Jumia, an African e-commerce company, has laid off 900 employees, or 20% of its workforce, as part of this effort.
According to Nairametrics’ analysis of the company’s Q4 2022 financial figures, this was disclosed today.
As part of its plans to cut costs and reduce losses, Jumia first raised the potential of a personnel reduction in November of last year. Jumia stated that the workforce reductions were completed in Q4 of 2022.
The business said that after the layoffs, it had reduced its organizational design and formed leaner, more productive teams that were totally focused on carrying out their strategy.
Jumia also drastically reduced its presence in Dubai, where several management responsibilities were housed, as a result of the reorganization. Jumia claimed to have decreased its staff by 60% in Dubai while moving the majority of the remaining employees to offices in Africa, which are more conveniently positioned for its customers, sellers, and operations.
Jumia described how the business would be impacted by the personnel cutbacks as follows: “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 claimed that by concentrating on enhancing marketing effectiveness, it was able to drastically lower its sales and advertising costs, which fell 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.
Francis Dufay, who was previously named Interim CEO, has been named CEO of Jumia by the Supervisory Board, according to a statement released by Jumia. The executive search that was being performed, according to the firm, is now complete. It further stated that Francis’ selection demonstrated the Board’s high regard for his leadership and capacity to grow the company to profitability.
