E-commerce start-up Zumi closes down over lack of funding

Zumi, the Kenyan e-commerce start-up that started as a women-focused digital magazine before becoming an apparel online retailer, is closing down.

On Tuesday, the B2B (business-to-business) marketplace’s co-founder and CEO William McCarren announced they will close doors due to a funding drought.

“With a heavy heart, I share the news that ZUMI will be closing its doors. The current macro environment has made fundraising extremely difficult, and unfortunately, our business was not able to achieve sustainability in time to survive,” McCarren wrote in a LinkedIn post.

Founded in 2016, Zumi had to date secured Ksh.120 million ($920,000) in funding, per its Crunchbase profile. The latest was a Ksh.39 million ($300,000) round in July 2021.

Zumi shifted to e-commerce due to challenges in generating revenue from digital advertisement.

The venture joins a list of Kenyan start-ups that have folded in recent months due to a difficult operating environment occasioned by rising inflation, weakening currency, and unfavourable interest rates that have seen foreign investors shift capital from emerging and frontier economies.

These include food-tech start-up Kune, Notify Logistics and agri-tech start-up WeFarm, which closed its WeFarm Shop platform.

But e-commerce firms have especially had a hard time with uptake due to hesitancy and last-mile delivery challenges, as well as the absence of a reliable national courier service which has forced companies to invest heavily in dispatch teams.

For instance, the NYSE-listed Jumia, which is Africa’s biggest e-commerce platform, is still not profitable since its launch in 2012 despite reports of growth in the African e-commerce scene.

In December, the Amazon-style e-commerce platform Sky Garden was acquired by tech credit platform Lipa Later on the brink of closure following insolvency.

The B2C (business-to-customer) platform that helps retail stores digitise offline and online sales, said the overall market in 2022 had been a struggle.