E-commerce Business-to-business (B2B) and end-to-end distribution have become the most common business formats in Africa.
B2B refers to business-to-business transactions, such as those between a manufacturer and a wholesaler or a wholesaler and a retailer. Africa has a lot of business potential, and investors are taking notice.
MarketForce, a retail business-to-business (B2B) and end-to-end distribution platform created in Kenya, recently secured $40 million in Series A funding for merchant inventory finance and growth across Africa as a result of the expanding potential of these businesses on the continent.
The startup, which expanded beyond Kenya and Nigeria last year to include Uganda, Tanzania, and Rwanda, wants to add buy-now-pay-later (BNPL) alternatives to assist retailers to get credit for fast-moving consumer goods (FMCGs). It also intends to expand its presence in East and West Africa.
This current round (equal amounts of debt and equity) takes MarketForce’s total funding to $42.5 million. It also arrives after the business received $2 million in a pre-Series A investment seven months ago.
V8 Capital Partners, a London and Lagos-based African-focused investment firm led the current round, which also included Ten13 VC, SOSV Select Fund, Vu Ventures, Vastly Valuable Ventures, and Uncovered Fund.
Reflect Ventures, Greenhouse Capital, Century Oak Capital, and Remapped Ventures were among the current investors who participated in the round. Ken Njoroge, the co-founder of Cellulant and chairman of the MarketForce board of directors, also participated in the round.
Informal traders can use its merchant super app RejaReja to get items (hundreds of SKUs) straight from producers and suppliers, place and pay for goods online, receive utility bill payments, and apply for business financing.
MarketForce, a SaaS product for the formal markets developed by Tesh Mbaabu and Mesongo Sibuti in 2018, launched the RejaReja retail marketplace in 2020.
Over the next few months, MarketForce wants to add to its staff to 800 people and increase the number of merchants using the RejaReja app by 2.5 times to 250,000, up from 5,000 a year ago. The rise of RejaReja and the increase of merchants means fresh markets for FMCG products.
RejaReja is an asset-light strategy, which means it doesn’t own capital assets like warehouses or delivery trucks; instead, it relies on its partners, who include manufacturers and distributors, to provide them.
Its strategy enables it to expand quickly. Pezesha, a digital financial marketplace platform, has partnered with the business to provide loans to its merchants.
Techbuild’s Take
One of the most important advantages of e-commerce is that it improves the performance and quality of B2B business transactions, lowering trade transaction costs.
Apps and electronic transactions have dramatically lowered transaction costs related to working with paper, such as shipping, filing, and storage costs, as well as geography costs, such as the cost of driving to a physical place to make a purchase.
Furthermore, B2B and end-to-end distribution have provided a cost-cutting potential for both buyers and suppliers, who can now eliminate shipping costs while making sure that buyers can enjoy their purchases as soon as the transaction is done.
Informal merchants offer almost 80% of household retail in Africa, but they are faced with a number of issues, including stockouts, earnings instability, and a lack of financing, all of which make it difficult for their businesses to develop.
Platforms like MarketForce, through RejaReja, solve this by offering a marketplace where informal merchants may source items directly, keeping product costs reasonable by eliminating the need for brokers, and ensuring things are delivered the next day. It also leverages the traders’ transaction history to create credit profiles, which are required to acquire loans.
The number of internet users worldwide is continually increasing, and many businesses are capitalizing on this trend.
This trend has aided the growth and development of e-commerce in Africa. E-commerce offers economic growth across the continent in addition to offering new means of transacting thanks to these innovations.
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