Jumia Technologies, an Africa-focused e-commerce retailer, will shut down operations in South Africa and Tunisia by year-end to concentrate resources on more profitable markets. CEO Francis Dufay emphasized that these regions fell short of the company’s strategic goals, prompting the decision to cut costs and reduce headcount. Jumia continues to operate in nine other markets, including Egypt and Nigeria, where it anticipates better growth prospects.
Jumia Technologies, an e-commerce company focused on Africa, has decided to cease operations of its South African fashion outlet Zando and its Tunisian segment by the end of the current year. This strategic move aims to concentrate efforts on other markets where growth prospects appear more favorable, as articulated by CEO Francis Dufay in a recent interview. This decision is part of a broader strategy to reduce costs and streamline operations in an effort to achieve profitability. Dufay stated that the performance of the South African and Tunisian markets did not align with the company’s overall strategy, citing complex macroeconomic conditions, a competitive marketplace, and limited potential for medium-term growth and profitability. He expressed confidence in the decision, indicating it would allow the company to reallocate resources to its more promising markets, which include Egypt, Kenya, Morocco, and Nigeria. Dufay noted that success in any of these markets could easily compensate for the volumes lost from the closure of operations in South Africa and Tunisia. In terms of metrics, the South African and Tunisian operations collectively contributed only 2.7% of total orders and 3% of Gross Merchandise Value in the six months up to June 30. Zando, established in 2012, has become a prominent online fashion retailer in South Africa, while the Tunisian operations have functioned under the Jumia brand for a decade, offering a variety of merchandise. Dufay has confirmed that there are no plans to sell the Zando and Tunisian businesses, which will conduct clearance sales ahead of their closure. Approximately 110 jobs are expected to be lost due to these closures, although there may be opportunities for some employees to be reassigned within the organization. This exit comes shortly after South Africa’s major online retailer Takealot announced the divestiture of its online fashion enterprise, Superbalist, amid intensifying competition from fast-fashion platforms like Shein and Temu. Dufay remarked that the growth potential in South Africa has become increasingly challenging due to intense competition.
Jumia Technologies operates as a leading online retail platform across several African countries, providing a wide variety of goods including fashion and general merchandise. The company has faced various challenges in the competitive e-commerce landscape, especially with the rise of international fast-fashion retailers. The decision to strategically withdraw from South Africa and Tunisia is a reflection of its attempts to enhance operational efficiency and focus on regions deemed more promising for future growth. The closures may impact local employment and the overall e-commerce economy in these two countries.
In summary, Jumia Technologies is strategically exiting its operations in South Africa and Tunisia as part of a cost-cutting initiative aimed at steering the company towards profitability. This decision supports the larger goal of reallocating resources to markets with greater growth potential. While this closure will result in job losses, it highlights the competitive nature of the African online retail environment, particularly in light of increasing competition from global players.
Original Source: www.marketscreener.com
