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Turbulence in Africa’s e-commerce sector continues, with more layoffs
By our News Team | 2023
Kenya’s Twiga Foods platform reveals more job cuts and another restructuring as turmoil among industry players shows no sign of abating.
The turbulence in the African e-commerce sector continues, with leading Kenyan-based B2B platform, Twiga, announcing restructuring and layoffs last week.
Around 280 people – a third of the permanent Twiga workforce – will leave because of what the company calls “strategic operating adjustments to enhance its service delivery capacity”.
Photo credit: Twiga Foods
It adds in a statement posted on its website that “this has been influenced by the current business environment where people’s purchasing power continues to decline”.
Twiga Foods Ltd is a tech-driven fresh food platform that connects suppliers (including farmers) with vendors that supply consumers – mostly in the informal retail sector in Kenya and Uganda.
B2C e-commerce platforms have typically been viewed as more vulnerable to the current market ups and downs, but this is not the first time that Twiga has had to retrench staff and restructure. The last time was in June this year, when it let go its internal sales team in favour of using independent contractors.
Twiga will, however, continue to operate Twiga Fresh, a food farming and distribution project it launched in May 2022. Twiga Fresh grows onions, tomatoes and watermelons on a 650-hectare farm in Taita Taveta, a county approximately 360km southeast of Nairobi.
E-commerce players are struggling to achieve profitability
Despite a proliferation of B2B and B2C e-commerce platforms in Africa – often attracting significant foreign investment – the sector has been turbulent and struggling to achieve profitability.
“For instance, the NYSE-listed Jumia, which is Africa’s biggest e-commerce platform, is still not profitable since its launch in 2012 despite reports of growth in the African e-commerce scene,” reports the Kenyan news portal, Citizen.Digital.
“Trendtype believes Twiga probably will close its operations in Uganda for the same reasons Copia did – trimming costs and focusing on the more competitive and developed market [in] Kenya,” says Trendtype, the London-based emerging markets consultancy.
“It is increasingly clear that the cash crunch among grocery buying platforms will have casualties. There are six major buying platforms in Kenya: Twiga, Copia, Wasoko, Marketforce, Omnibiz and social selling app Kapu.
“Of those, Marketforce is the most vulnerable because its operations are spread across five countries and it is very unlikely it can cover those costs in the mid term.
“We also question whether the timing of Omnibiz’s entry in late 2022 will lead to its successful embedding in the Kenyan supply chain, given the crunch.”
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