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The Failure of the African Amazon

How Copia failed to build the African Amazon despite raising $130M.

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Africa’s Amazon?

Last week, Copia Global, one of Kenya's largest e-commerce companies, announced it might have to lay off employees or even shut down entirely.

In recent years, Africa's e-commerce industry has generated a lot of excitement. Investors see it as a land of opportunities, with revenue expected to grow from $58.45 million today to $82.49 million by 2027.

However, the struggles companies like Copia face highlight the significant challenges that still exist in this sector.

That’s why I spent some time exploring what Copia aimed to achieve, why it might be failing, and how these issues relate to the broader context of African countries.

Copia vs Amazon

Copia was founded in 2010 by Tracy Truman, who noticed that many startups targeted wealthy customers, but few focused on middle and low-income African consumers.

From the outset, Truman understood that simply copying Amazon's business model wouldn't work in Kenya due to significant differences between the US and African markets. She knew she had to reinvent e-commerce to suit the African context.

One major challenge was the low use of smartphones and the lack of internet access. To address this, Copia implemented a network of Agents—local business owners who helped customers make online purchases. These agents also served as delivery points, simplifying logistics and accepting cash payments.

Another significant obstacle was the lack of access to credit and online payment methods. Most people didn't have credit cards, so Copia had to create systems allowing users to hold credit and make online payments, effectively turning Copia into a fintech company in many ways.

For these reasons, Copia cannot simply be considered the Amazon of Africa. It is a unique business with a distinct set of challenges and innovative solutions.

Over its 14-year history, Copia has raised over $130 million, including $50 million in 2022 and $20 million in 2023. Unfortunately, this funding hasn't been enough to make Copia profitable, and last week, CEO Tim Steel announced the company might have to reduce its workforce by 25%, which would affect 350 employees.

Reasons For Failure

The Nanyang Technological University of Singapore conducted a study analyzing the major obstacles to e-commerce in African countries, many of which are relevant to Copia’s situation:

  • High Logistics Costs: Logistics costs in African countries are much higher than in Europe or the US due to poor infrastructure, bad roads and railways, and complex geography. Although Copia’s Agents help to some extent, shipping products across Kenya remains expensive, making online shopping less attractive.

  • Lack of Trust: African consumers are less inclined to trust online purchasing compared to those on other continents. This distrust stems mainly from fears of scams or fraud and concerns that delivered products may be of poor quality.

  • Poor Internet Connectivity: While Internet adoption in African countries has improved in recent years, mobile data costs remain significantly higher than in America or Asia. This high cost of connectivity continues to be a barrier to widespread e-commerce adoption.

Go Deeper


The Calm Company

Four days ago, Michael Karnjanaprakorn, the former founder of Skillshare, shared a viral tweet about his vision for a "Calm Company." 

This idea is gaining traction online. Just a month earlier, Justin Jackson, founder of Transistor.fm, wrote an article outlining the attributes of a Calm Company.

I find the concept of a Calm Company very intriguing. A while back, I discussed "Zombie Companies" and explained how these do not have a huge growth potential but are not necessarily bad companies.

Many of these businesses generate small profits but fail to achieve the exponential growth that venture capitalists (VCs) look for, leaving them in a limbo state where they can't secure the funding needed for further expansion.

But is the VC route the only way forward? Do all startups need to raise significant capital for rapid growth? Karnjanaprakorn and Jackson argue that there are other paths. 

They believe startups should focus on more than just becoming the next unicorn. Prioritizing excellent customer service and ensuring a good work environment for employees could be more important goals to achieve. 

What Makes a Calm Company

There's no single answer to what a Calm Company is. If you look at the responses to Karnjanaprakorn’s tweet, you'll see a variety of perspectives on what such companies should look like. 

For instance, Amir Salhefendic, founder of Doist, replied, explaining that while Doist aligns with many Calm Company attributes, it doesn’t fit all of Karnjanaprakorn's criteria:

In my view, two major factors define a Calm Company:

  • Profitability: As Jackson says in his article, profitability is the “foundation that enables everything else.” A company can’t have a calm work environment if it's constantly in financial trouble or scrambling to raise new funding rounds. To be considered calm, a company should maintain a healthy profit margin to weather difficult times. Calm Companies likely avoid the VC route, focusing on making a good profit and growing slowly rather than aggressively expanding and then struggling to achieve profitability. Sustainable growth is prioritized over ambitious exponential growth.

  • Work Environment Comes First: While many startups aim to create a good work environment, a Calm Company sees it as the ultimate goal. Every business decision should be evaluated against the well-being of the team. As Jackson suggests, companies should ask, “Will this decision make our lives worse?” Calm Companies ensure excellent work-life balance and provide numerous benefits, viewing a positive work environment as an end in itself rather than just a means to an end.

Yes, But

  • Profitability and prioritizing the work environment can sometimes conflict. Policies designed to enhance team well-being might reduce productivity, which can hurt the company's margins. Thus, a good Calm Company should balance profits and employee well-being, ensuring that profit margins never fall below a sustainable level and that the pursuit of profits doesn't become a source of stress for the team.

  • This approach doesn’t work in every industry. Some responses to Karnjanaprakorn's tweet noted that a Calm Company would be extremely challenging in certain types of businesses. For example, service companies might struggle to maintain a calm environment since they often must meet multiple deadlines and cater to demanding clients.

  • Additionally, the Calm Company model doesn’t scale well. Small companies are more suited to this model, with Karnjanaprakorn suggesting core teams of fewer than ten people. This is because many Calm Company attributes, like minimal meetings, a lack of managers, and asynchronous communication, become harder to maintain as the team grows.

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