Africa’s E-commerce platform giant Jumia is set to end its food delivery services, Jumia Food in seven countries in the African continent.
In a statement, Jumia Technologies Ag stated that it will focus on its core physical goods business and JumiaPay business in all of its countries of operation.
Jumia Food delivery operations in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast will shut down by the end of December 2023.
Jumia has attributed the move to the unsuitability of its food delivery business to the current operating environment and macroeconomic conditions in its markets of operation.
Moreover, the firm has noted that the decision aligns with its strategy to optimize its capital and resource allocation and continue its path to profitability, as Jumia Food Delivery has not been profitable since its inception.
“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,” said Francis Dufay, Chief Executive Officer (CEO) of Jumia.
“In the current context, it means leaving the business line, which we believe does not offer the same upside potential – food delivery,” added Dufay.
For the nine months to September 30, 2023, food delivery represented around 11 percent of Jumia’s Gross Merchandise Value (GMV).
According to the e-commerce firm, Gross Merchandise Value (GMV) corresponds to the total value of orders for products and services, including shipping fees, value-added tax, and before deductions of any discounts or vouchers, irrespective of cancellations or returns for the relevant period.
“Food delivery remains a business with very challenging economics, in Africa and across the world, and we want to focus our efforts on our physical goods e-commerce business, in the eleven markets where we operate,” said Antoine Maillet-Mezeray, EVP Finance & Operations of Jumia.
“This is a matter of prioritization of opportunities, and expected return on investment,” added Mezeray.
Jumia has indicated that the employees currently dedicated to the food delivery business will transition to the continuing physical goods business in the 11 countries where it operates.