MarketForce, the Y Combinator-backed Kenyan startup founded in 2018, will shut down RejaReja, a B2B e-commerce platform that was a huge part of its business. The company’s co-founder, Tesh Mbaabu, shared the development in a blogpost on Wednesday afternoon.
The startup founder also shared the company’s new move: Chpter, a social commerce startup that provides an AI-powered conversational platform that automates conversations on WhatsApp and Instagram for business owners.
Mbaabu cited the razor-thin margins of B2B e-commerce businesses and profitability struggles on a unit level as contributing factors in the decision to close the business vertical.
On a phone call with TechCabal, Mbaabu said RejaReja’s “business model was challenging and capital-intensive.”
“Unfortunately, that is our closing chapter. After immense efforts to make our business model sustainable, including downsizing the business to extend the runway for as long as possible, we have concluded that it is no longer feasible to keep RejaReja operational.
“The segment is also highly price elastic, which means the price wars are consistent. That’s always a race to the bottom.”
While MarketForce began as a sales automation software, it pivoted to B2B e-commerce with RejaReja, a service that allowed neighbourhood merchants and small-time retailers to stock up their shops with goods from FMCGs like Unilever and Nestle.
The service also allowed customers to access digital financing; MarketForce partnered with Pezesha, a business credit provider, for this service. Many players in the B2B e-commerce space typically offer loans and apps that help customers manage their inventory.
There was considerable excitement from investors around B2B e-commerce at first. That sentiment and considerable traction in its early days helped MarketForce.
“Based on early traction for RejaReja, the company raised $2 million and was accepted into Y Combinator in the summer of 2020.”
More milestones were to follow, including supporting over 1 million merchants and raising $40 million in 2022 at a valuation of $100 million.
Today, the segment’s initial excitement has waned, and the investors who happily signed millions of dollars in cheques have slowed down. In December 2023, Wasoko and MaxAB, two heavily funded B2B e-commerce players, merged in the hopes of creating a category king. The Nigerian startup Alerzo has cut employees thrice in as many years as it hopes for profitability.
MarketForce also faced difficulty meeting its financial obligations to its credit partner, Pezesha. However, the two companies have since resolved the matter internally, avoiding a liquidation suit filed by Pezesha.
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