JOHANNESBURG, Oct 16 (Reuters) – Africa-focused e-commerce retailer Jumia Technologies will close its South African online fashion retailer Zando and its Tunisian operations by the end of the year to sharpen its focus on its other markets, the CEO told Reuters.
Jumia is aggressively cutting costs to try to turn profitable, including by reducing head count, exiting everyday grocery items and food delivery and cutting delivery services not related to its e-commerce business.
“The trajectory of the countries did not align with the strategy of the group,” CEO Francis Dufay said, citing complex macroeconomics, the competitive environment and low medium term potential for growth and profitability.
“We believe it’s the right decision,” he added. “It enables us to refocus our resources on the other nine markets, where we see more promising trends in terms of scale and profitability.”
Jumia’s remaining markets include Egypt, Kenya, Morocco and Nigeria. Dufay said success in any would “easily enable us to recover” lost volumes from South Africa and Tunisia.
These two businesses accounted for only 2.7% of total orders and 3% of Gross Merchandise Value in the six months ended June 30, Dufay said.
Zando.co.za was founded in 2012 and since then has grown to become a well-known South African online fashion platform. In Tunisia, the business has been operating under the Jumia brand for a decade, selling general merchandise.
Dufay said he was not planning to sell either operation, which will hold clearance sales before shutting.
The closures mean axing about 110 jobs, Dufay said, but some may be relocated to other parts of the group’s business.
The exit in South Africa follows shortly after the country’s biggest online retail group Takealot announced the sale of its online fashion business Superbalist in September, amid increasing competition from fast-fashion Chinese e-commerce retailers Shein and Temu.
Dufay said in South Africa “growth potential was definitely more difficult” because of the highly competitive environment.
(Reporting by Nqobile Dludla; Editing Tim Cocks and Barbara Lewis)
