Africa’s e-commerce giant, Jumia, has slashed 20% of its workforce in a layoff exercise that saw the exit of 900 people from the company.
The company disclosed this today in its Q4 2022 financial results.
Jumia, which first hinted at the possibility of a head cut in November last year as part of its strategies to cut costs and reduce losses, said the headcount reductions were done in Q4 2022.
Following the layoffs, the company said it has streamlined its organizational structure and created leaner, more effective teams that are fully committed to the execution of its strategy.
The re-organization also saw Jumia significantly reducing its presence in Dubai where certain management functions were located. Jumia said it reduced its headcount in Dubai by 60% while most of the remaining staff are being relocated to its African offices, closer to its consumers, sellers, and operations.
Explaining how the headcount reductions would affect the business, Jumia said:
“We expect these headcount reductions to allow us to 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 said it also focused on driving marketing efficiencies, allowing it to significantly reduce its Sales & Advertising expense which decreased by 41% year-over-year in the fourth quarter of 2022.
“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 build brand awareness and consideration in a cost-effective manner.
“We are also working on a comprehensive plan to drive fulfillment cost efficiencies. This includes a number of 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.
Meanwhile, the company has announced the appointment of Francis Dufay, previously appointed Acting CEO as the substantive Chief Executive Officer of the company. It added that the appointment reflected the strong confidence of the Board in the leadership of Francis and his ability to successfully scale the business to profitability.
Commenting on the company’s Q4 financial performance, Dufay said:
“In the fourth quarter of 2022, we started implementing our strategy to accelerate our path to profitability and further strengthen our fundamentals. 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’s operating loss for Q4 2022 decreased by 41% year-over-year, reaching $49.8 million and Adjusted EBITDA loss decreased by 30% year-over-year, reaching $49.2 million.
