Jumia Food has struggled to achieve profitability since its inception.
Jumia has announced it will discontinue its food delivery service, Jumia Food.
This will affect countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria by the end of December 2023.
According to the company, it will now focus on its core physical goods business and the Jumia Pay platform across its 11 countries of operations.
“The more we focus on our physical goods business, the more we realize 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. In the current context, it means leaving a business line, which we believe does not offer the same upside potential - food delivery," said Francis Dufay, Chief Executive Officer of Jumia.
Despite constituting 11% of Jumia's Gross Merchandise Value (GMV) in the first nine months of 2023, Jumia Food has struggled to achieve profitability since its inception. This means the total value of food sold on Jumia Food stood at $64 million (11% of $581 million) between January and September 2023. An indicator of the massive scale Jumia Food was operating at, but it doesn't necessarily amount to revenue or profitability.
Since its inception, Jumia Food experienced fluctuating fortunes, with a significant 82% year-over-year growth in 2021, reflecting the company's strong foothold in the food delivery segment. However, in 2023, the company saw a marked decline in Quarterly Active Consumers and Orders. A consequence of its shift to drive profitability by focusing on viable categories and reducing consumer incentives.
As for employees focused on Jumia Food, the company says a number of them will transition to the core physical goods segment, suggesting that some could be laid off.