Afrigather In its continued cost-cutting spree, e-commerce firm Jumia has shut down its meals supply enterprise in Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria.
Jumia, an African e-commerce firm, will shut down Jumia Meals, its meals supply enterprise, by the tip of 2023 in a brand new spherical of cost-cutting.
The unprofitable e-commerce firm, which misplaced $19 million in Q3 2023, has modified its strategic focus and doubled down on its ambition to succeed in profitability because it named Francis Dufay as CEO final 12 months.
Dufay informed Reuters that the meals supply phase has difficult unit economics and massive losses. He additionally blamed the closure of Jumia Meals growing competitors and price of operations.
“There’s downward strain on the commissions that we make and upward strain on advertising and marketing prices as a result of everyone seems to be preventing for purchasers.” He additionally described the phase as not providing the identical “upside potential” as the corporate’s bodily items enterprise
Dufay is selecting pragmatism
“Our priorities want to vary,” Dufay informed TechCabal in September.
Since then, Jumia has laid off 900, or 20%, of its staff and moved 60% of its high administration staff from the United Arab Emirates to the respective African nations to save lots of prices. It has additionally drastically lower its promoting and advertising and marketing spend.
Closing Jumia Meals, an unprofitable enterprise phase since its launch in 2013, is one other push to concentrate on enterprise segments that may drive profitability.
Whereas Jumia started specializing in small-ticket on a regular basis gadgets in 2021, Dufay has modified that, and he has additionally begun a push into smaller Nigerian cities.
Jumia Meals’s struggles
By the tip of Q3 of 2023, Jumia Meals has a gross sale of $63.9 million—11% of Jumia’s total gross merchandise worth. Nonetheless, the meals supply enterprise has by no means been worthwhile in any of the 11 North, East and West African nations it operates in.
The shutdown of the meals supply arm has been years within the making. Earlier than this entire shutdown, the e-commerce big discontinued meals supply in Egypt, Ghana, and Senegal “the place this exercise was sub-scale, leading to unit economics dilution with restricted client lifetime worth upside.” In Jumia’s press launch in regards to the shutdown, Antoine Maillet-Mezeray, EVP of Finance & Operations of Jumia, stated, “Meals supply stays a enterprise with very difficult economics, in Africa and the world over, and we wish to focus our efforts on our bodily items e-commerce enterprise within the eleven markets the place we function.”
The corporate, with a liquidity place of $166.3 million per its Q2 2023 reviews, is chopping off the meals supply phase to allocate its assets to extra promising segments like its core bodily items supply and cost service, Jumia Pay.
