Jumia hints at layoffs in order to reduce operating costs

Jumia, an African e-commerce company, has announced extreme measures to drastically down operating expenses across all of its divisions.

By forming a “leaner” team, the corporation claims these methods will lower its labour costs. These were made public by the corporation in its Q3 2022 financial statements.

As part of its efforts to cut costs and increase profitability, the business is also terminating its First Party grocery services in regions where it is still a small player and reevaluating its free shipping policy.

Jumia said that it is now getting closer to profitability as a result of managing to cut its operational loss by 33% from $64 million to $43.2 million. This was the company’s lowest loss in six quarters.

Jumia highlighted these cost-cutting measures:

“We intend to reduce staff costs by streamlining our management structure with a view to creating a leaner and more agile organization and locating senior leadership and decision centers closer to our consumers and sellers in Africa.

“To support unit economics, we are increasing the minimum basket size threshold for free delivery and further restricting its geographical scope to focus on primary cities.”

In nations where it thinks management resources would be best directed on enhancing the logistics efficiency for the core e-commerce business, the company said it is also ceasing to provide logistics services to non-e-commerce clients.

Nevertheless, Jumia stated that it would keep expanding this activity in a number of other nations, including Nigeria, Morocco, and the Ivory Coast, where the logistics infrastructure is prepared to support third-party volume and where the proof of concept for this service has already been established.

Acting CEO of Jumia Francis Dufay emphasized these tactics in his remarks on the outcome:

“We have a clear focus for the next chapter of our journey and are taking decisive action to support our path to profitability. We will bring more focus to the business, directing our efforts and resources to projects and activities that deliver tangible value to our consumers, sellers, and broader ecosystem participants. We are also enforcing tighter cost discipline and driving efficiencies across the full structure while enhancing the fundamentals of our core e-commerce business to drive user growth.”

Focusing on JumiaPay

Jumia announced it would now concentrate more on its fintech company, JumiaPay while reducing other parts of its business that it believed to be unprofitable. The corporation specifically said that it will be expanding its business in Nigeria and Egypt, both of which it already had paid licenses for.

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“JumiaPay remains a core priority for us, and we will work on making it an even more effective enabler of our eCommerce business, focusing on a more targeted number of critical products and ventures. We will retain a disciplined approach to driving on-platform payment penetration, with disciplined marketing and consumer incentives spend,” the company stated.