Introduction to Sabi
African B2B e-commerce startup Sabi has recently undergone a significant restructuring, resulting in the layoff of approximately 20% of its workforce, which translates to around 50 employees. This decision comes as the company pivots its focus from its original retail-oriented platform to concentrate on its burgeoning commodity exports business.
Background of Sabi
Sabi was launched in Lagos in 2020 as a software platform designed to help informal retailers digitize their inventory and sales, particularly in the face of disruptions caused by the COVID-19 pandemic. Over time, the company expanded its operations to become a fast-moving consumer goods (FMCG) marketplace that included embedded finance, scaling its presence across Nigeria and Kenya. By mid-2023, Sabi had achieved significant milestones, boasting over 300,000 merchants and $1 billion in annualized GMV. This momentum was instrumental in securing a $38 million Series B funding round at a valuation of $300 million.
Challenges Faced by Sabi
Despite its achievements, Sabi, like many other startups in the B2B e-commerce space in Africa, encountered structural challenges. These included thin margins, high capital intensity, and tough unit economics. While Sabi managed to maintain an asset-light model and remained profitable, unlike some of its competitors that burned through capital, the market dynamics were clear: there was a need for strategic adjustment to ensure long-term sustainability.
The Shift to Commodity Exports
In response to the evolving market conditions and the growing demand for traceable, ethically sourced commodities, Sabi introduced a new business line called TRACE (Technology Rails for African Commodity Exchange) in March. TRACE focuses on mineral and agricultural exports such as lithium, cobalt, tin, and cash crops, catering to global buyers who increasingly demand transparency, ESG compliance, and traceability. This strategic move has seen Sabi export over 20,000 tons of commodities monthly to buyers across the U.S., Europe, and Asia, with the company also establishing operations in the U.S. and making key senior hires to support its expansion.
Restructuring and Future Plans
The decision to lay off a portion of its workforce is part of Sabi’s broader restructuring efforts aimed at aligning its resources with the rising demand in commodity exports. The company has expressed its commitment to entering its next chapter with a focused approach to commodity trade and traceability for global customers. By doubling down on the part of its business that is seeing the most demand, Sabi is building on the strong foundation it has laid since 2021 by supporting African merchants and their growth.
Conclusion
Sabi’s transition underscores a broader theme in the evolution of informal commerce platforms in Africa. As these platforms seek sustainable paths, evolving into infrastructure plays for global trade emerges as a viable strategy. While this approach offers higher margins and clearer profitability paths, it can also lead to internal adjustments, as evidenced by Sabi’s restructuring. Sabi’s story serves as a significant example of how African startups can adapt and thrive in the face of market shifts, pointing towards a future where technology and trade intersect to create new opportunities for growth and development.
