Why Jumia Food Wants to Shut Down Operation by December 2023

In a strategic move that has captured the attention of the business world, Jumia, the leading e-commerce platform in Africa, has announced its decision to shut down operations of its food delivery service, Jumia Food, across several African countries, including Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria, by the end of December 2023. 

This decision has raised questions about the reasons behind this move and the implications it may have on Jumia’s future. As Jumia shifts its focus, the e-commerce landscape in Africa continues to evolve. Whether this decision will lead to greater success in their core business remains to be seen, but it signals a strategic prioritization in a competitive environment.

Jumia Food has struggled to make profits since its inception

The decision to shut down Jumia Food stems from Jumia’s commitment to refocusing its efforts on its core physical goods business and the Jumia Pay platform across its 11 operating countries. 

Francis Dufay, Chief Executive Officer of Jumia, emphasized the potential for growth and profitability in their physical goods business, stating, “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.”

While Jumia Food contributed approximately 11% of Jumia’s Gross Merchandise Value (GMV) in the first nine months of 2023, profitability has remained an elusive goal since the inception of the food delivery service. Despite the substantial $64 million in food sales between January and September 2023, it’s essential to note that this figure does not necessarily translate into revenue or profitability.

Jumia Food’s journey has been marked by fluctuating fortunes. In 2021, the service experienced an impressive 82% year-over-year growth, showcasing its strong position in the food delivery segment. However, 2023 saw a decline in Quarterly Active Consumers and Orders due to the company’s shift towards profitability by reducing consumer incentives and focusing on viable product categories.

Other e-commerce food companies who shut down their operation

Jumia Food’s decision to shut down operations aligns with the exit of another significant player, Bolt Food, from the African food delivery market, with departures from Nigeria and South Africa in December 2023. Economic challenges, high inflation, and fierce competition from established rivals like Jumia Food, Gokada, and Uber Eats were cited as reasons for Bolt Food’s exit.

On the flip side, Glovo, a Barcelona-based startup, has been expanding its footprint in Sub-Saharan Africa through strategic partnerships with restaurant chains like Chicken Republic and Shoprite. In Nigeria, Chowdeck celebrated a remarkable milestone by delivering food worth over ₦‎1 billion ($1.2 million) in a single month, coupled with a grocery delivery partnership with Shoprite.

However, it’s essential to approach these success stories with caution. Jumia Food’s 9-month figure of $64 million, while substantial, did not lead to profitability. This challenge is not unique to Jumia but reflects the broader difficulty many players face in the global food delivery landscape.