One of Africa’s largest e-commerce platforms, Jumia, has cut 900 staff from its workforce while disclosing that this decision was taken to reduce the cost of operation.
Jumia also disclosed that the recent layoff affects just 20% of its general workforce. According to its recent financial reports for Q4 2022, the e-commerce giant suffered an operating loss of 41% year-on-year, amounting to $49.8 million in Q4 of 2022. This forced the company to suspend its “logistics-as-a-service offering in a number of geographies”.
Jumia also disclosed that it is discontinuing its food delivery operations in Egypt, Ghana, and Senegal where “this activity was sub-scale, resulting in unit economics dilution with limited consumer lifetime value upside”.
Jumia also added that it would suspend some of its activities as part of its goal to focus on core areas of the business that yield better ROI and benefit the ecosystem.
The e-commerce giant also added that it is delivering on its strategy to minimize losses and increased profitability with its major aim of enhanced cost discipline and increased monetization.
The report read thus “Cost reduction is another key priority of our strategy. We are working across the full cost structure to drive efficiencies,”
“In the fourth quarter of 2022, we undertook significant headcount reductions, resulting in over 900 position terminations, corresponding to a 20 percent headcount reduction.
“We have streamlined our organizational structure, creating leaner, more effective teams fully committed to the execution of our strategy.
“As part of our streamlining efforts, we have significantly reduced our presence in Dubai where certain management functions were located, reducing headcount by over 60 percent. Most of the remaining staff are being relocated to our African offices, closer to our consumers, sellers, and operations.
“We expect these headcount reductions to allow us to save over 30 percent in monthly staff costs starting from March 2023, as compared to the October 2022 staff cost baseline. The implementation of these organizational changes resulted in $3.7 million in one-off restructuring costs booked in the fourth quarter of 2022.”
Jumia has also disclosed a gross profit growth of about 22% year-on-year, while it stated that the marketplace revenue reached an all-time high of $41.2 million.
Jumia CEO, Francis Dufay, commented on this development saying that efforts are being made to strengthen their vital areas and to increase profits.
He said “While the fourth quarter results only reflect a fraction of the actions we are taking, we are seeing early signs of success and remain focused on execution,”
“In light of these encouraging signs, we expect a sharp reduction in adjusted EBITDA loss from $207 million in FY2022 down to $100-120 million in FY2023.
We remain more-than-ever confident about the growth opportunity across our markets and are making fundamental improvements to our consumer value proposition which will help us drive sustainable long-term growth.”.