Jumia to discontinue food delivery business in Nigeria

The Pan-African e-commerce giant Jumia Technologies is considering to discontinue its food delivery arm in Nigeria effective from December ending, following a decision said to be part of a cost-cutting push aimed at refocusing the company on expanding its online retail business.

Penpushing reports that the company in a statement the decision is equally been extended to six other markets where it has footprints, pointing out that in the nine months to September has never recorded a profit since it commenced business.

‘Jumia Foods, which accounted for 11 per cent of Jumia’s gross merchandise value – the value of goods sold via its platform – in the nine months to September has never recorded a profit since it commenced business’.

Penpushing further reports that the company emphasized in a statement that in  addition to Nigeria, it plans to shut down operations in Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast,  explaining that its food delivery business is not suitable to the current operating environment and macroeconomic conditions in its market

‘The company determined that its food delivery business is not suitable to the current operating environment and macroeconomic conditions in its market, and will close its food delivery operations in all markets by the end of December 2023. This decision is in line with the company’s strategy to optimise its capital and resource allocation and to continue its path to profitability’, the statement. said

Penpushing also reports that Jumia has had to resort to headcount cuts, scaling back delivery services outside its e-commerce business and exiting everyday grocery items in a bid to turn profitable, and in view of this it is considering redeploying its food delivery staff to its physical goods business in the affected markets.

The company founded in 2012 in Lagos, attained unicorn status four years after when it became the first tech start-up on the continent to hit the $1 billion valuation mark and even surpass it, and it  would go on to be listed on the New York Stock Exchange (NYSE) in 2019, the first African-focused tech company to reach the milestone.

Penpushing further reports the household name company has record that the initial public offering conducted by the firm on New York Stock Exchange (NYSE) in 2019 generated $196 million in net proceeds.

‘The Chief Executive Officer Francis Dufay in an interview stated that it is a segment that is very difficult across the world, with very challenging economic and big losses, adding that it is also a segment that is extremely completive globally

‘It’s a segment that’s very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa. The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers,” he added.

Penpushing also reports that the record has it that the company has been paring down losses, the latest being in the third quarter during which it reduced losses by 67 per cent compared to a year ago.

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