Jumia set to close in Rwanda. Which countries are next?

Dec 10, 2019

Jumia Food logo
Jumia has suspended its food and drinks delivery service Jumia Foods in Rwanda, effective from 9th December. The company has operated Jumia Foods in the country for six years. The move comes amid a rationalisation at the internet retailer, under pressure from investors to cut the number of unprofitable markets in which it operates.

Jumia will no longer accepts cash on delivery and will only process pre-paid orders. It will fully close Jumia Foods on the 9th January 2020 and close all customer accounts. Jumia will retain its classifieds service in the country.  Previously called Jumia Deals, it will now become the main site for Rwanda,  jumia.rw.

This is the third closure, after Cameroon and Tanzania. It means that Jumia now operates in 11 countries. We do not expect it to the be last. Trendtype believes that Jumia will also exit Senegal and Uganda shortly. Perhaps two pressing questions are:

  • how profitable its North Africa operations are? We question whether Jumia will stay in Algeria, certainly and think Tunisia may also be vulnerable.
  • whether Jumia dares exit Côte d’Ivoire, its flagship sub Saharan African francophone market. Note, Jumia is almost certainly not profitable in the short term in Côte d’Ivoire.

The news didn’t impress investors much – after the announcement was made on Monday shares fell by 4.6%. Commentators have been quick to hype, and deflate, the Jumia growth story. The signs have long been there that internet retail was a tough, costly business, especially in markets with mostly low income consumers and undeveloped supply chains: the list of small, indigenous start ups that have closed is too long to list. Among more high profile international exits, Casino’s CDiscount and CFAO’s Afrishop stand out.

To put this in context: in Tunisia – where incomes are 3.5x higher than Kenya, the country’s most successful internet grocery retailer, Founa, turned over just $1m a year until it was bought by a supermarket chain.

As we have previously written, we believe that despite the overstretch and the losses, the fundamentals of the Jumia model are still interesting because of its customer reach and its role as a platform for a range of services that are profitable to supply – like digital payments. Furthermore, Jumia loses little by exiting undeveloped markets like Rwanda or Tanzania. It doesn’t really cede any first mover advantage.

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