Jumia has announced its decision to close the food delivery service Jumia Food by end of December 2023 in a move to optimize its capital and resource allocation to increase profitability.
Jumia Food will be shut down across several African countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria, by the end of December 2023.
Through a statement, the Pan African Ecommerce company noted that its food delivery business is not aligned with the current operational landscape and prevailing macroeconomic conditions in its market.
“The food delivery business is not suitable for the current operating environment and macroeconomic conditions in its market. The company will close its food delivery operations in all markets by the end of December 2023,” read the statement.
Fate of Jumia Foods Employees
Meanwhile, with the food delivery services shutting down, Jumia Food employees across several countries including Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast will now shift to the continuing physical goods business.
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Jumia Chief Executive Officer Francis Dufay stated that the food platform is a segment with very challenging economics and big losses.
“It’s a segment that’s very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa,” said Dufay.
In addition, the Jumia CEO highlighted a significance profit in the physical goods business citing an interest in investing more in the physical business.
“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,” said the CEO.
Similarly, he noted that the management plans for the transition was underway for an effective capital resource supply.
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“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,” the Jumia CEO added.
Notably, according to reports by the E-commerce chain, Jumia Food represents about 11% of Jumia’s general merchandise value for the nine months ended on September 30, 2023, and has not been profitable since its inception.
Furthermore, the statement revealed that Jumia Foods has not achieved profitability since its inception.
