Pan-African e-commerce giant Jumia Technologies will end the running of its food delivery arm this month in Nigeria and six other markets where it has footprints on the continent.
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The company’s current priorities across its 11 operational
nations are the Jumia Pay platform and its core physical goods business.
Even though Jumia Food accounted for 11% of Jumia’s Gross
Merchandise Value in the first nine months of 2023, the company has had
difficulty turning a profit since its founding. This indicates that between
January and September of 2023, the total value of food sold on Jumia Food was
$64 million, or 11% of $581 million. a measure of the enormous size at which
Jumia Food was functioning, but it is not a measure of profits.
Founded in 2012 in Lagos, Jumia attained unicorn status four
years after when it became the first tech start-up on the continent to hit the
$1 billion valuation mark and even surpass it. It would go on to be listed on
the New York Stock Exchange (NYSE) in 2019, the first African-focused tech
company to reach the milestone. An initial public offering conducted by the
firm on NYSE in 2019 generated $196 million in net proceeds.
“It’s a segment that’s very difficult across the world, with
very challenging economics and big losses. It’s also a segment that is
extremely competitive across the world and Africa,” CEO Francis Dufay said
during an interview with Reuters.
“The economics are tough in this market because the costs
are very high and there is plenty of competition so there is downward pressure
on the commissions that we make and upward pressure on marketing costs because
everyone is fighting for customers,” he added.
The company has been paring down losses, the latest being in
the third quarter during which it reduced losses by 67 per cent compared to a
year ago.
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