E-commerce firm Jumia, will shift to electric-powered vehicles for delivery of goods in a bid to lower operational costs as it seeks to reduce prices of goods purchased via its platform.
Vinod Goel, the chief executive of Jumia Kenya disclosed the plans that will cut the cost of logistics by up to 40 percent, paving the way for consumers to enjoy price cuts on products purchased via Jumia. This is because the firm factors in logistics costs when pricing goods.
Jumia is joining other firms that are gradually phasing out petrol- and diesel-powered vehicles from their fleet, helping to curb environmental pollution besides lowering operational costs.
“I would be happy if we replace a third of our vehicle fleet with EVs in the next six months. This will reduce our logistics costs and it is key to making our business more sustainable, costs-wise and environmentally wise too,” Mr Goel said.
“If we shift to EVs, fuel costs for our 3PLs (third party logistics partners) will fall by between 30 to 40 percent and to the consumers, prices can fall by around three percent.”
The firm is currently piloting use of EV tuk tuks in Kenya, laying the ground to fully deploy electric vehicles.
Use of EVs in Kenya has for the past three years gained traction with firms, online tax-hailing operators and public transport services adopting the units.
Customers who purchase goods via the Jumia platform can either collect them at the firm’s designated pickup joints across the country or have them delivered at the doorstep by Jumia’s contracted logistics partners.
Jumia incorporated third parties as part of its transport service providers for last-mile delivery of goods in all its African markets in 2020.
Kenya had 4,193 EVs at the start of last year, which was a growth of 295.9 percent from the 1,059 units that were on the roads in December 2023.
Jumia’s push to adopt EVs comes at a time the firm has reported significant growth of customers outside Nairobi.
Mr Goel says that Jumia reported a threefold surge in orders from rural Kenya and towns outside Nairobi last year, prompting the firm to add 80 more pickup locations for its goods outside Nairobi.
The e-commerce firm has driven its customer numbers by offering lower prices for most of the goods purchased on its platform. Jumia has over 20,000 agents across Kenya and makes deliveries in over 300 towns.
Jumia plans to open at least 100 more pickup locations across Kenya this year as it remains keen to cement its growing presence in the country.
Kenya is Jumia’s third biggest market in Africa, behind Ivory Coast. Nigeria, the continent’s leading economy, is the biggest market for the e-commerce firm.