Africa-focused e-commerce company Jumia Technologies plans to close its operations in Tunisia and South Africa’s online fashion retailer Zando by the end of 2024.
Jumia is taking drastic steps to slash operational costs in order to become profitable. These steps include pulling out of the regular grocery and food delivery industries, cutting back on delivery services unrelated to its main e-commerce company, and reducing its workforce.
According to CEO Francis Dufay, the action is a part of a strategy refocus on markets with higher potential for profit, like Nigeria.
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Reasons for exiting South Africa and Tunisia
Mr Dufay cited challenging macroeconomic conditions, a competitive environment, and constrained medium-term growth prospects in the two nations as the reason for Jumia’s exit.
“The trajectory of the countries did not align with the strategy of the group,” Mr Dufay told Reuters. He maintained that the move will enable the business to focus its resources on the other nine African nations, including Nigeria, Egypt, Kenya, and Morocco, where growth prospects are more promising.
“We believe it’s the right decision,” Mr Dufay said.
During the first half of the year, he pointed out, Zando and the business in Tunisia provided a mere 2.7 percent of total orders and 3 percent of Gross Merchandise Value between January and June 2024.
Since its establishment in 2012, Zando.co.za has grown to become one of South Africa’s leading e-commerce sites for fashion.
Jumia’s general merchandise activities in Tunisia have been active for over the last 10 years.
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110 jobs to be lost from the Jumia’s closure in South Africa and Tunisia
Mr Dufay said that neither operation—which would perform clearance sales prior to its closure—has any intentions to be sold. Though some workers might be moved to one of the company’s other divisions, the shutdown will result in the loss of about 110 jobs.
This choice was made soon after Takealot, the biggest online retailer in South Africa, disclosed that it was selling Superbalist, its fashion division, in the face of growing competition from massive fast-fashion e-commerce companies like Shein and Temu.
Mr Dufay agreed that South Africa’s highly competitive climate makes it harder to realise its growth potential.