Jumia, a leading e-commerce entity in Africa, announces the closure of its food delivery arm, Jumia Food, in seven countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria, by the end of December 2023.
The company is set to refocus on enhancing its core online retail business and expanding the Jumia Pay platform across its 11-country operational landscape. Jumia’s CEO, Francis Dufay, emphasizes the strategic decision, stating, “The more we focus on our physical goods business, the more we realize that there is huge potential for Jumia to grow, with a path to profitability.”
This strategic shift responds to challenges faced by Jumia Food, which accounted for 11% of Jumia’s gross merchandise value (GMV) from January to September 2023 but struggled with profitability. Despite a notable 82% YoY growth in 2021, 2023 saw a decline in quarterly active consumers and orders, prompting a reassessment of operational priorities.
To achieve profitability, Jumia is aggressively cutting costs, including workforce reductions, exiting everyday grocery items, and reducing non-e-commerce-related delivery services. The closure of Jumia Food will result in the transition of several employees to the core retail segment, potentially leading to layoffs.
Jumia Food Joins Upward Trend in Food Delivery Market
This decision aligns with a broader trend in the African food delivery market, as Bolt Food also withdraws from Nigeria and South Africa due to economic downturns, high inflation, and intense competition. Meanwhile, Barcelona-based startup Glovo is expanding in Sub-Saharan Africa through strategic partnerships, and Chowdeck achieves significant milestones in Nigeria’s food delivery arena.
Despite challenges, the African food delivery market offers opportunities with a CAGR of 12.2% from 2023 to 2028. Jumia’s recalibration reflects a pursuit of profitability, marked by cost-cutting measures, workforce reductions, and a focus on viable segments within its e-commerce sphere.
This strategic decision by Jumia, the first Africa-focused tech startup listed on the New York Stock Exchange, underscores the evolving dynamics of the African tech ecosystem and the ongoing quest for sustainable growth. The recent departure of Jumia Nigeria CEO Massimiliano Spalazzi further highlights the changes within the company.
