Marketforce’s Deceleration: A Shift from Growth to Profitability
In a significant move, Kenyan B2B e-commerce company MarketForce has decided to shut down its operations in three of its five markets in Africa. The decision comes amidst the global venture capital downtime that has made raising funding challenging for startups.
Marketforce’s Early Stages and Initial Success
MarketForce was founded with the aim of digitizing informal retail trade in Africa. The company launched RejaReja, a super-app that enables informal retailers to order fast-moving consumer goods (FMCGs) directly from distributors and manufacturers. It also provides access to financing based on the history of their transactions.
The app was initially successful, with a strong focus on solving challenges faced by these retailers, such as stockouts, earnings instability, and lack of financing to scale their trade. MarketForce’s model targeted the informal retail sector in Africa, which accounts for about 80% of household trade in sub-Saharan Africa.
Marketforce’s Expansion Plans Halted
However, despite its early success, MarketForce has been forced to scale down operations due to the global economic downturn and reduced funding opportunities. The company had planned to expand its services across Africa but was unable to secure additional funding commitments from investors.
This move comes as a result of VCs reneging on their Series A funding commitments last year. In an effort to stay afloat, MarketForce conducted multiple rounds of layoffs and scaled down operations in several markets.
Uganda: The Only Remaining Active Market
MarketForce’s country manager for Uganda, Dennis Nyunyuzi, has been promoted to managing director and will be responsible for steering RejaReja’s operations. According to an update shared with investors seen by TechCrunch, Uganda remains the company’s best-performing market.
The Ugandan market presents a unique opportunity for MarketForce due to its exclusive distributor contracts with four major manufacturers, resulting in better margins that enable a gross profitable operation.
Marketforce’s Shift towards Social Commerce
Marketforce’s decision to shut down operations in three markets marks a significant shift in the company’s strategy. The B2B e-commerce company is now refocusing its resources on building a profitable business by delivering services with strong demand density and shutting down routes that are not profitable.
Mbaabu, MarketForce co-founder and CEO, confirmed this new direction: "We are figuring out more profitable and high-margin segments, which is why we decided to move into social commerce."
Social Commerce: The New Frontier for Marketforce
Marketforce’s decision to enter the social commerce space marks a significant departure from its original B2B e-commerce model. Chpter, a new spinout company, will focus on enabling merchants to ‘turn conversations on their social media channels into more sales’.
The move towards social commerce is seen as an opportunity for Marketforce to tap into Africa’s growing digital economy and expand its services beyond traditional retail.
Marketforce’s Crowdfunding Efforts
MarketForce recently raised $1 million through crowdfunding. The funds will help the company navigate its current financial challenges and support the launch of Chpter, a social commerce spinout.
The decision to crowdfund comes as a result of the reduced funding opportunities available for startups in Africa. Marketforce is one of several companies that have turned to alternative funding options to stay afloat during these challenging times.
Conclusion
MarketForce’s decision to shut down operations in three African markets marks a significant shift in its strategy. The company’s move towards social commerce and crowdfunding efforts demonstrate its commitment to navigating the current economic challenges and adapting to changing market conditions.
As Marketforce continues to evolve, it will be interesting to see how this new direction shapes the company’s future in Africa’s growing digital economy.
Related Articles
- Marketforce’s Early Success: Solving Challenges Faced by Informal Retailers
- The Ugandan Market: A Unique Opportunity for Marketforce
- Marketforce’s Crowdfunding Efforts: Navigating Challenging Funding Opportunities
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