Today, we have learnt that the firm has also pulled a plug on its physical operations in Uganda and will be running Cheki Uganda and BrighterMonday Uganda remotely from its Nairobi offices in a move expected to cut the firm’s operational costs. Sources close to the firm say only one or two people will be on ground in Kampala, Uganda and they will work closely with the Nairobi office.
This is happening just days after Jumia Market shut its operations across Africa, signifying how hard venture-supported classifieds business is especially in markets with low consumer purchasing power.
The tough shake up is not a surprise to many since the death of One Africa Media boss which forced the group to sell itself cheaply to Ringier to form Ringier One Africa Media (ROAM), a pan African classifieds group away from its Ringier Digital Publishing arm. The closure of several arms of Ringier One Africa Media businesses in various markets will help it focus on growth in its key markets such as Kenya and Nigeria and will help it bolster its revenues and eventually profits. Conquering Africa is not on ROAM’s table yet.
TechMoran assumes both these businesses had paying customers in Uganda and the little revenues could have kept them afloat but a big team can be a huge strain on a firm’s resources hence the move. Unlike Naspers which has burned millions of dollars OLX in Africa, ROAM is not ready to spend such an amount of money and is keen on sustainability. It’s likely that it will take nearly a decade for the group to expand across the region again and the increase in Internet penetration won’t help if the demographic has a marginal propensity to consume.
Cheki Kenya and Nigeria will survive being ROAM’s core markets while on jobs BrighterMonday Kenya, Jobberman Nigeria and Jobberman Ghana will carry the day. ROAM recently added to its portfolio BuyrentKenya and will now have to invest more resources to grow its classifieds ventures and fill the gap left by Rocket Internet which bundled its classifieds verticals into the Jumia brand name.
Classifieds is a long-term business and ROAM’s go slow strategy might work for it and it wont have to rob a bank to stay afloat. However, both ROAM and OLX should be afraid of the growing number of users turning to Facebook Groups which have proved to be preferred marketplaces allowing people to sell and buy stuff due to trust and mutual connections.