The pan-African online retail platform has chosen to cease new operations to focus on its most profitable markets.
Jumia will stop its operations in Tunisia and close its online clothing store, Zando, in South Africa by the end of the year. This decision is part of the company’s ongoing strategy to reduce costs and its geographic footprint: “Money isn’t limitless, and we prefer to focus on other markets where growth prospects are strong,” says a company spokesperson.
Less than a year ago, Jumia decided to end its home meal delivery service, Jumia Food, in seven countries (Tunisia, Algeria, Kenya, Uganda, Morocco, Nigeria, and Côte d’Ivoire), also as part of its cost-reduction strategy. In 2019, the company had already pulled out of Cameroon and Tanzania.
From Jumia’s headquarters in Abidjan, the company is downplaying the impact of the announcement, pointing out that for the year ending on December 31, 2023, and the six months ending in June 30, 2024, South Africa and Tunisia accounted for only 3.5% and 2.7% of total orders in Zando, and 4.5% and 3.0% of gross merchandise value (GMV), respectively.
Challenges in achieving profitability
Jumia cited its inability to meet growth targets in these two countries. In South Africa, Zando’s service no longer aligns with the strategy being implemented by CEO Francis Dufay, as Jumia has recently refocused on selling cosmetics and electronics. The arrival of Amazon in the country last spring likely further convinced the group to discontinue its operations there. In Tunisia, the small market size and macroeconomic challenges have made profitability difficult for the subsidiary.
Dufay expressed confidence that Jumia can “easily recover” the lost volumes through its more successful markets. Recently, Jumia announced the expansion of its warehouses in Cairo, Lagos, Abidjan, and Casablanca, along with a strategy targeting secondary cities and rural areas. The platform also operates in Algeria, Uganda, Senegal, Ghana and Kenya.
These decisions come as Jumia has already cut 40% of its workforce since the new CEO took over in November 2022. In the first half of 2024, the platform saw a 17% revenue decline, reaching $36.5m. In August, Jumia raised nearly $100m through a share sale on Wall Street. On 16 October, Jumia’s stock was trading at around $5.06.
Source: Theafricareport
