Jumia Food to shutdown operations in Nigeria from December 2023

Decisively, Jumia is closing Jumia Meal, its meal delivery business, by the end of December 2023 in all of its operating countries, which include Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria. The company’s current priorities across its 11 operational nations are the Jumia Pay platform and its core physical goods business.

The more we concentrate on our physical goods sector, the more we see that Jumia has enormous growth potential and a clear route to profitability. To seize this opportunity, we need to make the appropriate choice and devote all of our managerial, team, and financial resources to it.

In the current situation, it entails exiting a business sector—food delivery—that we feel does not provide the same upside potential, according to Jumia CEO Francis Dufay.

Jumia Food has failed to turn a profit since its founding, even though it made up 11% of Jumia’s Gross Merchandise Value (GMV) in the first nine months of 2023. Accordingly, between January and September of 2023, the total value of food sold on Jumia Food was $64 million, or 11% of $581 million. an indication of the enormous scale at which Jumia Food was functioning, but it is not a guarantee of income or profitability.

Jumia Food has had mixed results since its founding, but in 2021 it showed a noteworthy 82% year-over-year growth, indicating the company’s solid position in the meal delivery market. Nonetheless, the business witnessed a significant drop in Quarterly Active Customers and Orders in 2023. a result of its change to concentrate on profitable areas and lower customer incentives to increase profitability.

Regarding Jumia Food staff, the business reports that several will move to the main physical goods division, implying that some may face layoffs.

Bolt Food, a prominent participant in the African food delivery industry, has announced its departure from South Africa and Nigeria in December 2023, coinciding with Jumia Food’s closure. Despite Bolt Food’s efforts to expand into major Nigerian cities like Lagos, the company’s demise is ascribed to economic downturns, high inflation, and fierce rivalry from established rivals like Jumia Food, Gokada, and Uber Eats.

On the other hand, Glovo, a startup located in Barcelona, has been expanding its reach throughout Sub-Saharan Africa through strategic alliances with major food chains such as Shoprite and Chicken Republic.

Chowdeck, an additional prominent participant in the Nigerian food delivery industry, has demonstrated remarkable expansion, having recently commemorated a noteworthy achievement of transporting food valued at more than ₦‎1 billion ($1.2 million) in a single month. A significant turning point in Chowdeck’s expansion plan has been reached with its recent grocery delivery collaboration with Shoprite.

It’s important to use caution when assessing Chowdeck’s purported achievements in the meal delivery space. Jumia’s nine-month total of $64 million, when viewed in perspective, equated to ₦‎5.7 billion each month, yet profitability remained a problem. Jumia is not alone in this.

A number of the companies operating in the global food delivery market still struggle with profitability.

Despite hardly turning a profit, Doordash and Uber have spent millions of dollars on venture capital to gain 96% of the US market for on-demand meal delivery services.

Glovo appears to fit the mould, having received $1 billion in funding to date, but it has set itself apart by diversifying its revenue stream early on and is currently active in 25 markets.

A capital-efficient business approach appears to be a major selling point for Chowdeck, as the CEO insisted in an interview that the company’s rise to a $1.2 million monthly GMV was entirely organic.

There are many possibilities and difficulties in the African meal delivery market, which is projected to develop at a CAGR of 12.2% from 2023 to 2028 and reach $1.7 billion. Though collaborations and technology integration present opportunities for expansion, the route to financial success is still convoluted. The growth of Glovo and Chowdeck is in contrast to the experiences of Jumia Food and Bolt Food. Both remain in their infancy in Africa’s food delivery scene, so there’s still an opportunity to go another path.