E-commerce startup MarketForce shuts down RejaReja distribution unit


Tesh Mbaabu and Mesongo Sibuti are the co-founders of MarketForce. PHOTO | POOL

Homegrown e-commerce start-up MarketForce has announced it is shutting down its business-to-business (B2B) distribution business RejaReja citing razor-thin margins that have made it a struggle to attain profitability at a unit level.

In a blogpost dated April 17, co-founder Tesh Mbaabu also attributed the move to high elasticity of prices, which translates to constant price wars in the business segment.

“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,” wrote Mr Mbaabu in the post.

While MarketForce originally started off as a sales automation software in 2018, it later ventured to the B2B e-commerce RejaReja, a service that allowed neighbourhood merchants and small-time retailers to stock up their shops with fast-moving consumer goods (FMCGs).

Mr Mbaabu says in the aggressive expansion drive and thirst for quick growth, they didn’t realise that they were treading in a new, unfamiliar territory, a situation that would further be compounded by a funding drought that struck shortly thereafter.

“This taught us a very hard, painful lesson. Venture capital is not for good, or even great, companies. It’s for companies that are so excellent that they produce outsized returns at the right time in the right market,” he said.

“We got this completely wrong, and it hurt us when the committed capital didn’t fully come through. Now we know that every dollar a startup can raise is a gift. It should never be the life-blood of the business.”

At the start in 2018, the firm bootstrapped for around a year and a half before it convinced angel investors to inject $200,000 (Sh26.6 million in current exchange rates) in seed capital.

Just after raising the funding, the Covid-19 crisis hit almost all global economies, with MarketForce reporting that it lost most of its recurring revenue during the period.

It is at this point that the firm pivoted from a software as a service (SaaS) company that focused on selling enterprise software to large FMCGs and financial institutions and transitioned to a B2B marketplace directly serving neighbourhood merchants.

The RejaReja venture kicked off on a strong note, signing up more than 1,000 merchants within the first six months.

The undertaking also thrust the firm into international limelight after it bagged the Y Combinator accelerator validation in 2020, giving it the much-needed boost to officially launch RejaReja and raise an additional $2 million (Sh266 million) for product development and expansion.

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