Faith Nyasuguta
Jumia, the Pan-African e-commerce giant, is set to cease its food delivery service, Jumia Foods, across Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria by the end of the month.
The move is part of a strategic shift to concentrate on the growth potential of its physical goods delivery and fintech offering, JumiaPay, in these markets.
Francis Dufay, CEO of Jumia, emphasized the decision’s rationale, stating, “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 make 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.”
Following leadership changes earlier this year, with Dufay taking the helm in February, Jumia has been implementing cost-cutting measures. This includes a 20% reduction in the workforce and a directive for certain top management officers to operate from Africa instead of the UAE.
Dufay’s strategic vision aims to accelerate Jumia’s path to profitability. In the fourth quarter of 2022, the company initiated actions to strengthen its fundamentals.
While the results only partially reflect these actions, early signs of success are apparent, and Jumia anticipates a substantial reduction in Adjusted EBITDA loss from $207 million in FY2022 to $100-120 million in FY2023.
Massimiliano Spalazzi, CEO of Jumia Nigeria, underscores the connection between profitability, boosting Gross Merchandise Value (GMV), and increasing sales or customers.
Jumia, however, faced challenges as its active customer base reportedly declined by one million in the second quarter of the year due to a difficult operating environment marked by record levels of inflation affecting consumer spending and sellers’ ability to source goods.
As Jumia Foods concludes its operations, other food delivery startups like Glovo and Chowdeck are expanding, illustrating the dynamic landscape of the African food delivery market.
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