Strategic Shifts In E-Commerce: Jumia Technologies AG Focuses On Core Business
$CELH, $JMIA
Celsius Holdings Inc. (NASDAQ:CELH) and Jumia Technologies AG (NYSE:JMIA) are two distinct entities operating in diverse markets. Celsius Holdings, a leading player in the functional drinks and wellness sector, has been capturing market share with its innovative portfolio of energy and fitness beverages, appealing to health-conscious consumers. On the other hand, Jumia Technologies, often dubbed the “Amazon of Africa,” operates an expansive e-commerce platform that serves a growing consumer base across several African countries, capitalizing on the continent’s increasing digital penetration and consumer spending.
Jumia Technologies AG has announced a significant strategic shift by deciding to discontinue its food delivery service, Jumia Food, by the end of December 2023. This decision comes as part of the company’s broader strategy to concentrate on its core physical goods business and JumiaPay operations across all its markets. The closure of Jumia Food aligns with Jumia’s objective to optimize capital and resource allocation and to accelerate its path to profitability. The food delivery segment, which accounted for approximately 11% of Jumia’s Gross Merchandise Value (GMV) for the first nine months of 2023, has consistently operated at a loss since its inception. The leadership believes that focusing on the physical goods sector presents a more substantial growth opportunity with a clearer route to profitability.
Antoine Maillet-Mezeray, EVP Finance & Operations of Jumia, echoed this sentiment, highlighting the importance of prioritizing opportunities and expected returns on investment. He noted that the decision to exit the food delivery market is a strategic move to allocate resources more efficiently towards more promising areas. The company has assured that employees currently working in the food delivery sector will be transitioned to roles within the physical goods business, ensuring a smooth realignment of its workforce to support its strategic goals. Jumia’s decision to refine its business focus comes at a time when the e-commerce landscape in Africa is increasingly competitive and dynamic. By streamlining operations and concentrating on core areas where it holds a competitive advantage, Jumia aims to strengthen its market position and enhance profitability in the long term. This strategic pivot underscores Jumia’s commitment to sustainable growth and profitability, as it continues to adapt to market conditions and consumer preferences in the diverse and evolving African e-commerce market.
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