In a strategic move aimed at focusing on growth and profitability, Jumia Technologies has announced the closure of its food delivery arm, Jumia Food, across all seven African markets it currently operates in, including Uganda, Nigeria, Kenya, Morocco, Tunisia, Algeria, and Ivory Coast.
The decision, according to Jumia CEO Mr. Francis Dufay, was prompted by a realization that the real feast lies in the core physical goods business and JumiaPay. Dufay emphasized, "The more we focus on our physical goods business, the more we realize 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."
Jumia Executive Vice President Finance and Operations, Mr. Antoine Maillet-Mezeray, acknowledged the challenging economics of the food delivery business, both in Africa and globally. "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 prioritization of opportunities and expected return on investment," he explained.
The move, set to take effect by the end of the month, is expected to streamline operations and enhance profitability. Employees currently dedicated to the food delivery business will transition to the continuing physical goods business in the affected countries.
While Jumia's food delivery business represented approximately 11 percent of its gross merchandise value for the nine months ended September 30, it has not been profitable since its inception. However, Jumia has been making strides in reducing losses, with a 67 percent drop reported in the third quarter of September.
The company reported an adjusted EBITDA loss of $15 million last month, marking the lowest since its initial public offering in 2019. This reduction outperformed previous quarters, reflecting a strategic streamlining initiative that included recalibrating the product and service portfolio. This initiative involved suspending first-party grocery offerings, logistics-as-a-service, and food delivery operations in specific markets where economic viability was deemed unsustainable.
Jumia's commitment to profitable growth is evident in these moves, indicating a strategic shift towards a more sustainable and lucrative business model.
As the company sets its sights on the e-commerce and fintech frontiers, shareholders eagerly anticipate the promised growth and profitability in the coming quarters.
