Africa’s largest e-retailers MaxAB, Wasoko in merger talks
Wasoko, a Kenyan e-commerce firm backed by Tiger Global Management, is set to merge with its Egyptian counterpart, MaxAB. The goal is to connect consumer goods companies and Africa's informal traders, who deal in essential products such as rice, flour, and soap.
The merged entity plans to leverage MaxAB's position as a one-stop supplier for a network of mom-and-pop stores in North Africa. This strategic move will enable the company to reach over 450,000 merchants across eight African countries, including Morocco, the Democratic Republic of Congo, Zambia, and key East African nations.
While the valuation of the combined entity remains undisclosed, Wasoko secured $125 million in Series B funding last year, and MaxAB received $40 million in pre-Series B capital. Notably, both companies count 4DX Ventures Management among their investors.
Given Africa's rapidly expanding population and a scarcity of formal retail infrastructure, approximately 70% of consumables, beverages, and personal care items are distributed through local outlets or kiosks. The informal retail sector on the continent is estimated to be valued at $850 billion, and the merchants served by Wasoko and MaxAB already cater to over 65 million consumers. Both Wasoko and MaxAB are capitalizing on the emerging e-commerce market in Africa. They provide a solution for informal retailers by offering an app that enables them to restock within a day or two of placing an order. Additionally, these companies extend financing options for merchants and operate logistics units to ensure the smooth transportation of goods, including items such as oil, toilet paper, and food, from warehouses to merchants, navigating challenging road conditions. Despite the potential, some retailers need help to sustain operations in Africa's largest markets. Issues such as difficulty in securing suitable real estate, high relocation costs for managers, and inadequate infrastructure have been cited as hurdles by other players in the industry.