Africa’s leading e-commerce Jumia Technologies revealed on Monday that it will suspend food and drinks delivery services on its Jumia foods division in Rwanda.
According to a statement from the company, “we have made the difficult decision to suspend our on-demand services in Rwanda effective on December 9th, 2019.” The statement went on to explain that “while decisions like these are always difficult, it is more important now than ever to put our focus and resources where they can bring the best value and help us thrive.”
A recent report shows that the Pan-African company has been struggling along the path to profitability with missed revenue estimates for the second time in three quarters, since becoming a publicly-traded company.
Popularly known as the Amazon of Africa, the e-commerce business strategy is similar to that of Amazon and also has a classified portal just like Alibaba. This, therefore, means that Jumia sells its stock and takes a cut of third-party transactions on its website.
Nevertheless, the business model has not paid off with its recent third-quarter loss standing at $55million, a major increase from $45m in 2018. Since launching its services in 2012, Jumia racked up losses of almost $1 billion and was cash-flow negative to the tune of $159.2 million, for the 12 months to December 31, 2018.
Last month, Jumia closed its e-commerce operations in Tanzania ten days after shutting down its activities in Cameroon in order to prioritize growth rather than profitability. The Amazon of Africa intends to drive the increased adoption of its marketplace platform to focus more on the growth of its four million active users.
The company reported a rise in active consumer numbers from 2.1 million in October 2018 to 2.7 million by April 2019 while active merchants moved to 53,000 from 43,000 during the same period.
Although Jumia has concluded that running its e-commerce business in Tanzania and Cameroon, together with its food delivery service in Rwanda was unprofitable, it continues to operate in Nigeria, Egypt, Morocco, Kenya, Côte d’Ivoire, South Africa, amongst other African countries.
By Treasure Nnabugwu.
