Jumia, an African online retailer, reported an operational loss of $20.2 million in the second quarter of 2024 amid a 17% drop in sales.
Nonetheless, the company’s Q2 loss indicates that it reduced its losses by 8% compared to the previous year when it reported an operational loss of $22.1 million.
The group’s revenue during the second quarter of this year was $36.5 million, compared to $44 million at the same time last year.
Throughout the examination period, Jumia’s gross merchandise value (GMV), or the total amount customers paid before deductions like fees, discounts, or returns, decreased by 5% year over year to $170.1 million.
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Revenue loss due to currency devaluation
The corporation attributed this to devaluations of the currencies in which it conducts business.
Francis Dufay, the group CEO of Jumia, stated that the company’s plan to reduce losses and transition to profitability is progressing as expected when discussing the performance of the business.
This quarter’s result bolsters Jumia’s conviction that its approach is working. The CEO stated that Jumia is well-positioned for development as it progresses to profitability, thanks to its distinctive asset base, strategy, and in-depth knowledge of the African e-commerce sector.
Jumia’s reforms to reduce loss
Dufay’s cost-cutting policy, which he has been implementing since becoming CEO, has eliminated about 900 jobs. In 2023, the firm closed Jumia Foods, citing Dufay’s report that this would help the business cut losses.
“Jumia is still using its JForce network to support its focused and disciplined approach to marketing spend, which is aimed at more effective marketing channels like search engine optimisation (“SEO”), customer relationship management (“CRM”), and pertinent offline local channels.
Dufay emphasised that a 262 basis point year-over-year improvement in repurchase rates in the first quarter of 2024 is proof that Jumia is recruiting a stickier and higher-quality client base due to these efforts.
According to the financial results, jumiaPay transactions surpassed 1.9 million in the second quarter, up 31% year over year.
According to the firm, the primary drivers of adopting cashback marketing and incentives in the second quarter of 2024, along with increasing JumiaPay penetration on delivery. ◦
The document also revealed that efforts are being made to improve the user experience, and it stated that JumiaPay is being positioned as a powerful facilitator of the company’s e-commerce platform by continuing to roll out JumiaPay on delivery to increase cashless orders.
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Jumia witnessed growth amid an economic slowdown
According to Dufay, despite the challenging economic situations in Nigeria and Ghana, two of Jumia’s main markets, the firm witnessed growth in those regions when it reported its Q1 2024 financial results.
He claims the company’s accomplishments are even more noteworthy given Africa’s challenging macro environment.
Significant currency devaluations in some of its main markets have created a challenging operating environment, affecting purchasing power and supply availability.
However, according to Dufay, Jumia’s capacity to maintain adequate inventory and provide a wide range of products at affordable costs keeps users interested in its platform.