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African Ecommerce Giant, Jumia, To Reduce Staff And Product Offerings

Felicia Akindurodoye by Felicia Akindurodoye
November 26, 2022
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African Ecommerce Giant, Jumia, To Reduce Staff And Product Offerings
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Jumia, an African e-commerce company, reported $50.5 million in sales for the third quarter of this year, although engaged customers and the service values sold both increased significantly. In comparison to the previous year, operating losses fell (33%), while gross profit climbed (29%). These findings were released just one week after the company’s co-CEOs announced their resignations, prompting some industry analysts to question the company’s plans.

However, Jumia co-founders Sacha Poignonnec and Jeremy Hodara quit as co-CEOs recently, barely 10 days before the third-quarter 2022 financial report. As a result, at the end of their term, a fresh face — Francis Dufay, the ex-chief of Jumia Ivory Coast and now interim CEO of Jumia — took leadership of the investor briefing for the first time.

Read also: Jumia Shares Rise After A Tough First Quarter

The New Management

According to the company, the findings demonstrate its progress toward profitability, and it will cease services that are incompatible with that goal.

This decrease in losses is due to a significant fall in marketing costs in the form of sales and advertising expenses, which decreased 31.5% year over year from $24 million to $16.4 million, and an improved monetization plan, which saw gross profit climb by 29.2% over the same period.

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Dufay was quick to point out during the call the reasons the supervisory board of the e-commerce giant decided to bring in new management, highlighting the need for more deliberate execution and a return to the fundamentals of e-commerce if Jumia was to turn a profit after five years of consecutive losses on the NYSE (as Africa’s first publicly traded company).

One of the programs being pulled out is Jumia Prime, an Amazon Prime-like loyalty program that promises limitless free shipping on all orders. Jumia announced it as a prototype in 3 Nigerian cities in June 2019 for 2,999 naira ($7) per month. It was eventually expanded to Egypt, Kenya, Egypt, Côte d’Ivoire, Ghana, Uganda, Tunisia, and Senegal. The idea behind Jumia Prime was that potential loyal consumers would want to pay a recurring subscription fee rather than pay different shipping costs for every order.

However, according to its results presentation (pdf), the company now believes that internet commerce in Africa is “too early in the adoption curve” for that product and will instead focus on knowing how to make customers repeat purchasers.

“We want to significantly improve our unit economics and create the right fundamentals for long-term growth. In the past, we’ve seen a lot of growth as a function of marketing, and promotional events, which then, as a consequence, lead to the alteration of our economics,” Dufay mentioned in an interview on Jumia’s new strategy. “This is not the way we want the future. And we believe that we have lots of success cases across our countries that show that we can grow and improve economics simultaneously.”

Dufay stated that he wants Jumia to be a more appealing platform for third-party suppliers to sell on. Jumia intends to achieve this by abandoning old monetization shortcuts such as increasing commissions for sellers’ services (for example, it charges 20-25% for fashion items and 5-10% for technology items). Instead, the company hopes to earn new revenue by providing value-added services such as advertising solutions and expanding its local supply of items.

Jumia, Zipline Partner To Launch Drone Package Delivery In Ghana

Reducing the Team in Dubai

“We intend to drive more staff costs savings and are implementing headcount reductions in several areas of the business,” the company stated in a section covering general and administrative expenses.

Aside from product cuts, Jumia’s report with the US Securities and Exchange Commission (SEC) mentions a continuing layoff exercise.

The affected positions tend to be based in Jumia’s Dubai office, where its officials typically work. More of the company’s senior management would relocate to Africa to be closer to the market, according to Dufay during the call.

Tags: E-commerceeCommerceJumia
Felicia Akindurodoye

Felicia Akindurodoye

Felicia Akindurodoye is an experienced writer and researcher, whose watchword is originality.

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