African e-commerce firm Jumia Technologies has announced it will close its food delivery business in all seven countries in which it operates by the end of the year to focus on growing its core online retail business.
“Following a strategic review of Jumia Food, the Company determined that its food delivery business is not suitable to the current operating environment and macroeconomic conditions in its market, and will close its food delivery operations in all markets by the end of December 2023. This decision is in line with the company’s strategy to optimize its capital and resource allocation and to continue its path to profitability,” the company said in a statement on Wednesday.
Jumia currently operates food delivery business in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast.
However according to the company, the food delivery business represents approximately 11% of Jumia’s gross merchandise volume for the nine months ended September 30, 2023 and has not been profitable since inception of the business.
“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. This is a matter of prioritization of opportunities, and expected return on investment,” Antoine Maillet Mezeray, EVP Finance & Operations of Jumia said.
The Jumia CEO, Francis Dufay said, “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, if means leaving a business line, which we believe does not offer the same upside potential – food delivery.”
The development means a number of people who have been employed to deliver food to customers will lose jobs but also the restaurants where the food was being got will have a reduction in the volume of sales.
.
