Jumia sacks 900 workers to reduce cost of operation

Jumia, a pan-African e-commerce platform, says it laid off over 900 workers in order to reduce its cost of operation.

The company, in its 2022 fourth quarter (Q4) financial report released recently, said the cut represents 20 percent of its general workforce.

Jumia said it experienced an operating loss of 41 percent year-over-year, reaching $49.8 million in Q4 of 2022; forcing the company to suspend its “logistics-as-a-service offering in a number of geographies”.

The e-commerce firm also discontinued its food delivery operations in Egypt, Ghana and Senegal where “this activity was
sub-scale, resulting in unit economics dilution with limited consumer lifetime value upside”.

Jumia explained that it decided to cease a number of activities as part of its goal of focusing on core areas of the business with attractive returns on investments and clear ecosystem benefits.

The organisation added that it is delivering on its strategy to reduce losses and accelerate progress toward profitability with a major focus on enhanced cost discipline as well as accelerating monetisation.

“Cost reduction is another key priority of our strategy. We are working across the full cost structure to drive efficiencies,” the report reads.

“In the fourth quarter of 2022, we undertook significant headcount reductions, resulting in over 900 position terminations, corresponding to a 20 percent headcount reduction.

“We have streamlined our organisational structure, creating leaner, more effective teams fully committed to the execution of our strategy.

“As part of our streamlining efforts, we have significantly reduced our presence in Dubai where certain management functions were located, reducing headcount by over 60 percent. Most of the remaining staff are being relocated to our African offices, closer to our consumers, sellers, and operations.

“We expect these headcount reductions to allow us to save over 30 percent in monthly staff costs starting from March 2023, as compared to the October 2022 staff cost baseline. The implementation of these organisational changes resulted in $3.7 million in one-off restructuring costs booked in the fourth quarter of 2022.”

The company also announced gross profit growth of up to 22 percent year-over-year, stating that marketplace revenue reached an all-time high of $41.2 million.

Commenting on the development, Francis Dufay, chief executive officer (CEO), Jumia, said efforts are being made to further strengthen their fundamentals and accelerate profits.

“While the fourth quarter results only reflect a fraction of the actions we are taking, we are seeing early signs of success and remain focused on execution,” Dufay said.

“In light of these encouraging signs, we expect a sharp reduction in adjusted EBITDA loss from $207 million in FY2022 down to $100-120 million in FY2023.

“We remain more-than-ever confident about the growth opportunity across our markets and are making fundamental improvements to our consumer value proposition which will help us drive sustainable long-term growth.”