Copia, the innovative Kenyan-based mobile commerce platform, has announced that it was suspending its operations in Uganda after entering the market in 2021. The reason given was a combination of economic downturn and constrained capital markets. This has forced the company to pause its Africa expansion plans and focus on building its Kenyan business to profitability.
The move to focus on Kenya has been driven by the need to adapt to the changing market environment and prioritize profit, which the company believes is consistent with many of the best companies in Africa and across the world.
Copia has been making strategic leadership appointments to focus on regional growth and expansion strategy. Last year, Caren Robb was appointed as Global Chief Financial Officer, and Mike King as Chief Technology Officer. Additionally, in-house leader Dominic Dimba was appointed as Managing Director for East Africa with immediate effect. In January of that same year, the startup raised $50 million in a Series C equity round led by Goodwell Investments.
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Copia has been using mobile technologies, a network of local agents, and proprietary logistics to reach a market that formal retail and Western e-commerce models cannot. Their innovative model has brought quality products at the lowest market prices delivered at no cost to thousands of customers every day. To date, the company has fulfilled more than 10 million orders.
It is unclear how many employees will be affected by the suspension of operations in Uganda. However, the company believes that this approach will ensure it is well-positioned to pursue its pan-African ambitions with its proven formula for successful expansion, to serve the 800 million middle and low-income consumers through the power of e-commerce.
A comparative review of what went wrong for Copia in Uganda against Kenya
Copia’s Business Model: Copia’s business model is unique in that it harnesses mobile technologies, a network of local agents, and proprietary Copia logistics to reach a market that formal retail and Western e-commerce models cannot. This strategy enabled the company to deliver quality products at the lowest market prices to thousands of customers every day. Although this model worked well in Kenya, it didn’t translate as well in Uganda.
Market Environment: Uganda’s market environment is different from Kenya’s in several ways. Copia’s expansion into Uganda was prompted by the country’s relatively untapped e-commerce market. The company saw an opportunity to serve the country’s middle and low-income consumers with quality products at low prices. However as noted by Copia, Uganda’s e-commerce market is still in its infancy, and it lacks the robust infrastructure needed to support Copia’s business model. The country’s logistics sector is underdeveloped, and there is a shortage of local agents to facilitate product delivery, thereby putting the final nail on the coffin for Copia.
Economic Downturn and Constrained Capital Markets: Copia’s sudden exit from Uganda is attributed to the country’s economic downturn and constrained capital markets by the company. This situation, the company noted, made it difficult to raise the funds needed to sustain its operations in the country. The company therefore had to prioritize profitability over expansion, which meant doubling down on efforts to drive its founding Kenyan business to sustainable, scaled profitability.
Lessons Learned:
Again just like Egypt’s Trella’s recent exit from Pakistan, Copia’s experience in Uganda offers several valuable lessons for startups looking to expand into new markets. First is that, once more, it stresses the need for startups to conduct market research to understand the market environment and tailor their business models accordingly, and not just expand on the heels of major fundraising or in response to other competitors’ expansion drives. While Copia’s business model worked well in Kenya, it didn’t translate as well in Uganda; and thus this draws one probable conclusion: Copia’s adventure in Uganda was mostly inspired by the need for experimentation.
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Recurring stories of this nature have also emphasized the need for startups to be flexible in their operations as well as willing to adjust their strategies to suit the market’s needs. Although Copia’s sudden exit from Uganda could be described as mostly reactionary in that the startup was hanging on the cliff of threatened business sustainability brought about by recent industry difficulty in accessing funds, it still displays the importance of being agile and responsive to changes in the market environment.
One thing is obvious in all of these: from Trella to SWVL’s exit from different international markets, it does seem African startups must now prioritize profitability over expansion. Copia’s decision to pause its Africa expansion plans and focus on building its Kenyan business to profitability is a testament to the importance of prioritizing profit, although the profitability quest still remains much to be seen in months, if not years to come.
Copia Uganda Copia Uganda
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard