Setback for Ramaphosa as another major retailer in South Africa closes its doors

Jumia Technologies, the Africa-focused e-commerce retailer that operates popular online retailer Zando, says it will be exiting the South African business by the end of the year to sharpen its focus on its other markets.

Speaking to Reuters, the group's CEO, Francis Dufay, said that it is 'aggressively cutting costs' to try to turn profitable, which will include reducing headcount, exiting everyday grocery items and food delivery, and cutting delivery services not related to its e-commerce business.

Zando.co.za was founded in 2012 and has become one of the more popular South African online fashion platforms. However, the Jumia CEO said that South Africa's environment is highly competitive, which made operating in the country difficult.

The CEO said that the group is not planning to sell the operation, and the site will hold clearance sales before shutting down.

Zando South Africa and Zando Tunisia - another site closing down - only made up 2.7% of total orders and 3% of Gross Merchandise Value in the six months ended June 30, the CEO said.

This marks just the latest business operation in South Africa heading for closure, while others have reported operational difficulties.

In September, South African online retailer Snatcher entered voluntary liquidation.

Snatcher, officially known as DHD Investments T/A Snatcher Deals, was an online retailer that had operated in South Africa for eight years, selling low-cost and off-brand electronics from China.

Earlier in October, popular online fashion retailer Superbalist informed employees that it plans to cut a large percentage of its staff.

BusinessTech received information from people close to Superbalist that the online store plans to retrench around 28% of its workforce.

The retrenchments affect most departments, including engineering, product management, finance, design, buying, and support.

The troubles for businesses are also very clearly present in the brick and mortar space.

Retailer Drip Footwear has entered liquidation, with employees laid off last week.

Drip's competitor, Cross Trainer, entered business rescue in August this year after facing cash-flow problems from the COVID-19 pandemic and struggling to keep up with operational costs.

Retailer West Pack also sought business rescue in May. The company said that it was financially distressed and unlikely to pay its debts when they became due over the next six months.

SPAR could offer West Pack a lifeline, with a potential acquisition on the cards.

South Africa's largest privately owned automotive parts retailer and wholesaler, AutoZone, may also receive a lifeline. JSE-listed investment group Metair is reportedly interested in acquiring AutoZone for R290 million.

Autozone entered business rescue in July of this year after performance did not meet expectations following a private equity transaction funded by debt.