Marketforce, a Kenyan B2B platform for retail distribution of consumer goods and digital financial services, has shut down operations in some of its African markets.
Reports reveal that MarketForce’s super-app dubbed RejaReja, which enables informal retailers to order fast-moving consumer goods (FMCGs) directly from distributors and manufacturers and access financing, will only be available in Uganda after the company discontinued the offering in Nigeria, Kenya, Tanzania, and Rwanda.
MarketForce’s current shutdown of its three African markets is coming after the company in May this year, tightened its belt when it was hit by tough times.
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The company was thrown into disarray after certain VCs that had committed funds in a $40 million Series A debt-funding, backed out of the deal. This forced MarketForce to look for new investors but was faced with a fundraising challenge. This spurred the startup to slow down its growth plans and downsize.
Also, with the cash crunch and current market realities that have forced companies to abandon growth-at-all-costs, MarketForce decided to refocus its resources on building a profitable business by delivering in areas with a strong demand density and shutting down routes that are not profitable.
The company’s CEO Tesh Mbaabu speaking on MarketForce’s focus on profitability said,
“After we decided to move towards a path to profitability, Uganda has been our best-performing market. We have exclusive distributor contracts with four major manufacturers, and margins are better, enabling us to run a gross profitable operation there, that is why we will keep it active”.
Following the latest changes, the startup country manager in Uganda, Dennis Nyunyuzi has been promoted to the position of managing director and will be responsible for steering RejaReja’s operations, according to an update shared with investors.
Launched in 2020, the RejaReja retail marketplace was rolled out as a brainchild of MarketForce, and as a SaaS product for formal markets. It enables informal traders or mom-and-pop shops to order goods directly from manufacturers and distributors for next-day delivery.
It also gives them access to financing based on the history of their transactions. The company was trying to solve challenges that these retailers face like stockouts, earnings instability, and lack of financing to scale their trade.
However, while MarketForce planned to tap the informal retail sector in the continent, which accounts for about 80% of household trade in sub-Saharan Africa, Mbaabu says they have been forced to scale down as margins are low in markets like Kenya and Nigeria, which are expensive to serve, and where competition is stiffer.
Founded in 2018 by Tesh Mbaabu and Mesongo Sibuti, MarketForce launched to tap the informal retail sector in Africa, which accounts for about 80% of household trade in sub-Saharan Africa.
Informal merchants in the region are faced with myriad challenges like stock-outs, earnings instability, and lack of financing, all of which hamper the growth of their businesses
The startup launched to solve this by enabling informal traders to order goods for next-day delivery directly from its merchant’s super-app (RejaReja). Traders are also able to access goods on credit based on the history of their transactions and credit profiles.