Jumia, one of the biggest online stores in Africa, has announced that it will shut down its food delivery service, Jumia Food, in seven countries by the end of 2023.
These countries are Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria.
As of right now, the company is planning to focus on improving its main online shopping business and spreading the Jumia Pay platform to all 11 countries where it does business.
The CEO of Jumia, Francis Dufay, said, “The more we focus on our physical goods business, the more we realize that there is huge potential for Jumia to grow with a way to make money.”
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It’s essential that we make the right choice and put all of our management, teams, and money into going after this chance. At the moment, it means giving up a business line that we don’t think has as much room for growth: food delivery.
Because Jumia Food has been having trouble making money since the beginning, even though it added 11% of Jumia’s gross merchandise value (GMV) between January and September 2023, the company is changing its strategy.
Although Jumia Food experienced substantial growth in 2021—an 82% year-over-year rise—quarterly active customers and orders dropped in 2023, forcing the company to rethink its operational goals.
On a mission to become profitable, Jumia is slashing costs by laying off workers, pulling everyday food items from its stores, and cutting back on delivery services unrelated to its online business. Therefore, when Jumia Food closes, many workers will move to the core retail segment, which could mean layoffs.
Read also: Bolt Food exits Nigeria with 5% market share
Jumia Food joins the growing food delivery market trend
Jumia’s move follows a more significant trend, as Bolt Food, a prominent African food delivery company, has left Nigeria and South Africa due to economic downturns, high inflation, and fierce competition.
Barcelona-based startup Glovo is strengthening its roots in Sub-Saharan Africa through innovative collaborations with famous restaurant chains despite financial challenges operating in 25 locations with $1 billion in capital.
Chowdeck, another Nigerian meal delivery company, has achieved a milestone of delivering over ₦1 billion ($1.2 million) in a month, highlighting its increased market share.
From 2023 to 2028, the African food delivery business will rise by 12.2%, creating opportunities and difficulties. Growth potential exists through partnerships and technological integration, but profitability is still challenging.
Jumia Food’s exit and others are complicating the sector, but Glovo and Chowdeck are showing the way to a new path.
Vendease, Nigerian Food Procurement Platform, Lays Off 9% Employees
To achieve profitability, Jumia has slashed costs, reduced its workforce, and focused on profitable e-commerce categories.
Jumia, the first African-focused internet business listed on the New York Stock Exchange, recalibrated to show how the African tech environment is changing and how sustainable growth is still pursued.
Jumia Nigeria CEO Massimiliano Spalazzi resigned yesterday. In a Lagos media presentation, the business announced the departure. Before the pandemic, Massimiliano became CEO in January 2020 and led the company through tough times.