Jumia Technologies AG (JMIA), a leading e-commerce platform in Africa, has announced its decision to discontinue unprofitable Jumia Food, its food delivery service.
This move is part of a broader initiative to refocus on its core e-commerce and JumiaPay operations across its markets.
The closure, scheduled for the end of December 2023, comes after a comprehensive strategic review revealed that Jumia Food was not aligning with the current operating environment and macroeconomic conditions.
Jumia Food accounts for approximately 11% of Jumia’s Gross Merchandise Value (GMV) for the nine months ending September 30, 2023, the food delivery segment has struggled to achieve profitability since its inception.
What they are saying
Francis Dufay, CEO of Jumia, emphasized the potential in their physical goods business, 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 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.”
Echoing this sentiment, Antoine Maillet-Mezeray, EVP Finance & Operations of Jumia, pointed out the challenging economics of the food delivery industry both in Africa and globally.
- “Food delivery remains a business with very challenging economics, in Africa and across the world, and we want to focus our efforts on our physical goods e-commerce business, in the eleven markets where we operate. This is a matter of prioritization of opportunities, and expected return on investment,” he said.
Jumia Food is currently operational in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast. The company plans to transition several employees from the food delivery segment to its ongoing physical goods business in these countries.
This strategic move is indicative of Jumia’s commitment to profitable growth and its focus on the core physical goods business across its 11 markets of operation.
The company’s food delivery business has not been profitable since the inception of the business.
- According to the company, JumiaPay Transactions reached 3.2 million in the third quarter of 2023, up 8% year-over-year.
- About 44.7% of Orders placed on the Jumia platform in the third quarter of 2023 were completed using JumiaPay, compared to 31.9% in the third quarter of 2022.
- This increase was mostly attributable to an increase in the percentage of orders on our physical goods and food delivery platforms completed using JumiaPay.
Jumia’s decision to close its food delivery business reflects a strategic prioritization in an increasingly competitive e-commerce landscape, with a clear focus on areas with the highest growth potential and profitability.
