The untold growth stock of Jumia.
Jumia is taking a more platform approach to growth. Instead of doing the e-commerce, they are building infrastructure to empower those who would like to do be a part of the e-commerce supply chain.
“Through our operations, we have developed a deep understanding of the economic, technical, geographic and cultural complexities that are unique to Africa, and which vary from country to country,” says Jumia in its IPO document.
Created in 2012 in Nigeria by Sacha Poignonnec and Jérémy Hodara, Jumia is currently a leader in the e-commerce in Africa in just 9 years. With record growth and steady loses, Jumia saw a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019 and a staggering $1 billion in losses since inception in 2012.
The IPO
In 2019, Jumia’s listing was recorded by some as a major milestone for Africa’s tech ecosystem (for me it’s another story entirely) and for a company which had expanded to 14 African countries with businesses across several verticals. The countries Jumia operates in together accounted for 72% of Africa’s GDP which was €2-trillion, and 74% of African consumer expenditure which was €1.4-trillion in 2018 — according to the IMF and Euromonitor.
In 2019 its Gross Merchandise Value — the total amount of goods sold over the period — contracted by 3% to €301 million in the 4thQ.
Not less than 800m people live in the countries Jumia operates in, some having the highest population growth rates in the world. With not less than 450m internet users in the market, Jumia said they had 6.1 million customers in 2019 from 4.0 million in 2018 seeing a 54% growth within fourth-quarter.
As Jumia takes
Sub-Saharan Africa is projected to have 690m smartphone users by 2025, up from 250m at the end of 2017, according to GSMA, the trade body for mobile carriers will this put Jumia in a good place?
“Given what it takes to actually build and deliver a proper e-commerce offering in any market, it makes better sense that investment is amortized over multiple countries instead of one. So the question of how big is the middle class, or how many of the 800m can spend money with us — we just know that we have $1.5B in consumer expenditure [in Africa] that we want to contribute to shift from offline to online, and we have dozens of millions of consumers to go after. Today we’re very far from hitting any type of ceiling.”
Juliet Anammah, chief executive of Jumia Nigeria
The IPO blackout.
As Jumia grew their challenge switched from focusing on driving the volume of sales, to increasing sales revenue per product line.
Within six months as at the close of the market on October 11, Jumia stood at $523.77 million which was less than 20% of its total market capitalization, following a Citron Research, alleging company of fraudulent fillings during the IPO registration.
According to the report, “Jumia is the worst abuse of the IPO system since the Chinese RTO fraud boom almost a decade ago. Worse than being “the most expensive” US listed e-commerce company, Jumia reported financials show us a stagnant business that has burned through $1 billion and has moved the suckers game to the US Markets.”
The Jumia Lean Approach
In the past months, The giant has exited several markets suspending e-commerce operations in Cameroon Tanzania, Rwanda and refocused its offerings. It handed over Jumia Travel vertical to Travelstart, and also made a thing for the Kenya’s ads industry, rewired Jumia Pay, into a full fintech focused product, and the micro-lending segment in Nigeria as part of restructuring efforts.
“We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec.
Gradual payoff
Partnership between Jumia Pay and Mastercard ushered in branded products, including cards and quick response codes, all part of Mastercard’s €50 million investment.
Result
(TPV) total payment volume on JumiaPay went up by 57% year-on-year to $45.7 million in 2019 and rewired the JumiaPay accounted for 29% orders on the e-commerce platform
Amidst these new moves in early April, the parent company, Rocket Internet, sold its stake.
And recent moves sees the company turning it logistics wing to a full time business.
“Businesses across the country are re-examining their costs, especially during COVID-19. For many, logistics is a major cost driver and headache to manage. At the request of our partners, we are opening up our logistics arm for B2B and B2C deliveries, with the hope that we can provide a better quality of service, at lower cost” Jumia Kenya CEO, Sam Chappatte.
In addition to handling deliveries for the e-commerce platform, Jumia logistics has now morphed into a full-blown logistics service overnight; one that is open to external clients, which include individuals and businesses.
Currently, the now-expanded service is available in Kenya where customers have the option of dropping off their parcels at Jumia drop off centres in Nairobi or have the company collect from their locations through business-to-customer (B2C) and business-to-business (B2B) type deliveries. Not unlike what is on offer from startups like Sendy, Lori Systems, and others. weetracker
Nevertheless
Jumia is taking a more platform approach to growth. Instead of doing the e-commerce, they are building infrastructure to empower those who would like to do be a part of the e-commerce supply chain. Chika-Umeadi
In a market where almost 89% of the total internet users access the internet on mobile Jumia took a “mobile-first” approach at the early stages when it was building and wide marketing.
How did this help the e-commerce giant?
Thank you.
Citural Tips
StartHawk 2.0 - Make your co founder search as easy and effective as possible.
Companies currently hiring.
Developer Experience Engineer – Android Engineer (Java X Flutter) | Flutterwave
Developer Experience Engineer – Backend Engineer (PHP) | Flutterwave
Founder this might help
Tweet of the week
Do you see things differently? Well then, definitely leave a message I would love to hear from you.
Follow us on twitter @citural @Instagram and @Linkedin.
Stay safe.