Jumia Technologies AG, a prominent African eCommerce platform, has made a strategic decision to discontinue its operations in South Africa and Tunisia as part of a company-wide resource optimization initiative. The planned shutdown by the end of 2024 is aimed at redirecting the company’s focus towards regions with higher growth prospects.
This move comes after an extensive review of Jumia’s performance by CEO Francis Dufay. The company’s South African division, which operates under the Zando brand, and its Tunisian branch have been underperforming, contributing merely 3.5% and 2.7% to total orders and 4.5% and 3% to the gross merchandise value (GMV) respectively in 2023. These figures saw a further decline in the first half of 2024, leading to the decision to exit these markets due to their minimal impact on the company’s overall business.
The strategic withdrawal from South Africa and Tunisia is anticipated to enhance Jumia’s operational efficiency across its remaining markets. CEO Dufay, since assuming leadership, has prioritized fortifying the business and achieving profitability. He cited the challenging macroeconomic environment and intense competition in South Africa and Tunisia as key factors limiting growth opportunities in these countries.
Acknowledging the difficulty of this decision, Dufay expressed his appreciation for the dedication of the teams, partners, and customers in both nations. He emphasized the necessity for Jumia to concentrate on regions where it can realize sustainable growth. The company’s strategic refocus will now be on its primary markets, including Nigeria, Kenya, Egypt, and Morocco, which are recognized for their dynamic eCommerce potential and are expected to benefit from the reallocation of resources.
Jumia’s exit from the less lucrative markets is part of a broader strategy to streamline its operations and achieve profitability. The company has faced various challenges, such as macroeconomic headwinds and competition from both local and international entities. In the second quarter of 2024, Jumia reported a revenue of $36.5 million, a 25% decrease from the previous quarter and a 17% drop from the same period in the previous year. The GMV also experienced a decline in Q2.
In an effort to consolidate its financial position, Jumia has undertaken significant measures, including the closure of Jumia Foods in 2023 to curb losses. The eCommerce leader is committed to fostering growth in its key markets by capitalizing on its marketplace, logistics capabilities, and the JumiaPay platform.
Recently, Jumia secured close to $100 million through secondary share sales and has been expanding its supplier network and logistics infrastructure. As Jumia redirects its focus, the company remains optimistic about its prospects for accelerating growth and solidifying its presence in Africa’s most promising eCommerce markets, with aspirations to return to profitability in the near future.
