Jumia Technologies, the African e-commerce giant, announced on Wednesday the closure of its food delivery business in all seven countries where the service operates by the year’s end, as Reuters reported.
Jumia operates its food delivery business in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and the Ivory Coast.
The closure decision aims to sharpen the company’s focus on strengthening its online retail business.
Jumia is actively implementing cost-cutting measures, such as reducing staff, exiting everyday grocery items, and trimming non-e-commerce related delivery services.
This strategic move aligns with Jumia’s commitment to optimizing capital and resources to pave the way for profitability.
Jumia Food, the food delivery arm, constitutes approximately 11% of Jumia’s general merchandise value for the nine months ending Sept. 30.
However, the food delivery service has struggled to make a profit since its inception.
According to Jumia’s CEO, Francis Dufay, the decision acknowledges the challenges of the food delivery market, both globally and in Africa.
“It’s a segment that’s very difficult across the world, with very challenging economics and big losses,” Dufay explained.
Dufay highlighted the intense competition in the sector, leading to high costs and pressure on commissions.
The company, the first Africa-focused tech start-up to list on the New York Stock Exchange, emphasized that the closure would see some employees transition to roles within the core e-commerce business in these countries.
The company’s latest financial report reflects progress in trimming losses, revealing a 67% reduction in third-quarter losses compared to the previous year.
In late 2022, the company, which has been around for a decade, showed warning signs when it decided to cut costs.
Jumia stopped delivering food in Egypt, Ghana, and Senegal, paused logistics-as-a-service in all markets except Nigeria, Morocco, and Ivory Coast, ended Jumia Prime in all markets, and reduced its first-party groceries in Algeria, Ghana, Senegal, and Tunisia.
Back then, Jumia mentioned that these actions made up less than 1% of the group’s overall sales and 2% of the group’s adjusted EBITDA loss in the first nine months of 2022.
Despite this decision, the company remains committed to its strategic path, focusing on sustainable growth and profitability in the dynamic African e-commerce landscape.
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