Jumia Food to exit Nigeria and six other African countries by end of 2023

Jumia, the prominent e-commerce entity in Africa, has unveiled plans to close its food delivery arm, Jumia Food, in seven countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria, by the end of December 2023.

The company is poised to redirect its efforts towards strengthening its core online retail business and the expansion of the Jumia Pay platform across its operational landscape, which spans 11 countries.

Francis Dufay, Jumia’s Chief Executive Officer, said, “The more we focus on our physical goods business, the more we realise 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.

Francis Dufay, Jumia’s Chief Executive Officer

This strategic shift comes amid challenges faced by Jumia Food, which contributed 11% of Jumia’s gross merchandise value (GMV) between January and September 2023, yet has grappled with profitability issues since its inception.

While Jumia Food saw significant growth in 2021, with an 82% year-over-year surge, 2023 witnessed a downturn in quarterly active consumers and orders, compelling Jumia to reevaluate its operational priorities.

Jumia is aggressively cutting costs to turn profitable, including headcount reductions, exiting everyday grocery items, and reducing delivery services not related to its e-commerce business. Consequently, the closure of Jumia Food will lead to several employees transitioning to the core retail segment, signalling potential layoffs.

Read also: Jumia records EBITDA loss of $15 million in Q3, the lowest since its IPO in 2019

Jumia Food joins growing food delivery market trend

This move by Jumia aligns with a broader trend, as Bolt Food, a significant player in the African food delivery market, also announced its withdrawal from Nigeria and South Africa, citing economic downturns, high inflation, and cutthroat competition as primary reasons.

However, amidst these closures, Barcelona-based startup Glovo is deepening its roots in Sub-Saharan Africa through strategic partnerships with renowned restaurant chains, even though it continually faces profitability hurdles despite operating across 25 markets with $1 billion in funding.

Meanwhile, Chowdeck, another player in Nigeria’s food delivery arena, has recently marked a milestone by delivering over ₦‎1 billion ($1.2 million) worth of food in a month, emphasising its growth in the market.

With a compound annual growth rate (CAGR) of 12.2% from 2023 to 2028, the African food delivery market offers both opportunities and challenges. Although partnerships and technology integration present growth opportunities, reaching profitability is still difficult.

With Jumia Food’s exit and other exits, the industry is becoming more complex, but as new players like Glovo and Chowdeck make their way through it, the possibilities for a different course in this changing industry are highlighted.

Jumia’s strategic decision aligns with its quest for profitability, echoed in cost-cutting measures, workforce reductions, and a pivot to concentrate on viable segments within its e-commerce sphere.

This recalibration by Jumia, the first tech startup with an emphasis on Africa to be listed on the New York Stock Exchange, highlights how the dynamics of the African tech ecosystem are changing and how sustainable growth is still being pursued.

Just recently, Jumia Nigeria CEO Massimiliano Spalazzi stepped down from his role. The departure was revealed by the company in a media parley held in Lagos. Massimiliano took over as CEO in January 2020 just before the pandemic and was able to guide the company through the torrid times.

Read also: Massimiliano Spalazzi steps down as Jumia Nigeria CEO after 4 years, to be replaced by Sunil Natraj