Jumia, Africa’s leading e-commerce start-up, has announced that it will shutter its food delivery service, Jumia Food, by the end of this December.
The company’s CEO, Francis Dufay cited a clear focus on the company’s core physical goods business and Jumia Pay platform as the reason for the exit. Despite Jumia Food accounting for 11% of the company’s Gross Merchandise Value, its persistent struggle for profitability proved the tipping point.
“The more we concentrate on our physical goods business, the more we recognise the substantial opportunities for Jumia to flourish and achieve profitability. Hence, we must make the right decision by directing our management, teams, and capital resources towards seizing this opportunity”, he said.
The news comes as no surprise to industry observers who witnessed Jumia Food’s roller-coaster ride.
After a meteoric rise in 2021 with 82% year-over-year growth, the company faced a sharp decline in 2023, attributed to a shift towards profitability and reduced consumer incentives.
This exit is not an isolated incident. Another major player, Bolt Food, also announced its withdrawal from Nigeria and South Africa, highlighting the harsh realities of the African food delivery landscape. Economic downturns, high inflation, and fierce competition from entrenched rivals such as Uber Eats and Gokada are creating a volatile and unforgiving environment.
However, amidst the doom and gloom, some players are finding success. Barcelona-based Glovo, through strategic partnerships with restaurant chains like Chicken Republic and Shoprite, is carving its niche in sub-Saharan Africa. Closer to home, Nigerian start-up Chowdeck celebrates delivering over ??1 billion worth of food in a single month, marking a major milestone in its expansion.
With Africa’s food delivery market expected to reach $1.7 billion by 2028, the potential is undeniable. But the path to success is riddled with obstacles. Partnerships, technological innovations, and capital-efficient models like Chowdeck’s might hold the key.
