Leading African e-commerce platform Jumia Technologies AG has announced that, as part of a strategic shift to concentrate on more lucrative markets across the continent, including Nigeria, it will close its operations in both South Africa (where it operates under the Zando brand) and Tunisia by the end of 2024. These two countries made up a small portion of Jumia’s overall business, with South Africa accounting for just 3.5% of total orders and Tunisia 2.7% for 2023 and the first half of 2024.
Francis Dufay, CEO of Jumia, said the choice was challenging but essential to boost development in higher-performing markets and increase operational efficiency. The corporation has already shown improvement, cutting its operating losses by 64% in 2023, and it intends to redirect its resources to nine additional African nations. As part of its profitability plan, the firm previously cut 20% of its workers in 2022 and shut down Jumia Food, an unproductive food company. Jumia had fierce competition in South Africa from well-known regional and international companies. One of the main competitors is Takealot, a Naspers company that controls the local market thanks to a strong customer base and an extensive Logistics network.
It intends to increase its investment in logistics.
Though smaller in size, Tunisia’s e-commerce market presented unique challenges due to the country’s slowing economy, with the World Bank projecting GDP growth of just 1.7% in 2024 and high Inflation of 9.3% in 2023. Additionally, the country’s digital payments Infrastructure is still developing, which limits the potential for growth in online retail. The South African e-commerce market is also growing, but it is highly saturated, with smaller competitors like Bidorbuy and Superbalist targeting niche segments.
Also, Jumia is currently focusing on nine African markets—Nigeria, Egypt, Kenya, Ghana, Senegal, Algeria, Morocco, and Uganda—where it sees greater room for expansion. The firm wants to simplify operations in these markets by utilising its current infrastructure. For instance, its top market is still Nigeria, where the company has witnessed a notable spike in platform usage by users. The business intends to increase its Investment in logistics, including “Jumia Logistics,” a delivery service that enables last-mile delivery in difficult-to-reach urban and rural locations.
Local stakeholders will be greatly impacted by the company’s decision.
In order to promote digital transactions in its primary markets, lessen dependency on cash-based transactions, and grow its clientele, Jumia also plans to scale its payment service, JumiaPay. Jumia is anticipated to increase its cash utilisation and profitability following its withdrawal from South Africa and Tunisia. The company plans to maintain this trend into 2024 after reducing its operating deficit by 64% in 2023 to $73 million. The business could further reduce losses by up to 50% in 2024, according to analyst projections, as it reallocates resources to its most lucrative countries and lowers operating costs.
Furthermore, the company expects to reach profitability by 2025 with continued investments in tech infrastructure and customer acquisition. Due to Jumia’s focus on high-margin services like logistics and digital payments, its gross merchandise value (GMV) is expected to increase in markets like Nigeria and Kenya. Local stakeholders will be greatly impacted by the company’s decision to close its operations in South Africa and Tunisia, as job losses will be similar to the 20% workforce reduction Jumia undertook in 2022 when it laid off 900 employees.
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Additionally, Jumia-dependent suppliers and logistical partners may also suffer from the loss of a significant sales channel. Consumers will have less options for online shopping in both countries, especially in South Africa, where Jumia was one of Takealot’s few rivals. The firm will probably assist its personnel and partners during this change, though, as it has expressed gratitude for their efforts. The business feels it can better serve its remaining consumers by improving delivery times and customer service, and by providing a greater selection of products in its important areas, by focused on its stronger markets. In the end, this strategic change puts the firm in a better position to maintain its long-term market leadership in Africa’s quickly developing digital economy.