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Jumia Technologies has announced it will be closing its food delivery business in all seven countries in Africa where its operation spans. This decision comes as part of their strategy to prioritise the growth of their core online retail business.
Jumia Ceases Operations in Africa
It looks like Jumia is aggressively cutting costs to become profitable in accordance with its strategy to optimize its capital. They plan to do this by:
- getting rid of everyday grocery items
- scaling back on delivery services that aren’t directly related to their e-commerce business.
- reducing its work force
Why?
Well, the company notes that Jumia Food is not suitable for the current operating environment and macroeconomic conditions.This is because Jumia Food makes up approximately 11% of Jumia’s overall merchandise value, and it has yet to turn a profit since its establishment.
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They aim to make the most of its capital and resources, hence the stringent focus on Jumia eCommerce.
Jumia Speaks
“It’s a highly competitive segment worldwide, including Africa,” said Chief Executive Officer Francis Dufay in an interview with Reuters.
“The economics can be quite challenging in this market due to high costs and intense competition. As a result, commissions are under downward pressure. All while marketing costs are on the rise as everyone is vying for customers.”
Jumia is currently rocking the food delivery scene in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and the Ivory Coast. The company has announced that some of its employees, who are currently working in the food delivery sector, will be shifting their focus to the core e-commerce business in these countries.
Let us know what you think of this situation. Will you be finding a new food delivery service?
More on this as we get information.
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