Jumia Technologies has announced that it will stop its food delivery operation in all seven countries by the end of the year to focus on growing its main online retail business.
Jumia is aggressively lowering costs to become profitable, including layoffs, discontinuing everyday grocery products, and reducing delivery services unrelated to its e-commerce operation.
The move is consistent with Jumia's "strategy to optimise its capital and resource allocation and to continue its path to profitability," according to the retailer, who added that Jumia Food is inappropriate for the current operating climate and macroeconomic factors.
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Jumia Food accounts for approximately 11% of Jumia's general merchandise value for the nine months ended September 30 and has been loss-making from its launch.
"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," said Chief Executive Officer Francis Dufay.
"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.
Jumia presently delivers food in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and the Ivory Coast.
A handful of staff currently engaged in the food delivery business will shift to the core e-commerce business in these nations, according to the first Africa-focused internet start-up to list on the New York Stock Exchange.
Jumia has been cutting its losses, with the most recent numbers revealing that it cut its third-quarter losses by 67% from the previous year.
