The CEO of the e-commerce company Jumia stated that as it intensifies its efforts to turn a profit in the face of growing competition from Chinese rivals such as Temu and Shein, it must “rebuild credibility” with investors.
Francis Dufay told the Financial Times in an interview published on Sunday that the pan-African group had a “history” with the stock market, saying that “too much had been promised and not enough” had been delivered since it went public in New York six years ago, becoming the first tech “unicorn” on the continent with a valuation of over $1 billion.
“My focus is very simple: we have to deliver the numbers. The target is break-even in 2027,” he said.
Jumia’s struggles
Jumia’s share price has dropped nearly 90 percent since its 2019 IPO, and it has dropped more than 60 percent in the last year alone.
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Baillie Gifford, the company’s former largest institutional investor, sold off its remaining stake last month because it has had trouble persuading investors of its strategy. Jumia is currently worth around $400 million.
In the group’s most recent attempt to restructure, Dufay, who assumed control of the company in late 2022 after the removal of its co-executives and entire management board, has been aggressively cutting costs over the past two and a half years, including slashing jobs and leaving unprofitable markets.
“Between now and 27, we’ll just deliver the numbers, and that will be a lot more impactful than big speeches or anything, and the markets will recognise it as we rebuild our credibility,” he added.
Since Dufay took over in 2022, the company has decreased its losses, although it still reported a $206 million loss at that time. Pre-tax losses are expected to range from $50 million to $55 million this year, compared to a $97.6 million loss in 2024.
Fierce competition from Temu and Shein
Temu and Shein, two Chinese low-cost behemoths, are increasingly posing a threat to Jumia, which has led e-commerce in many of its markets, and is under pressure to generate a profit.
Jumia’s goal has been to get more Chinese retailers to sell their goods on its online store. A team of roughly 70 individuals is currently working in Shenzhen to find new traders.
He stated that one-third of Jumia’s overall sales volume is made up of the quantity of goods from Chinese vendors, which include appliances, cosmetics, and clothing.
“We believe we can fight them,” said Dufay of Temu and Shein. “We have . . . more diverse product offerings in categories they can’t offer, we’re more tailored to the market and we have competitive productive offerings in their categories from our international sellers.”
Jumia’s cutting cost strategy
Jumia’s business now operates in nine countries, down from 14 when it went public, as it has backed off from its ambitious expansion plans.
According to Dufay, the business will instead focus twice as much on its current markets, including catering to more low-income clients outside of larger cities.
He claimed that Jumia, which presently only operates a comparatively small business, had the “greatest potential in terms of growth and profitability” in the Nigerian market. He added that Kenya, Uganda, and Egypt also had room to grow significantly.
Despite its explosive growth in the last ten years, e-commerce still accounts for a very small portion of total retail sales in Africa. Low internet usage, logistics, and payment issues—many people lack bank accounts or credit cards—are among the difficulties.
The prospects for e-commerce in Africa have also been hampered by high inflation and currency depreciation.
Efforts to convince investors
According to Dufay, he has been “talking to investors and having roadshows” in an effort to convince them of the company’s intentions.
The African telecom company Axian, which has operations in nine African nations, declared last month that it would buy an 8 percent share in Jumia. It raised its investment to 9.2 percent this week.
According to Dufay, Axian was a “serious investor” whose consumer credit and fintech ventures were “complementary to ecommerce.”
Dufay is also hopeful that the company will benefit in the medium run from the excess supply coming from Asian producers who have been impacted by trade tariffs imposed by US President Donald Trump.
“The exports from China and Southeast Asia will inevitably slow down and it means they will have look for new markets,” he said.
“There’s a big, growing undersupplied market here in Africa. Jumia is the middle man and we could be in a good position to tap that market and serve our customers better.”