Jumia is discontinuing operations in Tunisia and closing its Zando online clothing store in South Africa by the end of the year as part of a broader cost-reduction strategy. This is in line with the company’s focus on markets with stronger growth potential. The closures come after recent setbacks and a substantial workforce reduction since the new CEO took over. Jumia continues to enhance its presence in other promising markets across Africa, despite a reported 17% decline in revenue for the first half of 2024.
Jumia has announced the cessation of its operations in Tunisia and the closure of its online clothing platform, Zando, in South Africa by the end of the current year. This decision aligns with the organization’s ongoing strategy aimed at reducing operational costs and narrowing its geographic focus. A company spokesperson remarked, “Money isn’t limitless, and we prefer to focus on other markets where growth prospects are strong.” In less than a year, Jumia has also terminated its home meal delivery service, Jumia Food, in seven countries including Tunisia, Algeria, and Kenya, which formed part of this cost-cutting initiative. Prior to these actions, the company had exited Cameroon and Tanzania as of 2019. From Jumia’s headquarters in Abidjan, the company has downplayed the consequences of these closures, noting that Zando and the Tunisian market contributed only about 4.5% and 3% respectively to the gross merchandise value during the first half of 2024. The company attributed these closures to its failure in meeting growth targets within the two nations. Specifically in South Africa, Zando’s services have become misaligned with Jumia’s refreshed strategy under CEO Francis Dufay, which emphasizes a focus on cosmetics and electronics. Additionally, the entrance of Amazon into the South African market last spring may have prompted this strategic retreat. Meanwhile, in Tunisia, issues such as a limited market size and ongoing macroeconomic struggles have hindered profitability for the subsidiary. In optimistic terms, Mr. Dufay expressed confidence in Jumia’s ability to recuperate the lost revenues through its better-performing markets. Recently, Jumia has begun expanding its warehousing footprints in major cities such as Cairo, Lagos, Abidjan, and Casablanca whilst also implementing strategies aimed at reaching secondary cities and rural areas. The company maintains operations in several other nations, including Algeria, Uganda, Senegal, Ghana, and Kenya. These restructuring efforts come at a time when Jumia has reduced its workforce by 40% since Mr. Dufay assumed the role of CEO in November 2022. The organization reported a significant revenue decline of 17% in the first half of 2024, resulting in total revenues of $36.5 million. Furthermore, in August, Jumia successfully raised nearly $100 million through a share sale on Wall Street, with its stock priced at approximately $5.06 as of October 16, 2024.
In recent years, Jumia, a prominent e-commerce platform in Africa, has undergone significant restructuring as it aims to navigate the complex economic landscapes of the continent. The company’s strategic measures are reflective of broader challenges faced by online retail businesses in Africa. With the ongoing need to balance operational costs and focus on profitable markets, Jumia’s recent decisions to close its operations in Tunisia and South Africa underscore its commitment to streamlining its services and maximizing growth in more viable regions. The shift towards concentrated investments in regions exhibiting higher growth potential signifies a strategic pivot in response to market dynamics.
In summary, Jumia’s recent decision to terminate its operations in Tunisia and South Africa is emblematic of its broader strategy to enhance profitability and minimize costs amid challenging economic conditions. By refocusing on markets with greater growth prospects and emphasizing key product sectors, the company aims to stabilize its revenue streams and position itself more favorably within the competitive e-commerce landscape of Africa. These changes reflect Jumia’s adaptive approach to market dynamics while ensuring sustained efforts toward operational efficiency.
Original Source: www.theafricareport.com
