Sabi Lays Off 20% After $38M Raise, Focuses on Traceable Exports

Sabi Restructures, Shifts Focus to Commodity Exports

Sabi, an African B2B e-commerce startup, has reduced its workforce by approximately 20% – impacting around 50 employees. This adjustment accompanies a strategic pivot away from its initial retail-centric platform.

A New Direction: TRACE and Commodity Exports

The company confirmed the layoffs on Thursday, explaining they are part of a larger restructuring effort. This realignment aims to concentrate resources on a rapidly expanding business centered around commodity exports.

Sabi has observed increasing demand for commodities that are both traceable and ethically sourced. This led to the development of TRACE (Technology Rails for African Commodity Exchange), a new vertical launched last year.

From Retail Platform to Global Trade

Founded in Lagos in 2020, Sabi initially provided a software solution to help small, informal retailers digitize their inventory and sales processes during the COVID-19 pandemic.

The platform subsequently broadened its scope to include a fast-moving consumer goods (FMCG) marketplace, integrating financial services. It expanded operations throughout Nigeria and Kenya.

By mid-2023, Sabi reported a network of over 300,000 merchants and an annualized Gross Merchandise Volume (GMV) exceeding $1 billion.

Securing Investment and Facing Challenges

This growth trajectory enabled the company to secure a $38 million Series B funding round, resulting in a $300 million valuation.

However, like many B2B e-commerce startups operating in Africa, Sabi encountered significant challenges. These included low profit margins, high capital requirements, and difficult unit economics.

Despite these hurdles, Sabi distinguished itself by maintaining an asset-light business model and achieving profitability, unlike some competitors who relied heavily on capital expenditure.

TRACE: Exporting Commodities Globally

In March, TRACE was introduced as a distinct business line alongside the existing FMCG operations.

This new division focuses on the export of minerals and agricultural products, including lithium, cobalt, tin, and various cash crops. Global buyers are increasingly prioritizing transparency, Environmental, Social, and Governance (ESG) compliance, and traceability in these commodities.

Currently, Sabi exports over 20,000 tons of these commodities each month to customers in the U.S., Europe, and Asia.

Expansion and Future Outlook

To support this expansion, Sabi has established operations in the U.S. and recruited experienced personnel.

According to a company statement, “Sabi is entering its next chapter, with a focused commitment to commodity trade and traceability for global customers.”

The statement continued, “We’re doubling down on the part of our business seeing the most demand, built on the strong foundation we’ve laid since 2021 by supporting African merchants and their growth. To align with this momentum, we’ve made the difficult decision to restructure parts of our team.”

A Broader Trend in African E-commerce

This transition highlights a wider trend within the African informal commerce sector. Sabi demonstrates that evolving into an infrastructure provider for global trade is a viable path towards sustainability.

While this strategy promises improved margins and clearer routes to profitability, it can also necessitate internal restructuring, as evidenced by Sabi’s recent actions.