Free Access To Email Exclusive ContentGet notified and be the first to know when new & hot content drops
HomeBusiness NewsJumia Announces Strategic Pivot, Shuts Down Jumia Food to Bolster Core Business

Jumia Announces Strategic Pivot, Shuts Down Jumia Food to Bolster Core Business

Date:

In a bold and strategic maneuver, Jumia, a leading e-commerce platform in Africa, has announced the imminent closure of its food delivery service, Jumia Food, across multiple operating countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria. This decision, set to take effect by the end of December 2023, marks a pivotal shift in Jumia’s business focus, redirecting its attention to the core physical goods business and the further development of the Jumia Pay platform across its 11-country operation.

Francis Dufay, Chief Executive Officer of Jumia, explained the rationale behind the 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 constituting 11% of Jumia’s Gross Merchandise Value (GMV) in the first nine months of 2023, Jumia Food has grappled with profitability challenges since its inception. The platform recorded a GMV of $64 million between January and September 2023, showcasing a substantial scale of operation. However, this scale did not necessarily translate into significant revenue or profitability, underscoring the complexities of the food delivery sector.

Jumia Food’s journey has been characterized by fluctuating fortunes. In 2021, the platform experienced an impressive 82% year-over-year growth, showcasing its strong foothold in the food delivery segment. However, in 2023, the company witnessed a notable decline in Quarterly Active Consumers and Orders, a strategic move aimed at enhancing profitability by focusing on viable categories and reducing consumer incentives.

See also  Nigeria's President Tinubu Unifies Exchange Rate and Lowers Interest Rates: A New Economic Direction

Addressing the fate of employees associated with Jumia Food, the company mentioned that some would transition to the core physical goods segment, while others might face potential layoffs as a consequence of the business line closure.

Simultaneously, Bolt Food, another major player in the African food delivery market, declared its exit from Nigeria and South Africa in December 2023. The departure of Bolt Food, despite its expansion efforts in major Nigerian cities like Lagos, is attributed to economic downturns, high inflation, and stiff competition from well-entrenched rivals such as Jumia Food, Gokada, and Uber Eats.

While Jumia and Bolt Food reevaluate their positions in the food delivery landscape, other players are making strategic moves. Glovo, for instance, has been deepening its presence in Sub-Saharan Africa through key partnerships with restaurant chains like Chicken Republic and Shoprite. On the other hand, Chowdeck, a significant player in Nigeria’s food delivery market, has showcased impressive growth, recently celebrating a milestone of delivering food worth over ₦1 billion  in a single month. Chowdeck’s recent partnership with Shoprite for grocery delivery marks a landmark moment in its expansion strategy.

However, caution is warranted when interpreting reported success in the food delivery sector. Jumia’s 9-month figure of $64 million, equivalent to ₦5.7 billion monthly, highlights the challenge of achieving profitability. This challenge is not unique to Jumia but reflective of broader trends in the global food delivery industry.

Glovo, having secured $1 billion in funding, appears to be navigating this landscape differently by emphasizing early revenue diversification and operating in 25 markets. Chowdeck, citing a capital-efficient model, reported organic growth to $1.2 million monthly GMV.

See also  Maritime Anti-Corruption Network (MACN) Urges Data-Driven Compliance for Efficient Port Operations

The African food delivery market, projected to grow at a CAGR of 12.2% from 2023 to 2028, reaching $1.7 billion, presents a landscape of both opportunities and challenges. While partnerships and technological integration offer growth avenues, the path to profitability remains complex. The experiences of Jumia Food and Bolt Food stand in contrast with the expansion of Glovo and Chowdeck, highlighting the diverse challenges and opportunities in Africa’s evolving food delivery landscape.

 

Free Access To Email Exclusive ContentGet notified and be the first to know when new & hot content drops

Trending

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Recommended for you