African top e-commerce company Jumia has announced it will be scrapping some of its product offerings and laying off 900 staff (about 20% of Jumia’s general workforce).
Jumia said, “We anticipate that these workforce reductions will enable us to save over 30% in monthly staff expenditures beginning in March 2023, compared to the staff cost baseline in October 2022. The fourth quarter of 2022 saw the booking of $3.7 million in one-time restructuring charges due to these organizational changes.”
The cuts were announced after Francis Dufay was appointed CEO of the African e-commerce giant by the company’s supervisory board.
The new administration has decided to make such changes due to its evaluation of the increased cost of operations in the 3rd and 4th quarters of 2022. Some of the services to be dropped are Jumia Prime and third-party delivery services.
Jumia Prime is a subscription service like Amazon Prime offered by Jumia. This subscription service for Jumia users gives them access to free delivery at the cost of 3,000 naira per month. The third-party logistics service will also come to an end in almost every African country, excluding Nigeria, the Ivory Coast, and Morocco.
Another operational cost that has been reduced is the company’s presence in Dubai, where certain management functions are located. To be closer to its customers, sellers, and operations, Jumia claimed to have decreased its staff by 60% in Dubai while moving the majority of the remaining employees to its African headquarters.
The company stated, “We are also developing a thorough strategy to reduce fulfilment costs.” This entails a variety of steps, including enhancing the management and productivity of the warehouse employees, reducing the cost of packing, and many more. In our e-commerce physical goods sector, where the freight and shipping cost per package was reduced by 23% year over year in the fourth quarter of 2022, we have already seen promising results from this strategy.”
This is not the first time that the e-commerce company has had to make cuts to adapt to the changing economy; in 2020, it had to shut down operations in some African countries like Cameroon.
What do you think about the cuts to workers and services adopted by Jumia? Will this help the company generate more revenue? Let us know your opinion in the comments.
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Photo By Jumia
