Jumia Food, the food delivery arm of the e-commerce giant Jumia, is set to cease operations this month. For years, Jumia Food has competed with companies such as Glovo, Uber Eats, and Bolt Food. These all offer a convenient platform for customers to order food and drinks from local restaurants in their location.
Jumia has announced its decision to discontinue its food delivery division. The company said it will focus on its physical goods business and JumiaPay. The challenging nature of the food delivery business, marked by tough competition and thin profit margins, likely played a part in this decision. Jumia, facing overall profitability challenges, has opted to streamline its focus.
Unlike its competitors, Jumia Food lacks a ride-hailing division, a factor that gives platforms like Bolt Food and Uber Eats a natural advantage in cross-selling to their existing customer base. Additionally, Glovo, with its robust financial backing and a primary focus on the food delivery sector, stands out too.
in a statement, Jumia said, “The food delivery business is not suitable for the current operating environment and macroeconomic conditions in its market. The company will close its food delivery operations in all markets by the end of December 2023.” Notably, food delivery accounted for 11% of Jumia’s Gross Merchandise Volume in the first nine months of 2023, a small fraction considering thelack of profitability for Jumia Food since inception.
Jumia Food is currently available in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast. Jumia has confirmed that the employees working in its food delivery business will transition to its physical goods business.
What They Said
“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.
“Food delivery remains a business with very challenging economics, in Africa and across the world, and we want to focus our efforts on our physical goods e-commerce business, in the eleven markets where we operate. This is a matter of prioritization of opportunities, and expected return on investment,” said Antoine Maillet-Mezeray, EVP Finance & Operations of Jumia.
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