MarketForce, a Kenyan B2B e-commerce company, has announced the winding down of its B2B e-commerce business, RejaReja. This decision comes after a difficult two-year period that saw the company scaling down operations significantly. The shutdown of RejaReja follows MarketForce’s withdrawal from all its markets, except for Uganda.
RejaReja was initially launched to address the challenges faced by informal retailers, commonly known as mom-and-pop stores, by enabling them to order fast-moving consumer goods (FMCGs) from distributors and manufacturers. This marketplace aimed to tap into the vast informal retail sector in sub-Saharan Africa, which accounts for about 80% of household trade in the region.
During its peak, RejaReja employed over 800 people and served 270,000 informal merchants. MarketForce had successfully raised $42.5 million in funding, including a significant debt-equity investment of $40 million in a Series A round in 2022. However, the company encountered various challenges that made it difficult to sustain the business.
One major obstacle was the aggressive expansion strategy pursued by MarketForce. Combined with a capital-intensive business model and razor-thin profit margins in the retail FMCG market, the company faced significant financial strain. Additionally, a funding crunch ensued when an investor reneged on their promise, further exacerbating the situation.
Tesh Mbaabu, co-founder of MarketForce, acknowledged these challenges, stating, “The B2B distribution business that was RejaReja became unsustainable for a few reasons. Firstly, the retail FMCG market has razor-thin margins, which means that at a unit level, we struggled with profitability. The segment is also highly price elastic, which means the price wars are consistent.”
MarketForce made considerable efforts to make their business model sustainable, including downsizing operations to extend their financial runway. However, they ultimately concluded that it was no longer feasible to keep RejaReja operational.
It is worth noting that MarketForce is not the only B2B e-commerce company in Africa facing difficulties. Many other companies in the sector have also scaled back operations due to the ongoing funding crunch. This situation highlights the challenges faced by B2B e-commerce companies in Africa, where the retail FMCG market has thin profit margins and intense price competition.
Despite the closure of RejaReja, MarketForce is not giving up. The company is launching a new venture called Chpter, which Mbaabu describes as an AI-powered conversational commerce platform. Chpter aims to enable merchants to sell their products on social platforms, tapping into the growing trend of social commerce.
MarketForce’s investors, including Y Combinator, V8 Capital Partners, and Ten13 VC, among others, remain committed to the company’s success. While the closure of RejaReja is undoubtedly a setback, MarketForce’s pivot towards social commerce with Chpter demonstrates their determination to adapt and find new opportunities in the market.
In conclusion, MarketForce’s decision to wind down its B2B e-commerce business, RejaReja, highlights the challenges faced by B2B e-commerce companies in Africa. The razor-thin profit margins and intense price competition in the retail FMCG market, coupled with a funding crunch, made it difficult for MarketForce to sustain its operations. However, the company remains resilient and is launching Chpter, an AI-powered conversational commerce platform, to tap into the growing social commerce trend.
