E-commerce retailer, Jumia Technologies, will double down on its operations and solidify its market in Kenya, Egypt, Morocco, and Nigeria to recover lost revenues incurred by its latest exit from South Africa and Tunisia.
- •Jumia announced that the decision to leave South Africa and Tunisia was prompted by the company’s aggressive cost-cutting measures it has been implementing over the last year, in a bid to streamline operations and enhance efficiency.
- •Jumia’s South African fashion platform, Zando, has been facing intense competition from more formidable foreign players stifling any potential for growth in an increasingly difficult economic climate.
- •Both South Africa and Tunisia accounted for 3.5% and 2.7% of Jumia’s total orders respectively, recording low GMVs for the year ended December 2023.
“After a thorough analysis, we made the difficult decision to close down our operations in South Africa and Tunisia. Both businesses account for negligible portions of our overall operations,” said Francis Dufay, Jumia CEO.
The closures will hemmorhage 110 jobs in both countries, however, Dufay assured that some of the staff would be reallocated to other markets. The Group has regretted its optimization measures but cited them as necessary actions to restore pre-2019 profitability.
“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 those markets,” Dufay added.
Since the entry of Amazon.co.za to South Africa in May this year, competition has soared in the market leading to the slow dissipation of local e-commerce players like Takealot, which recently sold its fashion shop. Tunisia’s fortunes were likely affected by the North African nation’s small market size.
The NYSE-listed company also shed its entire operations in Tanzania and Cameroon in 2019. In December last year, it closed its food delivery service in seven countries opting to retain its core retail business due to losses.
According to Statista, the e-commerce business in Africa hit US$40 billion last year and is expected to grow exponentially in the coming years. Jumia will need to brace up for more competition from not only giant retailers from the west and China, but also the ingenious and ambitious local market upstarts like Kilimall in Kenya and Kilimall in Kenya.