MarketForce, a Kenyan B2B e-commerce business, is in the early phases of initiating a spinout into social commerce. The company has closed operations in three of its five African regions.
TechCrunch has learned that MarketForce’s super-app, RejaReja, will only be available in Uganda after the company discontinued the offering in Kenya, Nigeria, Rwanda, and Tanzania. RejaReja allows informal retailers, or mom-and-pop stores, to order fast-moving consumer goods (FMCGs) directly from distributors and manufacturers and access financing.
Tesh Mbaabu, who will simultaneously serve as MarketForce and Chapter co-founder and CEO, confirmed the changes to TechCrunch. Nevertheless, Kenya will remain the company’s headquarters and serve as a launchpad for Chpter, a social commerce spinout that MarketForce has built to enable merchants to “turn conversations on their social media channels into more sales.”
Due to many VCs’ cancellation of their Series A investment commitments, MarketForce was forced to scale back operations and go through several layoffs last year, which marked the beginning of the company’s decline. The global venture capital downturn that has made getting funds difficult coincided with the financial shortage.
Companies like MarketForce have been compelled by the financial crunch and present market conditions to give up on expansion at all costs and instead focus on being profitable, seeking out bridge rounds, or raising capital at cheaper values. Through crowdfunding, MarketForce was able to raise $1 million recently.
In a previous interview with TechCrunch, Mbaabu stated that his company is reallocating its resources to establish a viable business by discontinuing routes that are not lucrative and delivering in locations with high demand density. However, because of the capital-intensive nature of its asset-heavy business model and the growing liabilities it faced, the company ran out of choices and chose to shut down in all three regions.
Uganda has proven our strongest-performing market since we pursued a profitable course. We will continue to operate it since we have exclusive distribution agreements with four significant manufacturers, and the margins there are excellent, allowing us to run a very lucrative business,” Mbaabu stated.
According to an update provided by investors and obtained by TechCrunch, Dennis Nyunyuzi, the Ugandan country manager, has been upgraded to the role of managing director and will be in charge of overseeing RejaReja’s operations in light of the most recent adjustments.
In 2020, MarketForce’s invention, the SaaS platform for formal markets, RejaReja, was introduced as a retail marketplace. It allows mom-and-pop stores and unofficial merchants to place product orders directly with manufacturers and distributors for delivery the next day. Additionally, because of the history of their transactions, it grants them access to finance. The business was attempting to address issues that these shops encountered, such as stockouts, inconsistent revenues, and a lack of funding to expand their business.
MarketForce had intended to reach out to the informal retail sector in sub-Saharan Africa, which makes up around 80% of household trade. However, according to Mbaabu, they have been forced to reduce their operations due to low margins in markets with higher competition and higher service costs, such as Kenya and Nigeria.
“We are moving into social commerce because we are identifying more profitable and high-margin segments,” Mbaabu stated.