Jumia has announced it will be shutting down its food delivery operations in Nigeria as part of its plans to restrategise its operations in the continent.
According to the company, it will shut down operations in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast by the end of the year to “focus on growing its core online retail business”.
The announcement comes amid the recent mass exit of foreign companies from Nigeria.
According to Reuters, Jumia has set its sights on a more profitable year ahead and is aggressively cutting costs by reducing headcount, shutting down its everyday grocery items and reducing delivery services which is not related to its e-commerce business.
The company’s Chief Executive Officer, Francis Dufay noted the food segment was “very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa,”
“The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers.” He added.
Jumia Food recorded a gross sale of $63.9 million by Q3 of 2023 which was 11% of Jumia’s overall gross merchandise. The food section has struggled to achieve profitability since its inception in 2013 despite accounting for 11% of Jumia’s Gross Merchandise Value (GMV) in the first nine months of 2023.
The company also witnessed a marked decline in Quarterly Active Consumers and Orders in 2023, a development which has led to its current decision to focus on more viable categories.
Jumia has, however, said most of its employees in the food delivery section in the affected countries would be moved to the core e-commerce business.