In a strategic move to streamline its operations, Africa-centric e-commerce giant Jumia Technologies has announced the closure of its South African online fashion retailer, Zando, as well as its operations in Tunisia.
This decision, confirmed by CEO Francis Dufay in an interview with Reuters, aims to sharpen the company’s focus on more promising markets.
Cost-Cutting Measures in a Competitive Landscape
As Jumia seeks to turn a profit, the company is implementing aggressive cost-cutting measures.
These include a reduction in workforce, stepping away from daily grocery items and food delivery services, and cutting delivery options unrelated to its core e-commerce business.
Unfortunately, this decision will result in approximately 110 job losses.
Dufay explained, “The trajectory of the countries did not align with the strategy of the group,” highlighting the complex macroeconomic conditions and the competitive landscape in South Africa.
He emphasized that both the short-term growth and profitability potential in these regions were not favorable.
“We believe it’s the right decision,” he added, underscoring the need for a shift in focus.
Refocusing on Promising Markets
With the closure of Zando and the Tunisian operations, Jumia plans to reallocate its resources to other markets where it sees greater potential.
The remaining countries on the company’s radar include Egypt, Kenya, Morocco, and Nigeria.
Dufay expressed optimism, stating that success in any of these markets could easily compensate for the volumes lost from the South African and Tunisian operations.
Dufay noted that Zando and the Tunisian businesses contributed only a small fraction to Jumia’s overall performance, accounting for just 2.7% of total orders and 3% of Gross Merchandise Value during the first half of the year, which ended June 30.
Zando’s Legacy and Future Plans
Established in 2012, Zando.co.za has made its mark as a well-known online fashion platform in South Africa.
Dufay clarified that there are currently no plans to sell either the South African or Tunisian operations; instead, both will conduct clearance sales before closing their doors for good.
While the job cuts are unfortunate, some employees may find opportunities in other areas of Jumia’s operations.
The closure comes on the heels of Takealot, South Africa’s largest online retail group, announcing the sale of its fashion division, Superbalist, in September.
This reflects the intensifying competition from fast-fashion Chinese e-commerce giants like Shein and Temu.
Dufay admitted that the growth potential in South Africa has proven to be challenging due to the fierce competition, but he remains hopeful that this strategic pivot will better position Jumia for future success.
What’s Next for Jumia?
As Jumia moves forward, the focus will be on strengthening its presence in the remaining markets.
The company is optimistic about its ability to adapt and thrive in a rapidly changing e-commerce landscape, and will continue to explore opportunities for growth and profitability.