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Jumia to close unprofitable food delivery business
Jumia Food represents approximately 11 percent of Jumia’s gross merchandises value. Photo / File
What you need to know:
- Jumia Food will cease in all the seven markets Jumia operates, including in Uganda
Jumia Technologies has said it will close its food delivery business, Jumia Food, to focus on its core physical goods business and JumiaPay.
Jumia Food will cease in all the seven markets Jumia operates, among which include Uganda, Nigeria, Kenya, Morocco, Tunisia, Algeria and Ivory Coast.
The business, which Jumia said has “determined that it is not suitable to the current operating environment and macroeconomic conditions” will close by the end of this month.
“The more we focus on our physical goods business, the more we realise that there is huge potential for Jumia to grow, with a path to profitability. We must take the right decision and fully focus our management, our teams and our capital resources to go after this opportunity. In the current context, it means leaving a business line, which we believe does not offer the same upside potential - food delivery," Mr Francis Dufay, the Jumia Group chief executive officer, said in a statement.
Mr Antoine Maillet-Mezeray, the Jumia executive vice president finance and operations, said food delivery remains a business with very challenging economics, in Africa and across the world, noting that “we want to focus our efforts on our physical goods e-commerce business, in the [11] markets where we operate. This is a matter of prioritisation of opportunities, and expected return on investment."
Jumia also indicated that employees currently dedicated to the food delivery business will transition to the continuing physical goods business in the seven countries, noting that the strategic shift demonstrates its commitment to profitable growth.
The food delivery business represents approximately 11 percent of Jumia’s gross merchandises value for the nine months ended September 30, and has not been profitable since inception.
Jumia has been reducing its losses, with the latest financials showing that they dropped by 67 percent in the third quarter to September.
Last month, Jumia reported an adjusted EBITDA loss of $15m, which was the lowest since its initial public offering in 2019.
The reduction, data indicates, had outperformed the $27m recorded in quarter one and $19.3m in quarter two and a substantial decrease of $32m compared to the third quarter in 2022, representing a 67 percent year-on-year decline and 70 percent drop on a constant currency basis.
Jumia also reported a notable reduction in active customers and orders compared to the previous year, which was a deliberate outcome of the company’s strategic streamlining initiatives initiated in the last quarter of 2022, which included a decision to recalibrate its product and service portfolio by suspending first-party grocery offering, logistics-as-a-service and food delivery operations in specific vital markets where economic viability was deemed unsustainable.
