MarketForce, a Nairobi-based retail B2B and distribution platform, has announced the closure of its business-to-business (B2B) distribution unit, Rejakeja. Kenyan entrepreneur, Tesh Mbaabu, co-founder and CEO of MarketForce, cited challenging profit margins and a funding drought as primary reasons behind the decision.
In a recent statement, Mbaabu acknowledged the difficulty in maintaining profitability at a unit level within the B2B distribution sector. He attributed the closure to the high elasticity of prices, leading to perpetual price wars, which ultimately rendered the venture unsustainable.
“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 Rejakeja operational,” said Mbaabu.
The closure marks the end of a chapter for MarketForce, which initially ventured into the B2B distribution segment to digitize retail distribution for emerging markets. Founded in 2018 by Tesh Mbaabu and Mesongo Sibuti, the company focused on assisting consumer brands in managing field sales operations and expanding distribution networks in Africa.
Rejakeja: Initial success, ongoing challenges
MarketForce’s journey encountered significant challenges, including the impact of the COVID-19 crisis on global economies. The pandemic disrupted its revenue streams, prompting a strategic pivot from a software-as-a-service (SaaS) model to a marketplace catering directly to neighborhood merchants.
The Rejakeja venture garnered initial success, signing up more than 1,000 merchants within its first six months and earning validation from the prestigious Y Combinator accelerator in 2020. Despite this momentum, the B2B distribution unit faced setbacks, including a funding shortfall and heightened competition.
Reflecting on the experience, Mbaabu emphasized the importance of sustainable growth over rapid expansion. He noted, “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.”
Strategic shift: Rejakeja closure
MarketForce’s journey, marked by highs and lows, underscores the complexities of navigating the startup landscape in emerging markets. Despite the closure of its B2B distribution venture, the company remains committed to its mission of transforming retail distribution in Africa.
Since its inception, MarketForce has facilitated nearly a billion dollars in sales transactions and expanded its presence across five countries, partnering with over 50 renowned brands. The recent closure of Rejakeja signifies a strategic shift for MarketForce as it continues to evolve and adapt to market dynamics.
The decision to shutter Rejakeja comes more than two years after MarketForce secured a landmark $40 million Series-A funding round. As MarketForce charts its course forward, the closure of Rejakeja serves as a poignant reminder of the challenges inherent in entrepreneurship and the resilience required to navigate uncertain terrain.
