Serious cost-saving measures are going on at Jumia Technologies which is of huge significance when considering the last mile deliveries niche in Nigeria. It has led to trimming down less profitable segments of the e-commerce company such as its food delivery service that most office workers rely on when they cannot carve out time for restaurant eat-ins.

That convenience is now going away as soon as the year ends. This means that starting from the first day of 2024, old customers will no longer be able to order breakfast or lunch from the Jumia Food app. The Reuters news agency on Wednesday quoted the company’s reason for the dissolution as a “strategy to optimise its capital and resource allocation and to continue its path to profitability,” a direction that major firms have been looking at lately.

Also included in Jumia’s closing of segments are the food delivery services in six other countries that formed a septet with Nigeria. That includes Kenya, Uganda, Morocco, Tunisia, Algeria and Ivory Coast. When the deadline expires, a shift to Jumia Technologies’ most crucial retail portfolios will be the main focus going forward.

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The food segment’s inability to add value since its 2013 launch can be seen to be deeply connected to this recent move. Jumia Food which represents up to 11% of Jumia’s general merchandise has also existed among stiff competition from similar brands also trying out advertising to lure in patronage.

“It’s a segment that’s very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa,” says Chief Executive Officer Francis Dufay chatting with Reuters.

He adds “The economics are tough in [the food delivery] market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers.”

All these events are occurring at a time not far from a Naira devaluation which happened in June and the persistent inflation figures. They have weakened customer’s buying potential, which tends to leave FMCGs in a tight spot.

To ensure their survival, multinationals for example are pulling out of some of their plants in Nigeria and are resorting to an outsourcing approach for product distribution.

Ayodele Johnson

Ayodelé is a Lagos-based journalist and the Content and Editorial Coordinator at Meiza. All around the megacity, I am steering diverse lifestyle magazine audiences with ingenious hacks and insights that spur fast, informed decisions in their busy lives.