Following its strategic cost-cutting operation, Jumia, the African e-commerce giant, is shutting down food delivery operations across various African countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria.
Although unsurprising, Jumia has called quits on its food delivery operations across various African countries. The move is lauded as strategic by Jumia and comes amid financial struggles and loss to the tune of $19 million in Q3.
Jumia’s CEO, Francis Dufay, emphasized the challenging economies across its African markets and the significant losses as core reasons for this decision. The losses can be attributed to escalating competition and rising operational costs. For example, in Nigeria, the fuel price had escalated by 250% in 2023 alone.
Why is Jumia shutting down its food delivery businesses?
Dufay, who assumed the role of CEO in February, has been implementing stringent cost-cutting measures across operations. These included laying off 20% of the workforce, relocating top management from the UAE to African countries, and reducing advertising spend.
The decision to discontinue Jumia Food aligns with a strategic shift towards segments that promise profitability. Moving forward, the company will focus on the delivery of core physical goods and its fintech offering, JumiaPay.
Jumia Food contributed 11% to Jumia’s overall gross merchandise value (GMV), with a gross sale of $63.9 million in Q3 2023. However, it has never been profitable since launching in 2013.
This move to close Jumia Food across various African Nations may come as a necessary realignment of priorities. For now, the company hopes to direct its resources and focus on growing its profitably across existing businesses.
At first glance, the exits of Jumia Food and Bolt Foods from African markets underscore several challenges. Some of them include low commissions, increased marketing expenses with little results, and fierce customer acquisition battles. But even as Jumia pivots away from food delivery, other players in the market are seizing the opportunity.
So, what does this mean for the industry? For example, in Nigeria, food delivery startups like Glovo and Chowdeck are expanding their reach. Could this be a pointer to the dynamic nature of the food delivery industry? Maybe it’s just bad logistics management.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
