Jumia Technologies AG, Africa's leading e-commerce platform, has announced plans to shut down its operations in South Africa, where it operated under the brand name Zando, and Tunisia by the end of 2024.
This strategic move is aimed at optimizing resources and focusing on markets with stronger growth potential across the continent, which include Nigeria and others.
The company in a statement released on Wednesday, said the decision came as Jumia evaluates its operations in the two countries, which accounted for a small share of the company's overall business.
According to Jumia, for the year ended December 31, 2023, and the first half of 2024, South Africa and Tunisia contributed just 3.5% and 2.7% of total orders, and 4.5% and 3.0% of gross merchandise value (GMV), respectively.
Difficult decision
Jumia believes that reallocating resources to higher-performing markets will significantly enhance the company's operational efficiency and accelerate growth.
Commenting on the decision Jumia CEO Francis Dufay, described the exits from the two markets as a difficult decision.
"Since assuming the role of CEO, I have focused on initiatives aimed at strengthening our business and placing us on a path to profitability.
"After a thorough analysis, we made the difficult decision to close down our operations in South Africa and Tunisia. Both businesses account for a negligible portion of our overall operations.
"Furthermore, competitive and macroeconomic conditions in both markets have limited each country's growth potential and their contribution to our overall business has not aligned with expectations.
"Decisions like these are never easy and we are extremely grateful to team members in both countries, who worked tirelessly to serve our customers every day. We are also grateful to our suppliers, vendors, and logistics partners in these markets. We deeply thank them for their hard work and service to Jumia," he said.
The e-commerce giant believes that refocusing resources on its remaining nine markets across Africa will enable the company to better position itself for growth.
What you should know
With the plans to exit South Africa and Tunisia, Jumia will be focusing on its remaining markets comprising Nigeria, Algeria, Egypt, Ghana, Ivory Coast, Kenya, Morocco, Senegal, and Uganda.
After posting a 64% decline in operating loss for 2023, down to $73 million, Jumia's CEO, Dufay, who has been implementing several strategies to cut its losses and move to profitability expressed confidence that the business would back to growth this year while further reducing its losses.
According to him, the results of the recent quarters had shown clear steps towards Jumia's strategic focus, positioning it for topline growth and improved cash utilization for 2024.
Before that time, Jumia, as part of strategies to cut its perennial losses and move to profitability, had in Q4 2022 slashed its workforce by 20% in an exercise that saw the exit of 900 people from the company.
The company would later discontinue its food business, Jumia Food, which was described as unprofitable.
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