Jumia Prime was launched in 2019 and was pitched as a subscription-based delivery service looking to provide customers with free shipping on its marketplace. Modelled after Amazon Prime, the product was one of the company’s main strategies for user acquisition. However, although there are over 3.1 million quarterly active customers on the platform as per the company’s third quarter 2022 financial report, this traction as well as the volume of business brought by Prime in comparison with the level of investment it received, fell short of the company’s targets. As per information provided by Jumia, Prime will be discontinued as ‘it was too early in the adoption curve to push such a product’, with the team being relieved following an effort to reduce the company’s General & Administrative (G&A) expense, which, excluding share-based compensation, reached USD 28.3 million in Q3 2022, marking a 12% year-over-year increase.
The move marks one in several steps that the company has decided to take in order to cut costs, following a period of five consecutive years of losses on the New York stock exchange. As per a statement released by the company as reported by TechCabal, Jumia intends to allocate resources to focus on ‘core areas and projects with attractive returns on investments and clear ecosystem benefits’. As part of the move, the company will also be involved in decreasing the emphasis on and ceasing projects and ventures that do not meet such criteria.
Apart from discontinuing the service offering free unlimited delivery to loyal subscribers, Jumia Prime, the company is also set on ending its first-party grocery offering in selected markets following poor unit economics. Jumia is looking to cut staff costs by reducing the size of its Dubai office; furthermore, its senior leadership and decision centres are set to be relocated to a location that is more proximate to its Africa-based sellers and consumers.
Prior to the company’s decision in discontinuing their delivery system, Jumia had announced two partnerships in 2022 aimed at facilitating delivery within the African continent.
Earlier in September 2022, the company announced a partnership with logistics company Zipline looking to enable drone delivery to remote parts of Ghana. Combining Zipline’s automated, on-demand delivery system and Jumia’s distribution network, the partnership allowed customers located in more isolated regions to purchase and receive electronics, cosmetics, as well as other products.
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