Jumia Strategically Exits from Food Delivery Markets, Siting Unfavorable Conditions

Jumia, the e-commerce giant, is set to cease its food delivery business in all seven African markets, including Kenya, where it currently operates. The company unveiled this decision on Thursday through a statement, basing it on an assessment of unfavorable conditions in the current operational environment and macroeconomic landscape. This move signifies their proactive approach to market dynamics.

Jumia, a key player in Kenya’s e-commerce scene, oversees food delivery operations not only within Kenya but also across Nigeria, Uganda, Morocco, and the Ivory Coast, among others. The company has disclosed a seamless transition plan for employees involved in this venture to join the durable consumer goods business sector.

Highlighting Jumia’s food delivery segment as a significant player, the announcement emphasized its contribution of 11 percent to Gross Merchandise Value (GMV) during the nine months preceding September 2023. However, profitability has remained elusive for this particular business since its inception.

Gross Merchandise Value (GMV), as a metric, encapsulates the total value of orders, including associated costs such as shipping fees and taxes—prior to accounting for any discounts or cancellations. Jumia’s decision to pivot from the food delivery market aligns with an overarching trend in Kenya, where competition within this sector has escalated due to numerous new entrants, including notable players like Glovo, Uber Eats, and Dial-A Delivery.

Francis Dufay, the CEO of Jumia Group, characterizes the move as an active strategic shift towards profitability. Underlining significant potential for growth within Jumia’s physical goods business, he emphasizes concentrated resource allocation to promising sectors. “We must make the correct decision and concentrate fully on our management, teams, and capital resources on pursuing this opportunity,” he emphasized.

Aligning with its vision for sustained growth and profitability, Jumia has decided to exit the food delivery market. By the end of 2021, since establishing local operations in May 2013, this move comes after grappling with a cumulative loss of $87.8 million (Sh13.5 billion in current exchange rates) within their Kenyan business, demonstrating strategic decisiveness on Jumia’s part.

In June of this year, Jumia conducted an internal survey, unveiling intriguing consumer behavior. Among Kenya’s rural customers, beauty products commanded the most orders, constituting 16 percent of all deliveries to upcountry, surpassing demand for phones and home items, including furniture and bedding. Contrarily, urban customers preferred food items such as groceries and uncooked cereals.

Closing the chapter on its food delivery venture, Jumia aims to seize opportunities in e-commerce’s dynamic landscape. This strategic shift paves the way for new phases of growth and market focus within the company.

LEAVE A COMMENT

Please enter your comment!
Please enter your name here