Kenyan E-commerce Startup, Copia, Exits Uganda After 2 Years. Here Are Key Reasons And Lessons

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.

Caren Robb Copia's Global Chief Financial Officer
Caren Robb Copia’s Global Chief Financial Officer

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.

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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

Kenyan Ecommerce Startup Copia Lays Off 50 Staff

Copia, an ecommerce platform aimed at low-income households, is reported to have laid off roughly 50 employees.

According to persons familiar with the matter, the company laid off the stated number of employees as the tech industry continues to witness tens of thousands of lay-offs worldwide.

Copia

Copia has been on an expansion route since raising USD 50 million in a Series C round in 2021, with plans to operate in Nigeria and Ghana. It has since expanded into the Ugandan market. Copia has also been looking into other commercial opportunities, such as the establishment of sugar and rice manufacturing plants. It has previously stated that the facilities will be critical to increasing its output of affordable sugar and rice for the Kenyan market.

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No Previous History Of Financial Struggles

Copia has been performing well, according to earlier statements. It claimed it provides more than 4,000 goods, for instance, to the Kenyan and Ugandan markets. The company also claimed that it might be able to ship these goods to customers without incurring any logistics costs.

The business continues by stating that it has fulfilled over 13 million orders across the two regions. More than 38,000 agents make up its agent network. The majority of these intermediaries are store owners who act as delivery locations.

A formal certification from the Kenya Veterinary Board (KVB) has also been granted to the business, allowing it to provide a larger range of services to its expanding base of agricultural industry clients.

The nascent startup ecosystem in Kenya seems embattled. In a space of four months before October 2022, about six funded startups had, in full or in part, bitten the dust. Kune Food is one of them; the startup shut down after raising tens of millions of shillings. It had already let go of 70% of its workforce before leaving the company in June 2022. Sendy also disclosed that it has stopped providing supply services. The company had to fire 20% of its workforce as a result, thus this had a cost as well. It is now concentrating on providing fulfilment services. Twiga Foods also reduced staff. A total of 210 employees, or 21% of the workforce, were affected by the layoffs.

Copia ecommerce

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

Goodwell Investments Goes For Kenyan Ecommerce Startup Copia Global As It Raises $50M Round

Copia Global, a Kenyan B2C e-commerce firm, has raised $50 million in a Series C equity transaction led by Goodwell Investments.

New investors Zebu Investment Partners, the US International Development Finance Corporation (DFC), and Koa Labs joined previous investors Lightrock, the German development finance organization DEG, and Perivoli Innovations in the new financing round.

The funding comes three years after Copia’s $26 million Series B financing. A total of $33.5 million has been raised in Series A and B funding for the company. Copia’s total fundraising since its founding in 2013 now stands at $83.5 million, including its Series C.

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The Series C money will be used to expand the Kenyan company’s strategy across East Africa, primarily Kenya, Uganda, and, in the future, Rwanda and Tanzania. Steel estimates that in the next several years, Copia will be able to access 80 percent of Kenya’s serviceable market, up from 50 percent now.

Copia is exploring other African markets and may expand into Nigeria, Ghana, Cote d’Ivoire, South Africa, Zambia, Mozambique, and Malawi, depending on socioeconomic and political macroeconomic conditions.

Copia ecommerce
Tim Steel (CEO, Copia Global). Image credits: Copia

Why The Investors Invested

Copia has generated considerable traction since its last funding. According to a statement from the company, Copia has about 1.4 million unique clients and is roughly doubling every year. Copia also claimed that it delivers products to thousands of consumers every day and has completed over 10 million orders to date.

“Copia’s e-commerce model is built for the unique requirements of the African market and will save many Africans a lot of time and money. We see it as one of the next big leapfrogging technologies; just like mobile phones leapfrogged landlines and solar power leapfrogged the grid, Copia is leapfrogging retail,” Els Boerhof, the managing partner at Goodwell Investments, said in a statement.

A Look At What The Startup Does

Founded in 2013, Tracey Turner and Jonathan Lewis created Copia Global in Kenya as a B2C e-commerce platform to target Africa’s middle- and low-income consumers.

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In a statement, the company said it uses mobile technologies, a network of local agents, and its own Copia Logistics to reach a market that traditional retail and Western e-commerce models can’t reach.

Because of how it handles the market, Copia, on the other hand, runs a business that allows it to supply items profitably.

The e-commerce company focuses on clients in rural areas who struggle to get the same goods and services as consumers in metropolitan areas or with higher income levels in terms of choice, price value, and reliability.

The organization is establishing a long-term business model that comprises a three-way connection with clients and 30,000 agents across Kenya and Uganda.

As part of its strategy, Copia recruits and trains small company owners who have already developed a level of familiarity and trust with customers. They dress in Copia uniforms and promote the platform to individuals in local areas, eventually persuading them to make their first purchase on the e-commerce site. These agents then perform a secondary function as aggregated delivery points.

Customers can select whether they want to connect with Copia online or offline thanks to Copia’s agent network model. The e-commerce firm gives agents a fee on every goods sold, boosting their earnings by more than 30%. According to the company, women make up 77 percent of the organization’s 30,000 agents.

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Copia delivers merchandise to its consumers within 24 to 48 hours. Copia, according to Steel, does not charge clients a shipping cost, which sets it apart from other e-commerce platforms. Copia reduces delivery costs by reducing traditional supply chain processes by aggregating multiple commodities straight from vendors.

Copia ecommerce Copia ecommerce Copia ecommerce

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer