African e-commerce platform Jumia Technologies has announced that it will close its South African online fashion retailer Zando as well as its Tunisian e-commerce operations as part of a strategic shift to optimize resources.
In a statement, the company said operations in these countries will be halted by the end of 2024.
Jumia believes that the closure of these markets will allow it to focus resources on its most promising markets, which have stronger growth potential.
“For the year ended December 31, 2023, and the six months ended June 30, 2024, South Africa and Tunisia combined accounted for only 3.5% and 2.7% of total orders, and 4.5% and 3.0% of GMV [gross merchandise revenue], respectively. The strategic decision to close operations in these markets is expected to improve overall operational efficiency across Jumia’s business,” the company explained.
Jumia CEO, Francis Dufay, said the company made the decision to close its operations in South Africa and Tunisia after a thorough analysis as both businesses accounted for a negligible portion of Jumia’s overall operations.
“Competitive and macroeconomic conditions in both markets have limited each country’s growth potential and their contribution to our overall business has not aligned with expectations. Decisions like these are never easy and we are extremely grateful to team members in both countries, who worked tirelessly to serve our customers every day,” Dufay continued.
Jumia Technologies CEO Francis Dufay. (Source: Jumia Technologies)
Jumia said that leaving South Africa and Tunisia and refocusing on its other core markets like Nigeria, Kenya, Egypt and Morocco, will leave it better positioned to accelerate overall growth and improve efficiency.
Founded in 2012, Zando grew into a prominent online fashion platform in South Africa. Meanwhile, in Tunisia, the business has been operating under the Jumia brand for ten years, offering a variety of general merchandise online.
Steep competition in South Africa
The South African market has been difficult for online retailers, especially since Chinese retailers Shein and Temu entered.
In September 2024, Naspers-owned Takealot, sold its online fashion retailer Superbalist to a South African consortium of retail and private equity investors led by Blank Canvas Capital.
“This strategic acquisition will support Superbalist’s ongoing growth, allowing the Takealot Group to dedicate its efforts to further expanding Takealot and Mr D,” Takealot said at the time.
Even though the online retail market is competitive, American e-commerce giant Amazon, which launched in the country in May 2024, is optimistic about its growth prospects in the country.
In June 2024, Robert Koen, Amazon managing director for sub-Saharan Africa, spoke to Connecting Africa about the company’s growth strategy in South Africa and how it is tackling competition in the market.
“With online retail accounting for around 4% of total sales in South Africa, compared to significantly higher figures in other countries, there’s significant room for growth,” Koen told Connecting Africa at the time.
Despite tough competition in the online retail sector in South Africa, a 2023 study by World Wide Worx and Mastercard showed that the percentage of adult South Africans shopping online shot up from 27% in 2020 to 38% in 2022, a 40% increase in the total number of people shopping online.
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Publish date : 2024-10-17 14:16:13
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