The African B2B e-commerce landscape is witnessing a significant shift as Sabi, a prominent player in the sector, redirects its focus towards the burgeoning demand for traceable commodities. Following its recent $38 million Series B fundraising, Sabi reported a strategic pivot away from its initial retail-centric model towards enhancing its commodity exports division, particularly through its TRACE platform. This adjustment accompanies a 20% reduction in its workforce, emphasizing a targeted realignment of its operational strategies.
Founded in Lagos in 2020, Sabi began by providing digital inventory and sales tools to informal retailers disrupted by the COVID-19 pandemic. The company swiftly expanded into a fast-moving consumer goods marketplace, incorporating financial services and claiming significant reach across Nigeria and Kenya. By mid-2023, Sabi boasted over 300,000 merchants and reported a billion dollars in annualized Gross Merchandise Value (GMV), as noted in a recent TechCrunch article.
However, like many of its peers, Sabi encountered the inherent challenges of B2B e-commerce in Africa-namely thin margins and demanding capital and logistical requirements. This backdrop makes its pivot towards TRACE, a platform focusing on the export of minerals and agricultural products, particularly noteworthy. TRACE not only capitalizes on the global push towards ethical sourcing and environmental, social, and governance (ESG) compliance but also addresses an acute market need for transparency in commodity sourcing.
Indeed, transparency in commodity trading is not just a regulatory requirement but increasingly a business imperative. Global buyers are intensifying demands for clear traceability and ethical assurances, driving platforms like TRACE to the forefront of the export sector. With Sabi’s latest move to ship over 20,000 tons monthly of commodities like lithium and cobalt to markets in the U.S., Europe, and Asia, the strategic shift appears to be timely and well-conceived.
Despite the painful decision to reduce its workforce, Sabi's refocusing could be seen as a proactive adaptation to market dynamics. The move might not only safeguard the company's future but could also set a precedent for other African e-commerce firms grappling with similar market conditions. Moreover, Sabi’s lean, asset-light operational model, even as it expands into new territories such as the U.S., suggests a blueprint for sustainable growth amidst the volatile e-commerce landscape.
This transition by Sabi underscores a broader trend within the fintech and e-commerce sectors, where companies must continually evolve to meet changing market demands and regulatory landscapes. For businesses operating within or entering these markets, flexibility and responsiveness to the global economic environment will likely be key determinants of success. As Sabi adapts its business model, it will be instructive to see how other companies in similar situations respond to comparable pressures.
