Two of Africa’s leading B2B e-commerce platforms, Wasoko and MaxAB, have successfully executed a groundbreaking merger, a move set to redefine the continent’s informal retail market, valued at $600 billion, TechCrunch reports. This all-stock deal signifies a strategic shift towards creating a comprehensive multi-vertical ecosystem for Africa’s vast network of informal retailers.
Negotiations between the Kenya-based Wasoko and Egypt-based MaxAB commenced in December, culminating in the integration of 16 subsidiaries across different countries. Daniel Yu, co-CEO of the merged company, shared insights with TechCrunch about the complex eight-month process, a timeframe typical for mergers of this magnitude on a global scale.
The companies, previously serving as crucial distributors for numerous small retailers in Africa, have narrowed their focus to five key markets: Egypt, Kenya, Morocco, Rwanda, and Tanzania. This consolidation reflects the challenges and trends within the B2B e-commerce sector across Africa, including operational pullbacks and strategic pivots due to shifts in funding and market dynamics.
However, the merger presents substantial growth opportunities for both entities. Wasoko and MaxAB, already recognized as among the biggest B2B e-commerce platforms in terms of Gross Merchandise Value (GMV) and merchant reach, now claim to oversee the largest consortium of informal retail merchants on the continent, boasting over 450,000 merchants.
Emphasizing the shift towards profitability, Yu highlights the companies’ focus on net contribution margin or net profit per order, a departure from the previously GMV-centric strategy. This pivot towards financial sustainability is driven by an enhanced focus on fintech services, expected to yield higher margins than the initial commerce operations.
With independent units now managing fintech services such as e-payments and credit financing, the merged entity aims to offer these alongside traditional commerce operations through a unified application. Egypt, as the largest market for these services, saw over $180 million in e-commerce transactions last year, with the fintech sector expected to significantly boost revenue projections.
Yu, leading alongside Belal El-Megharbel of MaxAB, discusses the merger’s implications, synergies, and long-term goals for the combined company, shedding light on strategies aimed at leveraging their expansive network for intra-African trade and cross-border synergies.