In an unexpected turn of events, major food delivery services including Jumia Food and Bolt Food have announced their departure from Nigeria.
While the Nigerian market seems ripe for online food orders, the harsh realities of high inflation, fierce competition, logistics issues, internet fraud, and an unprofitable business model are leading food delivery services to quit their operation in the country.
In November, Bolt Food announced it was exiting Nigeria citing “business reasons” and struggling to gain market share. Surprisingly, Jumia Food also announced its shutdown in Nigeria in December 2023 due to its unsuitability for the current market conditions.
Based on the similarities involved in their departure, the factors responsible for reasons may be tied to;
1. Business Reasons and Financial Challenges:
Both Jumia Food and Bolt Food cited business reasons for discontinuing their food delivery operations in Nigeria, with Bolt Food mentioning that the decision was necessary to streamline resources and maximize overall efficiency as a company. Ultimately, financial challenges, including losses and the need to allocate resources effectively, were key factors in both cases.
2. Intense Competition and Cost of Operations:
Both companies highlighted increased competition with various rivals like Gokada, Glovo, Chowdeck, and Buyfood. The rising cost of operations was also a contributing factor to their decision to exit the Nigerian food delivery market.
Jumia’s CEO, Francis Dufay, mentioned downward pressure on commissions and upward pressure on marketing costs due to fierce competition.
The challenges of managing customer expectations, improper food handling, fluctuating market prices, and logistical challenges also contribute to the overall difficulties faced by the food delivery industry in Nigeria.
The food delivery market in Nigeria is still evolving, and while there are still opportunities for successful businesses, companies need to adapt their strategies to the current economic realities and intense competition to thrive in the food delivery market.
