MarketForce, the Kenyan B2B(business-to-business) e-commerce company, is making a substantial shift in its operations, ceasing business activities in three of its five African markets, a new report states.
However, it is noted that the company is preparing to embark on an innovative journey with the introduction of a new social commerce initiative called Chpter.
MarketForce’s flagship app, RejaReja, originally tailored for informal retailers, will no longer serve Kenya, Nigeria, Rwanda, and Tanzania.
Instead, this platform, which streamlines the ordering process for fast-moving consumer goods directly from distributors and provides financial support, will continue exclusively in Uganda.
“Kenya still plays a pivotal role in MarketForce’s plans, serving as the operational hub and launching ground for Chpter, an exciting social commerce spin-off. Chpter’s objective is to convert merchants’ interactions on social media into tangible sales,” Innovation Village reported.
This transition comes on the heels of financial challenges faced by MarketForce. Last year, the company encountered setbacks when venture capitalists withdrew their commitments for Series A funding.
MarketForce had previously announced the closure of a substantial $40 million Series A funding round, the largest of its kind in East and Central Africa. This financial setback was exacerbated by the wider downturn in global venture capital, making it even more difficult to secure necessary funds.
Consequently, MarketForce had to significantly reduce its operational footprint and implement multiple rounds of staff cuts.
“With profitability as the primary focus, MarketForce has opted for a more efficient allocation of resources and efforts. One key strategy involves concentrating on regions with strong demand density while phasing out unprofitable markets. Given the company’s capital-intensive structure and growing financial obligations, the decision to cease operations in three markets became unavoidable.”
MarketForce Chief Executive Officer (CEO), Tesh Mbaabu noted that Uganda has consistently shown stronger performance than other markets.
“We’ve successfully secured exclusive distributorship agreements with four major manufacturers in the country, allowing us to sustain a robust profit margin,” noted the CEO.
In this restructuring, Dennis Nyunyuzi, previously Uganda’s country manager, will now assume the role of Managing Director, overseeing RejaReja’s operations.
RejaReja, launched in 2020, was MarketForce’s solution designed to meet the unique needs of informal traders. It provided them with the convenience of ordering directly from manufacturers and accessing credit based on their transaction records.
The platform aimed to address challenges like stock shortages and financial constraints frequently faced by these retailers.
However, the aspiration to capture a significant share of Africa’s informal retail sector, which accounts for around 80% of household commerce in sub-Saharan regions, encountered various obstacles.
Profit margins in certain markets, particularly Kenya and Nigeria, were dwindling due to high operational costs and fierce competition.
In response to these challenges, MarketForce is revising its strategies. Mr Mbaabu noted, “We are now aiming to explore sectors offering higher profitability and margins. This has influenced our decision to transition towards social commerce.”