Jumia has said that by the end of December 2023, it would no longer be operating its food delivery service, Jumia Food, in a number of countries.
Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria are among the countries impacted.
The choice is in line with the company’s objective to strengthen its primary physical goods business and improve the Jumia Pay platform across all 11 of its operational nations.
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“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,” said Francis Dufay, CEO of Jumia, explaining the reasoning behind the move.
To seize this opportunity, we need to make the appropriate choice and devote all of our managerial, team, and financial resources to it.
It entails quitting the food delivery industry, which, in our opinion, does not have the same upside potential in the current scenario.
Even though Jumia Food made up 11% of Jumia’s Gross Merchandise Value (GMV) in the first three quarters of 2023, the company has never been profitable.
11% of the $581 million GMV during this time period came from the $64 million total value of food sold on Jumia Food.
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Despite being significant, this amount does not always equate to earnings or profits.
The trajectory of Jumia Food has been characterised by ups and downs.
The platform grew by an impressive 82% in 2021 compared to the previous year, demonstrating the company’s leadership in the meal delivery industry.
But 2023 saw a dip, as seen by a drop in orders and quarterly active consumers.
This change was made on purpose to increase profitability by focusing on marketable areas and lowering customer incentives.
Employees that were committed to Jumia Food will change when the company makes a turn, and some may even be integrated into the main physical goods division.
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The shift suggests that layoffs may occur as the business realigns itself for long-term profitability and growth.
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