Why ZUMI Kenya is Shutting Down
ZUMI Kenya is has finally shut down Shutting Down.
845,775—-#4,955
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Co-CEO
ZUMI
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Jumia Group
2 years 1 month
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Head of General Merchandise, Jumia Kenya
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Country Manager, Jumia Tanzania
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he world is witnessing a paradigm shift in media from print to digital. Digital-only media companies have been hailed as the future of journalism, and the venture capitalists have been testifying it by investing 100s millions of USD in these companies.
What we see in the US, China, India is not the story in Kenya. The number of digital media platforms in Kenya have gone up significantly in number in the last 2 years: Gadgets Africa, Pulse Live Kenya, Tuko, TechWeez, AfroMaisha, among others. Even though the digital platforms have a high and an instant reach, the advertiser’s mindset is still bent towards print and traditional media. Under the digital advertisement category for advertisers, budgets are mainly targeted on FB, Instagram and Google.
Lifestyle and Fashion focussed media platform Zumi has finally shut shop after struggling to make decent revenues as well as raise capital.
Launched in 2016, Zumi had raised over USD 250K from Chandaria Industries investment arm Chandaria Capital, UAE based Majlis investment and a few other investors. Founded by Ex-Rocket Internet Africa Employees William McCarren and Sabrina Dorman, Zumi was planning to pivot into an eCommerce platform as advertising revenue didn’t pick up.
The company officially announced the update on its social media pages yesterday that the company will cease operating, although the individual content producers will continue as usual.
There has been a lot of debate in Kenya around why digital media platforms are struggling to survive even when the digital wave has hit the country. And a lot has been attributed to the lack of awareness about native advertisement and performance metrics by the advertisers.
Kenya as a consumer market has been flooded with international brands for a while but how the population consumes awareness about these products still rests on traditional methods. Though it must not be ignored by the advertisers that the population is getting younger by the way and digital is the prefered medium of content consumption.
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Zumi, a lifestyle and fashion magazine focused on the millennial generation has called it a day, and the founders are moving on to eCommerce for the same demographics, according to sources that spoke to TechMoran on condition of anonymity.
Zumi, which raised over $250,000 to expand into Nigeria and Ghana was founded by Ex-Rocket Internet executives William McCarren and Sabrina Dorman, and covered entertainment, lifestyle and relationships, fashion, beauty and style news for African women ages 18-35.
Zumi which competes Fabwoman, follows OMG Digital which closed in similar circumstances. Our sources claim Zumi, like OMG, grew on social media promotions and didn’t have an organic audience. The firm inflated its numbers and raked in high profile clients such as Safaricom among others but its run-rate was so high it couldn’t foot its operation minus raising more funding. Zumi executives were also paying themselves telco-level salaries and expanded to more markets in anticipation that ad revenues will sustain and grow the company.
In Kenya, the firm let go of the whole content team of about 10 people in its bid to move into eCommerce as advertising and content syndication wasn’t making enough money to sustain the mouths.
There are also rumors that the two founders mismanaged investor funds and grew too fast. Something they might have learned from Rocket Internet which is running in losses till today. If they launch an eCommerce site, chances are they will run into the same problems and close shop again because they might not have learned why Zumi failed.
“They were running too fast and actually doing nothing. They went too big too quickly and launched allover with offices and staff. They should probably not hire too many people and they should not pay themselves as if they are working for Goldman Sachs,” our source told us.
Zumi’s total equity funding was about $370k after it raised $120 in August 2016 followed by the $250,000 to help it expand to the two new markets. Zumi had the best category of content to cover in Africa but it was without competition in all these markets. Fashion, beauty, dating, work, health and self-improvement are key subjects to young women across the world and Africa is no exception, but the content business is a marathon and not a sprint.
The content business is also so dynamic and its dependency on ad revenues is a hindrance to growth as Africa’s ad spends are not that high.
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