Jumia, The pan-African e-commerce platform, has disclosed plans to close its food delivery service, Jumia Food, by the end of December 2023.
The decision stems from a comprehensive review that identified current market conditions and economic challenges in the operating countries as making the food delivery venture unsustainable. The affected nations include Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast, as confirmed in a statement released by the company on Wednesday.
In accordance with its strategy to optimize capital and resource allocation and pursue profitability, Jumia will redirect employees from the food delivery segment to support the thriving physical goods operations in the impacted countries. The food delivery business constitutes approximately 11% of Jumia’s Gross Merchandise Value (GMV) for the nine months ending September 30, 2023, and has been unprofitable since its inception.
Francis Dufay, Jumia’s CEO, emphasized that focusing on the physical goods business reveals significant growth potential and a path to profitability. He stated that the decision to exit the food delivery sector aligns with the company’s commitment to making strategic choices.
Antoine Maillet-Mezeray, Jumia’s EVP of Finance and Operations, highlighted the challenging economic dynamics of the food delivery industry in Africa and globally. Prioritizing opportunities and expected return on investment led Jumia to concentrate efforts on its physical goods e-commerce business across the eleven markets it operates.
In Q3 2023, Jumia experienced growth in GMV for physical goods in African markets, contributing 49% to the company’s overall value. This decision follows Jumia’s earlier discontinuation of food delivery operations in Egypt, Ghana, and Senegal, 10 months ago, and comes amid the backdrop of a 41% year-over-year loss of $49.8 million in Q4 2022.
The move aligns with a broader trend in the industry, as Bolt Food also ceased operations in Nigeria on November 9, citing the need to streamline resources and enhance overall efficiency.
