Jumia has announced the discontinuation of its food delivery service, Jumia Food, across multiple countries by the close of December 2023.
The affected nations include Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria.
The decision aligns with the company’s commitment to bolster its core physical goods business and elevate the company’s Pay platform, encompassing its 11 operational countries.
The company’s Chief Executive Officer, Francis Dufay, articulated the rationale behind the decision, 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.”
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Despite contributing 11% to Jumia’s Gross Merchandise Value (GMV) in the first three quarters of 2023, Jumia Food struggled to achieve profitability since its inception.
The total value of food sold on Jumia Food during this period amounted to $64 million, accounting for 11% of the overall $581 million GMV.
This figure, though substantial, does not necessarily translate into revenue or profitability.
Jumia Food’s journey has been marked by fluctuating fortunes.
In 2021, the platform experienced a notable 82% year-over-year growth, showcasing the company’s dominance in the food delivery sector.
However, 2023 witnessed a downturn, characterized by a decline in Quarterly Active Consumers and Orders.
This shift was a deliberate move to enhance profitability by concentrating on viable categories and reducing consumer incentives.
As the company pivots, employees previously dedicated to Jumia Food will undergo a transition, with some potentially being absorbed into the core physical goods segment.
The transition hints at the likelihood of layoffs as the company repositions itself for sustained growth and profitability.