Jumia Technologies to Cease Operations in South Africa and Tunisia by Year-End
Jumia Technologies is set to close its operations in South Africa and Tunisia by the end of this year to concentrate on more profitable markets. This exit will impact its online fashion retailer Zando and reflects a strategy of cutting costs and focusing on markets like Egypt, Kenya, Morocco, and Nigeria, which are seen as offering better growth potential. CEO Francis Dufay noted that these regions have been challenging due to competitive pressures and economic factors.
In a strategic move to streamline operations and enhance profitability, Jumia Technologies, an African-focused e-commerce platform, will be ceasing its online retail operations in South Africa and Tunisia by year-end. This decision, as articulated by CEO Francis Dufay, arises from a need to concentrate resources on markets exhibiting stronger growth potential. The closures will affect Jumia’s South African fashion retailer, Zando, and its Tunisian segment, which have collectively represented a mere 2.7% of total orders and 3% of Gross Merchandise Value during the first half of the year. Dufay emphasized the unsustainable trajectory of operations in these countries, impacted by challenging macroeconomic conditions and fierce market competition, stating, “We believe it’s the right decision. It enables us to refocus our resources on the other nine markets, where we see more promising trends in terms of scale and profitability.” While approximately 110 jobs will be eliminated, some personnel may transition to other divisions within the company. Zando, established in 2012, has become a prominent online fashion player in South Africa, whereas Jumia has been operational in Tunisia for nearly a decade. Dufay expressed that the exodus aligns with the industry challenges faced, particularly in South Africa, where competition has intensified due to emerging entities like Shein and Temu.
Jumia Technologies has been a significant player in Africa’s e-commerce landscape, facing various challenges including competition from global retailers and economic instability in several regions. By exiting South Africa and Tunisia, Jumia aims to prioritize markets that offer better growth prospects. The strategic withdrawal reflects broader industry trends where local players must adapt to maintain viability in the face of increasing competition from affordable and accessible international brands. The company’s focus will now tilt toward countries such as Egypt, Kenya, Morocco, and Nigeria, which present more favorable conditions for expanding their business and recovering volumes lost due to the closures.
In conclusion, Jumia Technologies’ decision to exit South Africa and Tunisia is a calculated response to prevailing market challenges and aims to bolster the company’s focus on more lucrative sectors within Africa. By reallocating resources to its nine remaining markets, Jumia aspires to achieve better profitability and capitalize on growth opportunities more effectively, ultimately reaffirming its position within the continent’s competitive e-commerce arena.
Original Source: www.marketscreener.com
