Jumia e-commerce, the Africa’s popular online retailer has closed down its business in Tanzania in their ongoing portfolio review. ‘The Amazon of Africa’ as the e-commerce company has been labeled, does this barely two weeks after shutting down operations in Cameroon on November 18.
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“As part of our ongoing portfolio optimization effort, Jumia has come to the difficult decision to cease our operations in Tanzania effective on November 27,” Jumia Technologies said in a statement.
For quite a while, Jumia has seen its sales hurtle down especially from April when Wall Street ran an exposé about fraud cases in the company. They have experienced losses going as high as tens of billions. Their model of having a cut from their vendors whose products they sell through their website, mostly with high discounts doesn’t seem to offer the desired value.
Jumia operates both as Amazon and as Alibaba, whereby they sell own stock and at the same time gain from third party sales on their classifieds.
According to the November report, this was the second time the company missed their sales estimations in three quarters.
The Thursday statement indicated that Jumia e-commerce ceased to operate in Tanzania on Wednesday, November 27 meaning the suspension of operations happened even before the public announcement. The statement however was clear that vendors will still be able to do sales on the classifieds section.
Other market players such as Mybigorder Kenya can evaluate the situation to see whether they can leverage and take ground in Tanzania. May be it could favour them, but this would call for a lot of market study and consultation with experts.
Jumia’s case in Tanzania is another one of the many cases that are being experienced in Kenya during this period. Many companies in Kenya are retrenching, not to mention a few that have already announced business closure, attributing to tough economy. Having suspended business in Tanzania, maybe Kenya should feel affected in some way.
At the moment, the online company is running their Black Friday sale whereby products are going for as low as 50% or more in discounts.
Jumia e-commerce business closure in Tanzania means loss of employment to their staff and of course reduction sales to their vendors. This only serves to increase the unemployment levels in Tanzania and Africa in general. They said they want to focus their resources on other markets where they can realize the best value and thrive in business. We can only hope that Kenya is one of these; but you never know!