Jumia Food, a food delivery business under Jumia Technologies, a leading pan-African e-commerce platform, has announced plans to close business in all seven markets it operates in, including Uganda, by the end of December 2023.
According to Francis Dufay, Jumia Technologies CEO, the food business is not suitable for the current operating environment and the macroeconomic conditions in its markets.
According to BBC Africa, Jumia was the first Africa-focused tech firm to list on the New York Stock Exchange. However, the food delivery service has proved to be unprofitable.
In a statement, the company said that it will continue to focus on its physical goods business and JumiaPaya. The company says the affected employees and suppliers are now considering physical businesses.
One Benjee, a Jumia Food customer, has shared his sentiment with this website, wondering where businesses are going to start up with their products since Jumia Food is a major distributor.
“Where does this leave start-ups? The small restaurants that depend on Jumia for market and also for in-house deliveries, what will those who depend on them do?” Benjee questioned.
According to reports, most businesses might be forced to start their own delivery services so as to reach their customers which might lead to a price increment for services and goods.
Another Jumia customer, Christine, commented on their social media pages, saying that this is absurd since Jumia was quick at delivering food even from different restaurants around Kampala.
Customers of international fast food and local cuisine from popular brands like Pizza Hut and KFC might be disappointed by Jumia’s decision to focus on expanding its physical goods business in all markets; however, experts say that this may lead to an improvement in the quality and availability of physical goods and payment services.
The closure of Jumia Food, according to sources, will also have an impact on the food delivery market in the affected countries, as it will reduce competition in the sector.
Jumia Food closure will see some employees transition into other roles within the company; however, others will lose their jobs due to the closure leaving many unemployed.
Jumia Food has been losing money since its inception and represents about 11% of Jumia’s general merchandise value for the past nine months. It has been reducing its losses, with the latest financials showing that they dropped by 67% in the third quarter to September.
The company has been cutting costs, including headcount reductions, exiting everyday grocery items, and reducing delivery services not related to its e-commerce business.
Jumia currently operates in the countries of Morocco, Tunisia, Algeria, and Ivory Coast. According to management, the closure of Jumia Food is in line with the company’s strategy to optimise its capital and resource allocation.
