As a new strategy to attract lower income earners and boost growth, Jumia Foods is offering cheaper menu options in its African home market. The platform, a subsidiary of recently NY-listed e-commerce platform Jumia, offers food delivery services in 30 African cities in 11 countries, with a target at the middle class, but not anymore.
Joe Falter, chief executive of Jumia Food, told Reuters that convenience has become increasingly important for people who don’t have a huge amount of money to spend, hence the company’s new decision to focus on consumers who spend a smaller amount per order and perhaps does so more frequently.
To do this, Jumia Foods will be working with restaurants to offer cheaper meals of a maximum of 300 Kenyan shillings, 300 KES lower than the former price range of 350-600 KES. The platform is betting on the growth of the African middle class to cause an increase in the demand for online services. According to a report by the AFDB, the UNDP and the OECD, Africa’s growing population is expected to lead to an increase in consumer spending to $2.2 trillion by 2030.
In a brief interview with Ventures Africa, Guy Futi, Managing Director of Jumia Food explains how the new strategy is going to implemented in Nigeria and across African cities where the platform is present.
Ventures Africa(VA): How exactly is the new strategy to reach out to low-income earners going to work? Is Jumia Food going to partner with street food vendors to get cheaper meals for this new demographic its expanding into? Or is it just going to work with its current partners to create cheaper meals?
Guy Futi(GF): The strategy to reach low-income earners is to work closely with some of our notable partners to provide affordable meals. It is our mission to bundle affordable meals that can be delivered to your home/office fast. The meals will come from some of Nigeria’s most popular vendors. We may explore the possibility of partnering with caterers and street vendors in the not too distant future.
VA: There’s also the issue of knowledge and perception; do the people in this demographic know about Jumia Food to order food online? How is Jumia Food going to change this perception or educate this demographic to break into that market?
GF: Increasing consumer awareness is one of our top priorities at Jumia Food. There is a growing adoption of our service – more and more people are discovering and enjoying the convenience of ordering food online. Our plan is to continue working with a varied demographic to promote our services.
VA: How is this expansion going to work in Nigeria? What is the maximum price of cheaper meals going to be here compared to what it is now?
GF: The Nigerian market is growing at an incredible pace. We have recorded more than 150 percent growth in the last year alone. The popularity of Jumia Food continues to grow as we work tirelessly to improve operations, selection and customer experience. We have rolled out a “Big Chops, Small Money” category on our app which promotes affordable meals. We are currently offering meals as low as N500[in Nigeria].
VA: Is Jumia Food rolling out this new strategy at the same time in all the countries it is present in or is it going to be launched one country at a time?
GF: Bringing affordable meals throughout the continent is a priority in all countries. We are currently testing in several markets.
Since its launch in 2012, Jumia Food has grown to serve about a million customers across Africa with orders increasing by seven percent each month. According to Falter, the platform’s active customers make orders, on average, between five and six times per month.