The e-commerce giant Jumia Technologies’ meal delivery service, Jumia meal, has declared that it would be closing its doors in Nigeria this December.
By the end of the year, Jumia plans to shut down its food delivery services in Nigeria and the other six nations where it conducts business, Reuters reports, in order to concentrate on expanding its main online retail operation.
Jumia Technologies announced a 67% decrease in losses from a year ago in its third-quarter earnings, however a decline is still anticipated. It attributed the decline in losses to cost-cutting measures, which it is actively pursuing to become profitable.
Reducing manpower, getting rid of regular food goods, and cutting back on delivery services unrelated to its e-commerce company are a few of the cost-saving strategies. The current decision to shut down Jumia Foods is seen in a similar light.
In a statement, it was revealed that the decision is in line with Jumia’s “strategy to optimise its capital and resource allocation and to continue its path to profitability.”
Jumia Food represents about 11 per cent of Jumia’s general merchandise value for the nine months ended September 30 and has not been profitable since its inception.
“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. The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers,” Chief Executive Officer Francis Dufay said.
Jumia Food currently operates in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast.
The company said that some of its employees currently dedicated to the food delivery business will transition to the core e-commerce business in these countries.
This followed the recently announced exit of Bolt Food, the food delivery service of the popular ride-hailing company, Bolt, this month after only two years of operation.
Bolt said that after evaluating its performance, it decided to align with its broader strategy of focusing on its more profitable segments. At first, it said that it was only exiting Nigeria but it later confirmed that it would shut down its operation in South Africa as well.
