MarketForce, a Kenyan B2B e-commerce company, is saying goodbye to its RejaReja arm that served informal merchants after facing challenges for over two years. The company has been forced to scale down operations drastically, leading to the shutdown.
The decision to close RejaReja comes a few months after MarketForce pulled out of its markets in Nigeria and Kenya, except for Uganda. RejaReja, launched in 2020, aimed to solve the issues that informal retailers face, such as stockouts and financing, by allowing them to order fast-moving consumer goods (FMCG) from distributors and manufacturers. The marketplace targeted the continent’s informal retail sector, which makes up about 80% of household trade in sub-Saharan Africa.
During its peak, RejaReja had a workforce of over 800 people and served 270,000 informal merchants. MarketForce managed to raise $42.5 million, including $40 million debt-equity in a Series A round in 2022, with a valuation of over $100 million, to support the business.
However, the B2B e-commerce company faced a mix of challenges, such as aggressive expansion, a capital-intensive business model, low profit margins, and a funding crunch after a key investor failed to fulfill their promise. These struggles made it difficult for the company to sustain its operations, leading to the eventual shutdown. MarketForce is not the only B2B e-commerce company in Africa that has had to scale back due to the continued funding crunch.
“The B2B distribution business, RejaReja, became unsustainable for a few reasons. Firstly, the retail FMCG market has very slim margins, making it challenging to generate profits at a unit level. Additionally, the segment is highly price elastic, resulting in consistent price wars,” shared Tesh Mbaabu, co-founder of MarketForce, with Mesongo Sibuti in 2018.
Despite their efforts to make the business model sustainable, including downsizing to extend the runway, MarketForce has come to the conclusion that it is no longer feasible to keep RejaReja operational.
Some of the investors in MarketForce are Y Combinator (YC S20), V8 Capital Partners (who led the Series A round), Ten13 VC, SOSV Select Fund, VU Venture Partners, Vastly Valuable Ventures, Uncovered Fund, Reflect Ventures, Greenhouse Capital, Century Oak Capital, and Remapped Ventures.
Moving forward, MarketForce is launching Chpter, a social commerce spinout. According to Mbaabu, Chpter is an AI-powered conversational commerce platform that enables merchants to sell their products on social platforms.
