Jumia Shuts Down Food Delivery Business

African e-commerce giant Jumia Technologies has announced its decision to shut down its food delivery operations across all seven countries where the unit is currently active by the year-end.

The move is part of Jumia’s aggressive cost-cutting measures aimed at achieving profitability. Strategies include reducing staff numbers, discontinuing everyday grocery offerings, and scaling back delivery services unrelated to its core e-commerce business.

Jumia clarified that the closure aligns with its broader strategy to optimize capital and resources, emphasizing a renewed focus on enhancing its core online retail business. The decision to exit the food delivery segment is attributed to its unsuitability for the current operating environment and prevailing macroeconomic conditions.

Jumia Food, the food delivery arm, accounts for approximately 11% of Jumia’s overall merchandise value for the nine months ending September 30. Despite its significant contribution, the service has struggled to turn a profit since its inception.

Jumia’s CEO, Francis Dufay, highlighted the inherent challenges in the food delivery market, characterized by intense global competition, high operational costs, and substantial losses.

Dufay emphasized the difficult economics of the segment, pointing to the fierce competition that exerts downward pressure on commissions and escalates marketing costs as companies vie for customers.

The affected countries where Jumia will cease food delivery operations include Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast. In a bid to reallocate resources, the company plans to transition several employees currently dedicated to the food delivery business to its core e-commerce operations in these regions.

Jumia, which made history as the first Africa-focused tech start-up to list on the New York Stock Exchange, has been actively reducing its losses. The latest financial figures indicate a substantial 67% reduction in third-quarter losses compared to the same period in the previous year.

These strategic moves underscore Jumia’s commitment to achieving profitability and sustaining its position as a major player in the African e-commerce landscape.