E-commerce giant Jumia has made a strategic decision to close down its food delivery service, Jumia Food, in all operating countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria, with the cessation scheduled for the end of December 2023. This move is part of a concerted effort to redirect the company’s focus towards its core physical goods business and the Jumia Pay platform across the 11 countries where it operates.
Francis Dufay, Chief Executive Officer of Jumia, expressed the company’s rationale behind this decision, stating, “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, it means leaving a business line, which we believe does not offer the same upside potential – food delivery.”
Despite accounting for 11% of Jumia’s Gross Merchandise Value (GMV) in the first nine months of 2023, Jumia Food has struggled to achieve profitability since its inception. The total value of food sold on Jumia Food during this period amounted to $64 million, representing 11% of the overall $581 million GMV. However, this substantial scale does not necessarily translate into revenue or profitability.
Jumia Food witnessed a remarkable 82% year-over-year growth in 2021, showcasing its dominance in the food delivery segment. However, in 2023, the company experienced a notable decline in Quarterly Active Consumers and Orders. This shift was a deliberate move towards profitability, with Jumia concentrating on viable product categories and reducing consumer incentives.
Regarding the fate of employees dedicated to Jumia Food, the company has indicated that some will transition to the core physical goods segment, while others may face the possibility of layoffs. The restructuring reflects Jumia’s commitment to optimizing its operations for sustained growth and profitability in its primary business areas.
