Jumia to shut down food delivery operations, says ‘it’s unprofitable’

Jumia, a pan-African e-commerce platform, says it will shut down its food delivery business, Jumia Food, by the end of December 2023.

Jumia said the decision was necessary after a thorough review revealed that the current market conditions and economic climate in its operating countries make the food delivery business unsustainable.

Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast are the seven countries that will be affected, the company said in a statement on Wednesday.

The firm said employees under Jumia Food will transition to support the thriving physical goods operations in the affected countries.

“Following a strategic review of Jumia Food, the Company determined that its food delivery business is not suitable to the current operating environment and macroeconomic conditions in its market, and will close its food delivery operations in all markets by the end of December 2023,” the statement reads. 

“This decision is in line with the Company’s strategy to optimise its capital and resource allocation and to continue its path to profitability.

“The food delivery business represents approximately 11% of Jumia’s Gross Merchandise Value (GMV) for the nine months ended September 30, 2023, and has not been profitable since inception of the business.”

Francis Dufay, chief executive officer (CEO) of Jumia, said the more the firm focuses on the physical goods business, the more the realisation that there is huge potential for the company 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,” Dufay said.

“In the current context, it means leaving a business line, which we believe does not offer the same upside potential – food delivery.”

Also, Antoine Maillet-Mezeray, the firm’s executive vice-president (EVP) of finance and operations, said food delivery remains a business with very challenging economics, in Africa and across the world.

He said Jumia’s intentions to focus efforts on its physical goods e-commerce business in the eleven markets it operates, is a matter of prioritisation.

“This is a matter of prioritisation of opportunities, and expected return on investment,” the vice-president said.

In the third quarter (Q3) of 2023, the e-commerce platform recorded growth in the GMV for physical goods in African markets and contributed 49 percent of the company’s overall value.

Jumia’s decision comes 10 months after the firm announced the discontinuation of its food delivery operations in Egypt, Ghana and Senegal.

The firm had recorded a 41 percent year-over-year loss of $49.8 million in the fourth quarter (Q4) of 2022.

The development followed the sack of over 900 workers to reduce its cost of operation.

On November 9, Bolt Food also ceased operations in Nigeria, citing the need to streamline its resources and maximise overall efficiency.