Online retailer Jumia in Africa is going out of business for food delivery

Jumia Technologies (4JMAy.F), an African e-commerce company, announced on Wednesday that it will focus on expanding its core online retail business by closing its food delivery division in all seven of its operating countries by the end of the year.

Jumia is giving up on regular grocery items, reducing delivery services unrelated to its e-commerce business, and reducing headcount in an aggressive effort to turn a profit.

The retailer said that the action is in keeping with Jumia’s “strategy to optimize its capital and resource allocation and to continue its path to profitability,” but that Jumia Food is not appropriate given the macroeconomic climate and current operating environment.

Since its founding, Jumia Food has not turned a profit; for the nine months that ended on September 30, it accounted for roughly 11% of Jumia’s total merchandise value.

This market segment faces significant challenges globally, including difficult economic conditions and substantial losses. Additionally, Francis Dufay, the company’s chief executive officer, told Reuters that the segment is very competitive both globally and in Africa.

“The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers.”

Jumia currently serves customers in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and the Ivory Coast through its food delivery service.

The first tech start-up with an emphasis on Africa to list on the New York Stock Exchange announced that several workers who were previously working on the meal delivery business will move to these nations to work on the main e-commerce business.

According to the most recent data, Jumia has been reducing its losses; in the third quarter, it lost 67% less than it did a year ago.