Pan-African e-commerce platform Jumia has announced the discontinuation of its food delivery service, Jumia Food, in seven markets including Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast. The decision comes as a response to the current operational landscape and prevailing macroeconomic conditions in these regions.
Key Takeaway
Jumia is discontinuing its food delivery service in seven markets to prioritize its core physical goods business and pursue profitability. The decision reflects the company’s strategic shift and focus on efficient resource allocation.
Warning Signs and Cost-Cutting Efforts
During Q4 of 2022, Jumia initiated several cost-cutting measures, including discontinuing food delivery operations in Egypt, Ghana, and Senegal, suspending logistics-as-a-service in most markets, halting Jumia Prime across all markets, and scaling back first-party groceries in several countries. Despite these efforts, Jumia Food in the now-closed seven markets accounted for approximately 11% of the company’s gross merchandise volume (GMV) for the nine months ending September 30, 2023.
Focus on Profitability and Core Business
Although Jumia Food was the fastest-growing category on the e-commerce platform for years, it has not achieved profitability since its inception. The company aims to optimize its capital and resource allocation, focusing on its core physical goods business and JumiaPay operations across all 11 markets. This strategic shift is in line with Jumia’s pursuit of profitability and efficient resource management.
Redirecting Focus and Capitalizing on Growth
Jumia’s new strategy involves redirecting its focus towards the core physical goods business and JumiaPay operations. The company observed growth in GMV for physical goods in several African markets and plans to capitalize on this momentum, extending it to the remaining six markets. As part of this transition, some employees from the food delivery business will move to roles within the physical goods business in these countries, while also necessitating a reduction in the workforce.
