Pan-African e-commerce giant, Jumia Technologies will end the running of its food delivery arm this month in Nigeria and six other markets where it has footprints on the continent.
The decision is part of a cost-cutting push to refocus the company on expanding its online retail business. Jumia Foods, accounting for 11 per cent of Jumia’s gross merchandise value – the value of goods sold via its platform – in nine months from January to September never recorded a profit since it commenced business.
In addition to Nigeria, it plans to shut down operations in Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast. Jumia CEO, Francis Dufay, said the company will now refocus on its core physical goods business and payment platform.
He stated: “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.”
The company further explained that a number of employees at Jumia Food will transition to the core physical goods segment Their exit is coming after Bolt Food, another major player, also announced its withdrawal from Nigeria and South Africa, highlighting harsh realities of Africa’s food delivery landscape.
Founded in 2012 in Lagos, Jumia attained unicorn status four years after when it became the first tech start-up on the continent to hit the $1 billion valuation mark and even surpass it.
It would go on to be listed on the New York Stock Exchange (NYSE) in 2019, the first African-focused tech company to reach the milestone. An initial public offering conducted by the firm on NYSE in 2019 generated $196 million in net proceeds.The company has been paring down losses, the latest being in the third quarter during which it reduced losses by 67 per cent compared to a year ago.
