In order to concentrate on its primary physical goods business and JumiaPay, Jumia Technologies has announced that it will close its meal delivery company, Jumia meal.
All seven of Jumia’s operating markets—Uganda, Nigeria, Kenya, Morocco, Tunisia, Algeria, and the Ivory Coast—will see the closure of Jumia Food.
The company will close by the end of this month, according to Jumia, who stated that they have “determined that it is not suitable to the current operating environment and macroeconomic conditions.”
The more we concentrate on our physical goods sector, the more we see Jumia has enormous growth potential and a clear route to profitability. To seize this opportunity, we need to make the appropriate choice and devote all of our managerial, team, and financial resources to it. The Jumia Group CEO, Mr Francis Dufay, stated in a statement that “in the current context, it means leaving a business line, which we believe does not offer the same upside potential – food delivery.”
The executive vice president of finance and operations at Jumia, Mr. Antoine Maillet-Mezeray, stated that the food delivery industry still faces extremely difficult economic conditions both in Africa and globally, adding that “we want to focus our efforts on our physical goods e-commerce business, in the [11] markets where we operate.” This has to do with how opportunities are prioritised and the anticipated return on investment.”
Jumia further disclosed that workers presently committed to the food delivery service will move to the ongoing physical goods business in the seven nations, citing this as a strategic move that exemplifies the company’s dedication to profitable expansion.
Since its founding, the food delivery service has not turned a profit and accounted for about 11% of Jumia’s gross merchandise value for the nine months that ended on September 30.
Jumia has been cutting its losses; according to the company’s most recent financial reports, they decreased by 67% in the third quarter ending in September.
Jumia posted an adjusted EBITDA loss of $15 million last month, the lowest since the company’s 2019 IPO.
According to the data, the fall was higher than the $27 million in the first quarter, the $19.3 million in the second, and the significant $32 million drop from the third quarter of 2022. This represents a 67 percent year-over-year decline and a 70 percent drop when adjusted for constant currency.
As a deliberate result of the company’s strategic streamlining initiatives, which were launched in the last quarter of 2022, Jumia also reported a notable decline in active customers and orders relative to the prior year. These initiatives included the decision to recalibrate the company’s product and service portfolio by suspending its first-party grocery offering, logistics-as-a-service, and food delivery operations in certain crucial markets.
