The growing competition in the Egyptian B2B e-commerce market

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With the growing digitalization around the world during the two years of the global pandemic outbreak, an increasing number of smaller retailers turned to online channels for sourcing their products. Notably, the convenience of sourcing products through online channels, along with the overall efficiency of the B2B e-commerce market, meant that most retailers have continued with the process even as the impact of the pandemic diminished. This has led to a growing interest in the B2B e-commerce space, including venture capital firms and other players that are seeking to enter the market.

In Egypt, the B2B e-commerce market has recorded strong growth during the pandemic, and the trend is expected to further continue over the next three to four years. As a result, the competitive landscape in the Egyptian B2B e-commerce segment has surged significantly in 2022. For instance,

• In October 2022, MaxAB, one of the leading food and grocery B2B e-commerce platforms in Egypt, announced that the firm had raised US$40 million in its pre-Series B funding round. Notably, the Series A round was raised in two tranches, which include the US$40 million that the firm raised in October 2022. The firm is planning to use the capital to further accelerate its growth in the region, where the demand for food and groceries has surged significantly.
• Since its inception in 2018, the firm has served over 150,000 retailers across Egypt and Morocco. During its lifetime operations, the firm has delivered over 2.5 million orders. The firm is planning to scale its operations further across Morocco, while also planning expansion in Saudi Arabia by the end of 2023. Notably, the food and grocery market is huge. According to the firm, there are more than 750,000 small and medium-sized retailers in Egypt and Morocco alone.

While there is a huge market for MaxAB to tap into the Egypt and North Africa region, the competition has also increased with the presence of many players. Cartona and Capiter are among the two other well-funded B2B e-commerce platforms that MaxAB is competing with for market share.

Amid the growing competition in the Egyptian B2B e-commerce segment, mergers and acquisition trends have also started to emerge in the country, as new players are looking to capitalize on the potentially high-growth market. For instance,

• In November 2022, SPEED, another Egypt-based B2B e-commerce platform, announced that the firm was acquired by X-ERA, a UAE-based logistics tech firm. Notably, through the acquisition, the Emirati-based firm is seeking to create an improved experience for SPEED customers, who are mostly small and medium-sized grocery retailers. Furthermore, X-ERA is also planning to develop the technology and expand the platform to capitalize on the growing B2B e-commerce market in the country.

With the growing competition in the Egyptian B2B e-commerce segment, these firms are also looking to differentiate their services to small and medium-sized retailers in the region. For instance,

• MaxAB launched a fintech business to further add a growth stream to its existing business model in 2021. Notably, the fintech arm of the business leverages its large pool of merchants and operational capacity for carrying out cash collections.
• The firm adopted a different approach to mark its entry into the financial services segment. Unlike many other B2B e-commerce platforms globally, which offer a buy now pay later service, MaxAB launched a bill aggregation product. Since its launch in 2021, the financial service has recorded a growth of five times in transaction value. However, looking at the growing popularity of the buy now pay later service, the firm also launched a working capital product for merchants in September 2022.

In the current macroeconomic environment, where interest rates and inflation are rising, the demand for working capital among small and medium-sized merchants is expected to grow significantly. Consequently, PayNXT360 expects more of these B2B e-commerce players to foray into the B2B fintech category from the short to medium-term perspective. Furthermore, as the competition continues to grow in the Egyptian B2B e-commerce market, PayNXT360 also expects more of these firms to raise funding rounds to further accelerate their growth in the region. This will also open up potential mergers and acquisition deals for larger players who are looking to enter into the high-growth market over the next three to four years.