Jumia to exit South Africa, Tunisia and focus on Nigeria, Egypt, Kenya

African e-commerce company, Jumia will shut down its South African online fashion retailer Zando and its Tunisian operations by the end of the year. According to a statement from the company, the move is part of a strategic refocus on more profitable markets such as Nigeria.

The closures will result in approximately 110 job losses, although some employees may be relocated within the company’s other divisions. The CEO also confirmed that both companies will hold clearance sales before their shutdown. He also indicated that there are no plans to sell either operation at the moment.

Dufay explained, citing complex macroeconomic conditions, a competitive landscape, and limited medium-term growth potential in these regions. “The trajectory of the countries did not align with the strategy of the group,” he said.

The CEO explained that Jumia is implementing aggressive cost-cutting measures. These include reducing its workforce, exiting the everyday grocery and food delivery sectors, and scaling back delivery services unrelated to its core e-commerce business to achieve profitability.

According to him, Zando and the Tunisian operations contributed only 2.7% of total orders and 3% of Gross Merchandise Value during the first half of the year. Zando.co.za was founded in 2012 and it has established itself as a prominent online fashion platform in South Africa. Similarly, Jumia’s Tunisian operations have been running under the Jumia brand for a decade, offering general merchandise.

“We believe it’s the right decision,” emphasizing that the move will allow the company to concentrate its resources on the other nine markets where growth prospects are more promising”, he explained.

As it stands, Jumia’s remaining markets include Egypt, Kenya, Morocco, and Nigeria.

Jumia revenue challenges

Jumia’s financial results for the second quarter of 2024 indicate that the e-commerce company witnessed a 17% revenue decline to $36.5 million. This, the company said was a result of the impact of regional currency devaluations, which affected both GMV and Total Payment Volume (TPV).

The company’s Q2 2024 results underscore a period of careful yet determined execution against its strategic priorities. As the company continues to successfully navigate market challenges and drive sustainable growth, it remains a pivotal player in connecting millions of African consumers with a diverse range of products and services

Despite a 17% decline in reported revenue to $36.5 million, Jumia saw a 15% increase on a constant currency basis, indicating strong underlying performance masked by currency devaluations in key markets.

Gross Merchandise Value (GMV) experienced a similar pattern, with a 5% decrease in reported terms but a robust 35% growth in constant currency, reaching $170.1 million in reported currency. 

The company reduced its operating loss by 8% year-over-year to $20.2 million and its Adjusted EBITDA loss by 10% to $16.3 million. This indicates that the company’s concerted efforts in cost management are yielding significant results. Notably, the company’s cash burn was cut by more than half, declining to $8.7 million, demonstrating a disciplined approach to expenditure and efficient use of resources.

These metrics reflect Jumia’s adaptive strategies and its emphasis on core business strengths, such as optimizing its product assortment and improving customer engagement. According to the statement, this was partly achieved through a 19% reduction in marketing expenses, focusing on high-return channels like CRM, SEO, and targeted offline initiatives.

At that time, CEO, Dufay also promised that the company would implement costs to reach profitability. This includes cutting jobs, exiting the food delivery space, and eliminating services not related to its e-commerce business.

According to him, the company needs to focus on enhancing cash efficiency, refining its customer value proposition, and leveraging strategic partnerships, resulting in notable operational and financial metrics improvements going forward.