Jumia Set to Leave South Africa, Tunisia, Shares Plan for Nigerian Operations
- Jumia Technologies intends to close its online clothing stores in South Africa and Tunisia, Zando and Zando
- The company also plans to cut expenses by laying off employees and stopping the delivery of meals and ordinary groceries
- It mentioned the competitive climate, the intricate macroeconomics, and the limited medium-term development and profitability prospects
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Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
To better concentrate on its other countries, Africa-focused e-commerce company Jumia Technologies plans to shut down its Tunisian and South African online apparel retailers, Zando and Zando, by the end of the year, the CEO told Reuters.
Source: UGC
In an effort to generate a profit, Reuters reported that Jumia is slashing expenses, which includes laying off employees, stopping the delivery of meals and ordinary groceries, and discontinuing delivery services unrelated to its e-commerce operations.
CEO Francis Dufay said, citing complex macroeconomics, the competitive environment and low medium term potential for growth and profitability.
He said,
"The trajectory of the countries did not align with the strategy of the group."
"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."
Focus on surviving market
Nigeria, Kenya, Morocco, and Egypt are among Jumia's surviving markets. According to Dufay, the business could easily regain lost volumes from South Africa and Tunisia if it were successful in any of them.
In the six months ending June 30, these two companies only made up 2.7% of all orders and 3% of gross merchandise value, according to Dufay.
Since its founding in 2012, Zando.co.za has developed into a well-known online fashion marketplace in South Africa. The company has been selling general products in Tunisia under the Jumia brand for ten years.
Dufay stated that he has no intention of selling either business, which will have clearance sales before closing.
About 110 jobs will be eliminated as a result of the closures, according to Dufay, though some might be moved to other areas of the group's operations.
According to Dufay, the closures would result in the loss of roughly 110 positions, but some might be moved to other areas of the group's operations.
The departure from South Africa comes soon after Takealot, the nation's largest online shopping group, announced in September that it was selling its online fashion brand Superbalist as fast-fashion Chinese e-commerce shops Shein and Temu are becoming a bigger threat.
Growth potential in South Africa, according to Dufay, was undoubtedly more challenging due to the fiercely competitive climate.
Analysts believe that the situation is a clear reflection of the challenges surrounding the ease of doing business in Africa.
Charles Abuede, a financial analyst said,
He said,
It underscores the importance of addressing these issues to foster a more conducive and attractive environment for businesses in Africa"
Multinational company set to leave Nigeria
Legit.ng earlier the multinational company, PZ Cussons, the parent company of PZ Cussons Nigeria, announced plans to sell its assets and African subsidiaries, citing naira’s depreciation as the critical reason.
In its operational year’s results, PZ Cussons disclosed that it is considering either a partial or total sale, saying that the sale will reduce its exposure to naira fluctuations.
Vanguard reports that the consumer foods maker said the board had received multiple interests in selling its Africa business.
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Source: Legit.ng
