Africa-focused e-commerce giant Jumia Technologies is set to shut down its South African fashion retailer Zando and cease its operations in Tunisia by the end of the year. The decision comes as part of the company’s ongoing efforts to streamline operations and sharpen its focus on markets with higher growth potential. According to CEO Francis Dufay, the move is part of Jumia’s strategy to achieve profitability by cutting costs and concentrating resources on more promising markets.
Jumia has been actively seeking ways to reduce operational expenses as it aims to turn a profit. The company has already made significant changes, including cutting staff, scaling back on everyday grocery items, and discontinuing food delivery services in some markets. Dufay emphasized that Jumia’s decisions are based on aligning its operations with its long-term strategic goals.
“The trajectory of the countries did not align with the strategy of the group,” Dufay said in an interview with Reuters, citing the challenging macroeconomic environments, increased competition, and limited prospects for growth and profitability in both South Africa and Tunisia. He added, “We believe it’s the right decision. It enables us to refocus our resources on the other nine markets, where we see more promising trends in terms of scale and profitability.”
Jumia’s remaining markets, which include key countries such as Egypt, Kenya, Morocco, and Nigeria, have shown stronger potential for growth. Dufay expressed confidence that success in any of these markets would easily compensate for the loss of business in South Africa and Tunisia. He noted that the two exiting markets represented only 2.7% of Jumia’s total orders and 3% of its Gross Merchandise Value (GMV) for the six-month period ending June 30, 2024.
Zando, the South African online fashion platform that Jumia acquired in 2018, was originally founded in 2012 and has since become a prominent player in the country’s e-commerce space. Despite its success, the platform did not align with Jumia’s broader vision for the future, leading to the decision to close it down. In Tunisia, Jumia’s operations have been running for a decade, offering general merchandise under the Jumia brand. However, the limited growth in the Tunisian market, coupled with a tough competitive landscape, prompted Jumia to pull out.
Jumia’s retreat from these two markets highlights the company’s determination to stay focused on regions where it sees the most potential for expansion and profitability. The e-commerce landscape in Africa is complex, with varying levels of internet penetration, logistical challenges, and consumer spending power across different countries. By narrowing its focus, Jumia hopes to optimize its resources and build stronger, more sustainable operations in its core markets.
As the company exits South Africa and Tunisia, its primary focus will shift to markets with more favorable conditions for growth. Egypt, Kenya, Morocco, and Nigeria are central to Jumia’s strategy, with Nigeria, in particular, being the company’s largest market. Jumia believes that by concentrating on these markets, it will be able to achieve profitability and scale more efficiently.
The decision to exit certain markets is part of a broader effort by Jumia to enhance its operational efficiency and profitability. By shedding non-core operations and doubling down on markets with greater potential, the company hopes to create a leaner, more focused business that can better serve its customers and investors alike. As Jumia navigates the challenges of the African e-commerce landscape, this strategic shift represents a crucial step towards achieving its long-term growth objectives.
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