Why B2B E-Commerce and Retail Tech Fractured

Between 2020 and 2023, startups in Africa's B2B sector raised several million dollars to digitise informal retail. The idea was to help kiosks and dukas order products directly from FMCG manufacturers using mobile apps, digital payments, and delivery services, while reducing the need for multiple middlemen.

Investors poured capital into companies such as MarketForce, Wasoko, Capiter, and Alerzo, betting they could become the digital infrastructure powering Africa's fragmented retail economy. The vision was to build a single platform that retailers could rely on to source inventory, access credit, make payments, and manage their businesses more efficiently.

By 2025 and into 2026, the picture changed drastically. The market leaders had downsized, exited countries, merged with competitors, or collapsed under debt. While demand seemed high, the economics of running logistics-heavy businesses that own inventory and are run by software were unattainable. They faced currency volatility, fuel shocks, and inflation that drove many out of business.

Why Investors Backed the Model

Informal retailers account for most consumer goods sales across Sub-Saharan Africa. However, the supply chain was highly fragmented, manual, and inefficient. Kiosk owners frequently struggled with stockouts, inconsistent pricing, and the need to visit multiple wholesalers just to keep their shelves stocked.

The high adoption of smartphones and the continued digitisation made high levels of procurement possible for most people.

Investors saw an opportunity to aggregate demand, build network effects, capture proprietary data on informal retail purchasing patterns, and layer embedded finance on top once trust and repeat usage were established.

The presence of direct relationships with manufacturers created better margins than traditional distribution.

But the reality diverged from the model almost immediately. These companies were becoming distributors, fleet operators, warehouse managers, and micro-lenders all at once. This was the beginning of the breakdown.

Where the Model Broke

Thin Margins Couldn't Absorb Rising Costs

FMCG distribution has always run on slim margins, often single digits. That works when volumes are stable, and costs are predictable.

It becomes untenable when costs fluctuate, for example, fuel prices, warehousing costs, and currencies devalue sharply. This is what happened across Kenya and Nigeria through 2023 and 2024. Every naira or shilling of new cost had to be absorbed by a margin that had almost no room to give.

In software, each new customer typically improves unit economics. This means marginal cost approaches zero, and scale compounds.

B2B commerce platforms, however, faced the opposite dynamic. New retailers increased inventory to be pre-financed, adding a need for more warehouse capacity and delivery vehicles, and tying more working capital up in goods sitting on shelves or in transit.

The Software Did Not Remove Physical Constraints

Digitising the order itself was the easy part. Technology could not fix poor road infrastructure, unpredictable fuel availability, the difficulty of financing inventory in a high-interest-rate environment, or the operational complexity of running logistics across borders with different regulatory and currency regimes.

This is where the model met the physical world, and the physical world did not care how elegant the app was.

Four Case Studies

MarketForce

Rapid multi-market expansion exposed unit economics that couldn't support the pace of growth, forcing a retreat to a single core market.

Wasoko

Even the sector's clearest category leader was forced to pivot from aggressive growth to survival-focused profitability, exiting West Africa and eventually pursuing a merger with Egypt's MaxAB.

Capiter

The company grew rapidly in Egypt but struggled with operational and financial challenges, leading to its shutdown in 2022.

Alerzo

Built a large retailer network and delivery fleet but couldn't overcome the high costs of distribution in Nigeria, eventually defaulting on its debt and losing its assets.

What Should You Be On The Lookout for as a Founder?

1. A large addressable market is not the same as a profitable business.
2. Logistics-heavy businesses should be judged on operational efficiency
3. Capital-intensive businesses need resilient unit economics before they expand.
4. Technology creates real value, but it does not eliminate the cost of moving physical goods.

Conclusion

Informal retail is genuinely ready for digitisation, and the demand for better distribution is present. However, technology alone cannot overcome the economics of logistics, inventory, and inflation.

The next wave of founders will likely succeed through building leaner, more capital-efficient models that complement existing distribution networks instead of attempting to replace them outright.