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Jumia Technologies, the African e-commerce company, has announced its decision to discontinue its food delivery operations in all seven countries where the unit is active by the end of the year. This strategic move is part of Jumia’s broader initiative to enhance its focus on the growth of its core online retail business as it actively seeks to trim costs and achieve profitability. The cost-cutting measures include reducing headcount, exiting everyday grocery items, and scaling back delivery services unrelated to its e-commerce operations.
Jumia emphasizes that the closure of Jumia Food aligns with its strategy to optimize capital and resource allocation, acknowledging that the current operating environment and macroeconomic conditions are not conducive for the food delivery segment. Jumia Food, which constitutes approximately 11% of Jumia’s general merchandise value for the nine months ending September 30, has not turned a profit since its inception.
CEO Francis Dufay highlighted the challenging economics of the food delivery market globally and in Africa, citing intense competition and high costs. He explained, “The economics are tough in this market because the costs are very high and there is plenty of competition, so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers.”
Jumia currently operates its food delivery services in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast. As part of the transition, Jumia plans to reallocate some employees from the food delivery business to its core e-commerce operations in these countries. The move comes as Jumia has been actively reducing its losses, with recent figures indicating a 67% reduction in third-quarter losses compared to the previous year.
