Jumia to close down food delivery business

E-commerce platform Jumia has announced plans to shut down its food delivery business in all the seven African markets it operates in including Kenya by the end of this month, citing unfavourable conditions.

In a statement on Thursday, Jumia which runs the food delivery business in Kenya, Nigeria, Uganda, Morocco, Tunisia, Algeria and the Ivory Coast, said employees currently attached to the venture will transition to durable consumer goods business.

“Following a strategic review of Jumia Food, the company determined that its food delivery business is not suitable to the current operating environment and macroeconomic conditions and will close its operations in all markets by the end of December 2023,” read the statement.

The firm added that the food delivery business accounted for 11 percent of its gross merchandise value (GMV) during the nine months to September 2023, noting that it has never been profitable since its inception.

GMV refers to the total value of orders for products and services, including shipping fees, tax, and before deductions of any discounts or vouchers, irrespective of cancellations or returns for the relevant period.

Jumia’s withdrawal from the food market comes at a time when the space in Kenya has been teeming with new entrants, a trend that intensified competition.

Other delivery firms include Glovo, Uber Eats and Dial-A Delivery.

Jumia Group CEO Francis Dufay termed the move a strategic shift that would place the firm on the path to profitability, noting that food delivery had failed to show potential.

“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,” said Dufay.

“In the current context, it means leaving a business line, which we believe does not offer the same upside potential – food delivery.”

By the close of 2021, Jumia had made a cumulative loss of $87.8 million (Sh13.5 billion in current exchange rates) in the Kenyan business since it set up local operations in May 2013.

In June this year, an internal survey by Jumia revealed that beauty products were the most ordered items on the platform among Kenya’s rural customers, contributing 16 percent of all upcountry deliveries ahead of phones and home items such as furniture and beddings.

According to the survey, urban customers mainly purchased food items that included groceries and uncooked cereals.

Source: Business Daily

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