MarketForce exits three markets, set to launch a social commerce spinout

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Kenyan B2B e-commerce company MarketForce has shut down operations in three of its five markets in Africa and is in the early stages of launching a social commerce spinout.

TechCrunch has learned that MarketForce’s super-app dubbed RejaReja, which enables informal retailers (mom-and-pop stores) to order fast moving consumer goods (FMCGs) directly from distributors and manufacturers and access financing, will only be available in Uganda after the company discontinued the offering in Kenya, Nigeria, Rwanda and Tanzania.

However, Kenya will continue to serve as the company’s headquarters and a launchpad for Chpter, a social commerce spinout that MarketForce has been building to enable merchants “turn conversations on their social media channels into more sales,” Tesh Mbaabu, who will double up as MarketForce and Chpter co-founder and CEO, told TechCrunch while confirming the changes.

MarketForce’s deceleration started last year when some VCs reneged on their Series A funding commitments, forcing the company to scale down operations and conduct multiple rounds of layoffs. The cash crunch came amidst the global venture capital downtime that has made raising funding hard.

The cash crunch and current market realities have forced companies like MarketForce to abandon growth-at-all-costs and instead pursue paths to profitability, push for bridge rounds or raise funding at lower valuations. MarketForce recently raised $1 million through crowdfunding.

Mbaabu said in an earlier conversation with TechCrunch that his company is refocusing its resources to building a profitable business by delivering in areas with a strong demand density, and shutting down routes that are not profitable. However, with their asset-heavy model being capital intensive and having to contend with mounting liabilities, the company ran out of options and decided to close shop in the three markets.

“After we decided to move towards a path to profitability, Uganda has been our best performing market. We have exclusive distributor contracts with four major manufacturers, and margins are better, enabling us to run a gross profitable operation there; that is why we will keep it active,” said Mbaabu.

Following the latest changes, Uganda country manager Dennis Nyunyuzi has been promoted to the position of managing director and will be responsible for steering RejaReja’s operations, according to an update shared with investors, and seen by TechCrunch.

The RejaReja retail marketplace was launched in 2020 as a brainchild of MarketForce, and as a SaaS product for formal markets. It enables informal traders or mom-and-pop shops to order goods directly from manufacturers and distributors for next-day delivery. It also gives them access to financing based on the history of their transactions. The company was trying to solve challenges that these retailers face like stockouts, earnings instability and lack of financing to scale their trade.

However, while MarketForce planned to tap the informal retail sector in the continent, which accounts for about 80% of household trade in sub-Saharan Africa, Mbaabu says they have been forced to scale down as margins are low in markets like Kenya and Nigeria, which are expensive to serve, and where competition is stiffer.

“We are figuring out more profitable and high margin segments and that is why we decided to make a move into social commerce,” said Mbaabu.

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