Jumia, a pan-African e-commerce platform, says it laid off over 900 workers in order to reduce its cost of operation. According to TheCableNg, the company said the cut represents 20% of its general workforce. The company in its 2022 fourth quarter (Q4) financial report released this information.
Jumia said it experienced an operating loss of 41% year-over-year, reaching $49.8 million in Q4 of 2022. This forced the company to suspend its “logistics-as-a-service offering in a number of geographies”.
The e-commerce firm also discontinued its food delivery operations in Egypt, Ghana and Senegal. These are where the food service “ activity was sub-scale, resulting in unit economics dilution with limited consumer lifetime value upside”. Jumia explained that it decided to cease a number of activities as part of its goal of focusing on core areas of the business with attractive returns on investments and clear ecosystem benefits.
The organisation added that it is delivering on its strategy to reduce losses and accelerate progress toward profitability with a major focus on enhanced cost discipline as well as accelerating monetisation. The report reads;
“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 organisational 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 organisational changes resulted in $3.7 million in one-off restructuring costs booked in the fourth quarter of 2022.”