Jumia joins the 2023 layoffs league as it downsizes 20% of its workforce, affecting 900 employees.
Jumia affirms it has taken this step to minimize costs and losses in line with streamlining its organizational structure and creating a more effective and highly committed team focused on set goals.
The e-commerce platform also did a headcount reduction in its Dubai office, affecting 60% of employees in managerial roles, while others are being posted to its African offices.
Report states that Jumia expects these headcount reductions will allow it save over 30% 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 significantly reduced its Sales & Advertising expense which decreased by 41% year-over-year in the fourth quarter of 2022.
According to the company, “As part of that, we are working on optimizing the returns on our paid online marketing investments by rationalizing marketing channels. We are also allocating a higher share of investment to local offline channels that help us cost-effectively build brand awareness and consideration.
“We are also working on a comprehensive plan to drive fulfilment cost efficiencies. This includes several actions such as optimizing our footprint and logistics routes, improving warehousing staff management and productivity, reducing packaging costs, and many more. We have seen early signs of success of this strategy in our e-commerce physical goods business where the freight & shipping cost per package decreased by 23% year-over-year in the fourth quarter of 2022,” the company stated.
Francis Dufay, Jumia CEO said the company started implementing its strategy to accelerate its path to profitability and further strengthen fundamentals in the fourth quarter of 2022. “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.”
Jumia Prime will be discontinued across all its markets. The company will also suspend its logistics-as-a-service in all markets except Nigeria, Morocco and Ivory Coast. Then, it will scale back first-party groceries in Algeria, Ghana, Senegal and Tunisia. It will also discontinue food delivery operations in Egypt, Ghana and Senegal. The company stated these activities accounted for less than 1% of group GMV in the first nine months of 2022 and 2% of group adjusted EBITDA loss.
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