Jumia to shut down food delivery service across seven markets
Jumia, a prominent e-commerce player in Africa, has discontinued its unprofitable food delivery service, Jumia Food, in seven markets, including Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast. This decision is part of a broader strategic initiative to refocus on the core operations of e-commerce and JumiaPay across its markets.
The closure of Jumia Food is scheduled for the end of December 2023. The decision stems from a comprehensive strategic review, revealing that Jumia Food was not aligning with the current operating environment and macroeconomic conditions.
Despite accounting for around 11% of Jumia's Gross Merchandise Value (GMV) for the nine months ending September 30, 2023, the food delivery segment has struggled to achieve profitability since its inception. This move reflects Jumia's commitment to optimizing its business operations and concentrating on areas that align more effectively with its overall strategic goals.
Key Takeaways
Jumia's decision to discontinue its food delivery business aligns with a broader industry trend, echoing the recent exit of another food delivery competitor, Bolt Food, from Nigeria and South Africa. Both exits are influenced by prevailing macroeconomic challenges, high inflation, and increased competition within the food delivery sector across the continent. Notable competitors in this space include Chowdeck, Glovo, and Uber Eats. Jumia displayed warning signs in Q4 2022 when the decade-old company initiated several cost-cutting measures. These included discontinuing food delivery operations in Egypt, Ghana, and Senegal; suspending logistics-as-a-service in all markets except Nigeria, Morocco, and Ivory Coast; ceasing Jumia Prime across all its markets; and scaling back first-party groceries in Algeria, Ghana, Senegal, and Tunisia. At the time, Jumia stated that these actions accounted for less than 1% of the group's gross merchandise volume (GMV) in the first nine months of 2022 and 2% of the group's adjusted EBITDA loss.
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