Jumia Technologies will close its South African platform Zando and Tunisian operations by year-end to refocus on more profitable markets. CEO Francis Dufay stated that these decisions result from complex macroeconomic challenges and competitive pressures. The exits reflect Jumia’s ongoing cost-cutting measures to achieve overall profitability, impacting about 110 jobs.
Jumia Technologies, a key player in Africa’s e-commerce sector, has announced the closure of its South African online fashion platform, Zando, alongside its Tunisian operations by the conclusion of the current year. This decision aims to streamline the company’s focus on more profitable markets. The Chief Executive Officer, Francis Dufay, articulated that the challenges faced in these countries, including complex macroeconomic conditions and fierce competition, were not conducive to the group’s overarching strategy. In a bid to attain profitability, Jumia is undertaking significant cost-cutting measures, which include workforce reductions and retracting from non-core operations such as grocery items and food delivery. Dufay emphasized, “The trajectory of the countries did not align with the strategy of the group,” highlighting that the exit would allow the firm to concentrate resources on other territories considered to have better growth prospects, such as Egypt, Kenya, Morocco, and Nigeria. As of June 30, the two operations represented a mere 2.7% of Jumia’s overall orders and 3% of its Gross Merchandise Value. Zando, established in 2012, has become a recognized entity in the South African fashion space, while the Tunisian branch has been operational for a decade. Although closure will lead to the loss of approximately 110 jobs, some employees may be reassigned within the organization. This strategic exit from South Africa follows a similar action from Takealot, the nation’s largest e-commerce group, which divested its online fashion segment in response to rising competition from brands like Shein and Temu. Dufay concluded that the growth prospects in South Africa were diminishing due to intense competition, making this adjustment crucial for Jumia’s future sustainability.
The decision by Jumia Technologies to exit its South African and Tunisian operations reflects a broader strategy aimed at consolidating resources in response to challenging market conditions. Jumia, which has been active in multiple African countries, has been grappling with the need to attain profitability in an environment marked by heightened competition and complex economic challenges. The shift in strategy points to Jumia’s efforts to allocate resources to markets where growth potential is more favorable, while also aligning its operations with long-term profitability goals. Jumia’s presence in the remaining markets represents a significant opportunity for recovery and potential growth, as articulated by its leadership.
In conclusion, Jumia Technologies’ decision to cease operations in South Africa and Tunisia represents a strategic pivot towards more viable markets amidst increasing competition and challenging economic circumstances. By concentrating on nine other markets with better growth potential, Jumia seeks to stabilize and enhance its profitability trajectory. This move, while resulting in job losses, underlines the company’s commitment to realign its resources for sustainable growth in the evolving e-commerce landscape in Africa.
Original Source: www.marketscreener.com
