Jumia, a pan-African e-commerce platform, has announced the layoff of over 900 employees in order to reduce its operating costs.
In its recently released 2022 fourth quarter (Q4) financial report, the company stated that the cut represents 20% 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 made the decision to discontinue a number of activities in order to focus on core areas of the business with attractive returns on investments and clear ecosystem benefits.
The organization also stated that it is following through on its strategy to reduce losses and accelerate progress toward profitability, with a particular emphasis on improved cost discipline and accelerated monetisation.
“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 a 22 percent increase in gross profit year over year, as well as an all-time high in marketplace revenue of $41.2 million.
In response to the news, Jumia CEO Francis Dufay stated that 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.”
