Another day, another Jumia story. This time, it’s the company’s hotel and flight bookings vertical, Jumia Travel, that is getting a brutal swing of the axe.
Yes, Jumia has decided to let go of Jumia Travel in a desperate attempt to arrest its mounting losses and perhaps finally make a move that is in the direction of profitability.
Since the Africa-focused e-commerce giant let the world in on its financials for the third quarter of this year — which reflected the continuation of a quarter-on-quarter cash deluge — the company appears to have set out on a quest to cut its losses by any means necessary.
Today, word has got out that Jumia has decided to let go of Jumia Travel with immediate effect. And that’s not all — there is a strong indication that Jumia Food (the company’s surviving vertical in Rwanda) is going to be shut down early next year.
The New Times of Rwanda reports Jumia Food will close operations in Rwanda in a matter of weeks. “We regret to inform you that Jumia will suspend our on-demand delivery operations in Rwanda on January 9th, 2020,” the company is quoted as saying.
Jumia is offloading Jumia Travel to its partner, Travelstart; the online flight-booking platform which operates mainly in Nigeria and South Africa.
“We have decided to enter into a partnership with our partner, Travelstart. While we will continue to promote the Travel category, Travelstart will be responsible for the operational side of the business,” according to a statement from Jumia to TechCabal.
“This partnership will ensure we remain hyper-focused on our growth and path to profitability as we reinvest our resources in our key markets, services and technology to create the best customer experience in Africa and help Jumia thrive.”
It is also believed that employees of Jumia Travel are to be absorbed into Nigerian competitors, Wakanow and Konga Travel, pending the conclusion of conversations and interviews.
By the close of business today, it is expected that the website of Jumia Travel will re-direct visitors to the Travelstart, though it remains unclear if the latest development is an acquisition or the extension of a partnership.
However, it can be deduced that every operational aspect of the business will be out of Jumia’s hands going forward as Jumia says Travelstart will now be responsible for the operations of the business.
As conveyed in reportage claiming to have gotten hold of an email from Jumia Travel to its employees, Jumia Travel will no longer operate its Hotels and Flights websites and app. Things like revenue management, and corporate sales, customer service, and effectively everything connected to the business will now be under Travelstart’s control.
The decision to cut off Jumia Travel from the parent company, Jumia, may have something to do with Jumia Travel burning through unscalable budgets in product promotion in pursuit of growth.
Sources familiar with the matter blame the maladies of Jumia Travel on crazy marketing spends in pursuit of aggressive growth prior to the restructuring of Jumia, and bad deals struck by management with companies that have corporate bookings on Jumia Travel and are owing millions of dollars.