Jumia Technologies is set to withdraw from the South African and Tunisian markets by year-end, closing Zando and its Tunisian operations to concentrate on more promising areas. This decision stems from a strategic review aligning with heightened competition and less growth potential in these regions, prompting workforce reductions and resource reallocation towards markets like Egypt and Nigeria.
Jumia Technologies, a prominent player in the e-commerce sector in Africa, has announced its decision to exit the South African market by closing its online fashion retailer Zando, alongside shutting down its operations in Tunisia before the year concludes. This strategic maneuver is aimed at allowing the company to concentrate on markets deemed more viable and promising for potential growth and profitability. CEO Francis Dufay communicated to Reuters that the evolving dynamics in these countries did not align with Jumia’s overall corporate strategy, which now seeks to streamline operations amid challenging economic conditions and fierce competition. As part of its cost-reduction measures, Jumia is also reducing its workforce, moving away from the grocery and food delivery sectors, and discontinuing delivery services unrelated to its core e-commerce business. Dufay emphasized, “We believe it’s the right decision,” underlining the need to reallocate resources towards the company’s nine remaining markets, which include Egypt, Kenya, Morocco, and Nigeria. He noted that any success achieved in these regions could compensate for the volumes lost from the closures.
Jumia Technologies has been navigating a complex e-commerce landscape in Africa, characterized by varying degrees of competition and growth potential across its markets. The company’s choice to exit South Africa and Tunisia reflects its strategic review of operations, influenced by factors such as deteriorating macroeconomic conditions, stiff competition, and limited medium-term growth prospects. Despite the significant recognition of the Zando brand in South Africa, it represented a modest portion of Jumia’s overall business, with just 2.7% of total orders and 3% of Gross Merchandise Value reported in the first half of the year. The challenging operating environment in South Africa has been exacerbated by the rise of fast-fashion retailers such as Shein and Temu, which further complicates Jumia’s market position.
In summary, Jumia Technologies’ decision to cease operations in South Africa and Tunisia marks a significant pivot in its business strategy, emphasizing a focus on markets with higher growth potential. While the closure of Zando and the Tunisian branch will result in approximately 110 job losses, there are indications that some employees may be relocated within the organization. Jumia’s leadership remains optimistic about its prospects in remaining markets, wherein successes could potentially counterbalance the impact of leaving these less lucrative locations.
Original Source: www.marketscreener.com
