Barely eight days Procter & Gamble, a multinational consumer company, announced closing its manufacturing operation, Jumia is also on the verge of shutting down its food delivery service, Jumia Food, in Nigeria.
The e-commerce giant also planned to exit from Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria, by the end of December 2023.
The company, according to Techpoint, will now focus on its core physical goods business and the Jumia Pay platform across its 11 countries of operations.
“The more we focus on our physical goods business, the more we realise that there is huge potential for Jumia 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. In the current context, it means leaving a business line, which we believe does not offer the same upside potential – food delivery,” said Francis Dufay, Chief Executive Officer of Jumia.
Despite constituting 11% of Jumia’s Gross Merchandise Value (GMV) in the first nine months of 2023, Jumia Food has struggled to achieve profitability since its inception. This means the total value of food sold on Jumia Food stood at $64 million (11% of $581 million) between January and September 2023. An indicator of the massive scale Jumia Food was operating at, but it doesn’t necessarily amount to revenue or profitability.
Since its inception, Jumia Food experienced fluctuating fortunes, with a significant 82% year-over-year growth in 2021, reflecting the company’s strong foothold in the food delivery segment.
However, in 2023, the company saw a marked decline in Quarterly Active Consumers and Orders. A consequence of its shift to drive profitability by focusing on viable categories and reducing consumer incentives.
In similar development, Bolt Food, another significant player in the African food delivery market, announced its exit from Nigeria and South Africa in December 2023.
Bolt Food’s departure, despite its expansion efforts in major Nigerian cities like Lagos, is attributed to economic downturns, high inflation, and stiff competition from well-entrenched rivals such as Jumia Food, Gokada, and Uber Eats.
