Jumia Shuts Down Food Delivery Business To Cut Costs

Jumia has shut down its food delivery business to cut costs.

The African e-commerce company has decided to shut down its food delivery business, Jumia Food, across several African countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria by the end of December 2023.

Jumia, facing a Q3 2023 loss of $19 million, has been reevaluating its business segments to navigate challenging market dynamics since Q4 2022, where the company made a full-year loss of $207 million and a Q4 loss of $49.2 million. Jumia CEO, Francis Dufay highlighted the food delivery sector’s tough unit economics and substantial losses, attributing the closure to increased competition and rising operational costs.

Over recent months, Jumia has implemented significant cost-saving measures, including a 20% reduction in its workforce (900 employees), relocation of 60% of top management from the United Arab Emirates to the respective African countries, and substantial cuts in advertising and marketing spending.

Despite Jumia Food contributing 11% to Jumia’s overall gross merchandise value, it has consistently operated at a loss in the 11 North, East, and West African countries where it operates. While the company initially shifted focus to small-ticket everyday items in 2021, Dufay has redirected efforts and expanded into smaller Nigerian cities.

The decision to shut down Jumia Food follows a trend, with the company previously discontinuing the service in Egypt, Ghana, and Senegal due to sub-scale operations and challenging economics.