Pan-African e-commerce giant Jumia Technologies will end the running of its food delivery arm this month in Nigeria and six other markets where it has footprints on the continent.
The decision is part of a cost-cutting push aimed at refocusing the company on expanding its online retail business.
Jumia Foods, which accounted for 11 per cent of Jumia’s gross merchandise value – the value of goods sold via its platform – in the nine months to September has never recorded a profit since it commenced business. In addition to Nigeria, it plans to shut down operations in Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast.
“The company determined that its food delivery business is not suitable to the current operating environment and macroeconomic conditions in its market, and will close its food delivery operations in all markets by the end of December 2023,” Jumia said in a statement.
“This decision is in line with the company’s strategy to optimise its capital and resource allocation and to continue its path to profitability.”
Jumia has had to resort to headcount cuts, scaling back delivery services outside its e-commerce business and exiting everyday grocery items in a bid to turn profitable. It is considering redeploying its food delivery staff to its physical goods business in the affected markets.
READ ALSO: Jumia kicks off Brand Festival to promote authentic brands
Founded in 2012 in Lagos, Jumia attained unicorn status four years after when it became the first tech start-up on the continent to hit the $1 billion valuation mark and even surpass it. It would go on to be listed on the New York Stock Exchange (NYSE) in 2019, the first African-focused tech company to reach the milestone. An initial public offering conducted by the firm on NYSE in 2019 generated $196 million in net proceeds.
“It’s a segment that’s very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa,” CEO Francis Dufay said during an interview with Reuters.
“The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers,” he added.
The company has been paring down losses, the latest being in the third quarter during which it reduced losses by 67 per cent compared to a year ago.
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Pan-African e-commerce giant Jumia Technologies will end the running of its food delivery arm this month in Nigeria and six other markets where it has footprints on the continent.
The decision is part of a cost-cutting push aimed at refocusing the company on expanding its online retail business.
Jumia Foods, which accounted for 11 per cent of Jumia’s gross merchandise value – the value of goods sold via its platform – in the nine months to September has never recorded a profit since it commenced business. In addition to Nigeria, it plans to shut down operations in Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast.
“The company determined that its food delivery business is not suitable to the current operating environment and macroeconomic conditions in its market, and will close its food delivery operations in all markets by the end of December 2023,” Jumia said in a statement.
“This decision is in line with the company’s strategy to optimise its capital and resource allocation and to continue its path to profitability.”
Jumia has had to resort to headcount cuts, scaling back delivery services outside its e-commerce business and exiting everyday grocery items in a bid to turn profitable. It is considering redeploying its food delivery staff to its physical goods business in the affected markets.
READ ALSO: Jumia kicks off Brand Festival to promote authentic brands
Founded in 2012 in Lagos, Jumia attained unicorn status four years after when it became the first tech start-up on the continent to hit the $1 billion valuation mark and even surpass it. It would go on to be listed on the New York Stock Exchange (NYSE) in 2019, the first African-focused tech company to reach the milestone. An initial public offering conducted by the firm on NYSE in 2019 generated $196 million in net proceeds.
“It’s a segment that’s very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa,” CEO Francis Dufay said during an interview with Reuters.
“The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers,” he added.
The company has been paring down losses, the latest being in the third quarter during which it reduced losses by 67 per cent compared to a year ago.
Support PREMIUM TIMES’ journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
Donate
TEXT AD: Call Willie – +2348098788999