Jumia made NGN21 billion loss in six months

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Jumia, Nigeria’s largest eCommerce company is far away from profitability.

This to me is not surprising. There was too much pressure on the company as a result of the recession, drought in Forex and increase in the hardship of lower-middle-class Nigerian. With 70% of eCommerce sales gone in the wind.

But the company still needs to define its business model in the face of growing shopping mall culture with the likes of Shoprite and Game declaring record profits.

As per when the company will make a profit, I think it will take another five years. What do you think?

https://pageone.ng/2017/09/28/jumia-moves-farther-from-profit-posts-usd61-million-loss-in-six-months/

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what a useless company, yet they still continue to get funding. White priviledge at it’s finest.

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I think the company misread Nigeria’s oil boom of 2011-2014 for a reliable market.

Over 90% of what they sell on their site are imported. This opens them to Forex risks should oil prices fall. Many Nigerians can no longer afford two square meals, where will they get NGN100,000 to buy the latest Android phone Jumia and Konga are peddling?

Both Konga and Jumia will need to sit down and think about what business model they will leverage as the current merchant model might not even work in the medium term.

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Actually Konga is profitable, and in a way better position than Jumia

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I think the major issue with Jumia is they have lost lots of ground to Konga. This, to me, is due to various reasons. Firstly, Jumia stopped advertising or drastically reduced their marketing budget a few years ago, when they became very popular. At that same time, Konga got funding and started massive marketing, which they continued till today. That struck Konga as the default place to shop on the Internet for most Nigerians.

Secondly, Jumia relies on their own stock, and the stock of a few other pre-vetted big merchants. Konga, on the other, welcomes everyone to sell with them, big players, tiny players, everyone in between. This ensured Konga always has stock beyond what they can stock themselves. There is a huge diversity on Konga, such that most people give up searching for a product if they can’t find it on Konga. Jumia, on the other hand, lacked many essential products, and lots of niche products. When they have it, the choice is severely limited, as typically it’s available from one merchant.

Konga ships stuff by themselves. They have a whole logistics company dedicated to shipping stuff. This makes it very easy for merchants to sell on their site. Their processes are also very automated (at least in Nigerian standard). This makes merchants more willing to sell on Konga, and of course the customers will go where the merchants are.

Jumia’s merchant website, kaymu, has always received much less attention than Jumia itself, and has made it difficult for it to be recognized by most people. Some people use kaymu only as a last option, and merchants don’t like it that much. It feels more like OLX. Konga doesn’t segregate their marketplace from their own shop, which makes it more trustworthy and more Amazon-ish while kaymu is more eBay-ish.

Finally, Jumia is everywhere at the same time. I’ve lost count of the number of Jumia owned websites and services. They’re basically dividing their labour, there is little focus. Not to talk of that they’re in so many other countries. You can only imagine the overhead costs involved in managing that many companies.

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Oh dear!

Thanks for the time you took out to write this piece…

It is complete rubbish.

I think the major issue with Jumia is they have lost lots of ground to Konga.

Based on what number or information you have?

Firstly, Jumia stopped advertising or drastically reduced their marketing budget a few years ago

Uh? Jumia, ever stop advertising or reduced?

Secondly, Jumia relies on their own stock

Actually, Jumia is now a 95% marketplace…has been for almost 2 years now

I will stop here because you have not one clue.

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From your history, I see you have a habit of insulting people and thinking your intellectually superior to every other person. You accuse me of not providing sources, where are your own sources?

If you can’t respond to a comment with intelligent counter-argument, then don’t respond at all.

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Sigh. I only comment on certain topics. Unlike you, I don’t jump into topics and write long stories when I have not one clue. No hard feelings, your entire input about Jumia is untrue.

I don’t need to prove anything to you mate. Bask in your ignorance.

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Bask in your filthy tongue, if it was so untrue will they be losing money this way? Have they released growth numbers that gives you an idea on how they are growing or revenue numbers?

If you work for Jumia say so and then make the guy understand your Point you dont go insulting and saying’ I only comment on certain topics’ if you have a very solid argument, drop it or shut up.

Kinnevick recently left Jumia group and Orange and MTN are on the verge of pulling out, im sure the investors were confident that Jumia is fine.

if Jumia is 95% marketplace can they release growth numbers and CAC and Revenue numbers on a MoM and YoY Basis or do you just want to blab here without any single fact than you can blab?

Jumia is heading to a slippery slope losing large chunks of revenue due to Operations cost, OP has said they need to rethink business model or begin acquisitions to forestall loss.

If you like respond to this post with an insult or respond with a concrete argument that remains your business.

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Ha. The holy one is here… the first thing he does is insult me too? Aren’t you classy?

if Jumia is 95% marketplace can they release growth numbers and CAC and Revenue numbers on a MoM and YoY Basis or do you just want to blab here without any single fact than you can blab?

You can check Rocket Internet’s website for most of these infos you asking for.

But still, you are just another ignorant fellow. :wink: Please enjoy yourself.

Jumia is heading to a slippery slope losing large chunks of revenue due to Operations cost, OP has said they need to rethink business model or begin acquisitions to forestall loss.

Jumia doesn’t publish such info so I am wondering why you sound so sure of what you are saying. Why can you be correct and I can’t be correct?

You won’t get another reply from me.

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Lmaooooo unfortunately for you you are the ignorant one here THE UNHOLY ONE( like i even know what this means).

You attacked a commentator like you had a fact, but now you are pointing me to Rocket internet website lmaoooooooooooooo mind you RI will only give you revenue figure either Quarterly or Yearly (thats if you even get) but not acquisition numbers you get that by listening to investor calls right before Quarter results are sent, i happen to always listen to them so spare me this rubbish if you dont have any fact to add like i said shut up or bring to the table.

I can be correct because i do due diligence from Startup and Investor side and i know they are bleeding cash due to heavy Operations, would you as a serious investor be happy if a company loses 21 billion in six months? would you say ’ ah its the cost of doing business or would you investigate actions and sell your shares and pull out’ what then does that tell you o unsmart ignorant one?

If you like reply o, if you like dont reply, you should never come to a discussion like you know when you no nada, i myself can tell you few things but its those inside who have the data but what you can glimpse is gory lets not sugar coat it, Jumia Group is at a negative and bleeding cash quickly thats how it stands today, argue in your bedroom.

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This report is the opposite of what OP posted ;

According to TechCity : Expert analyses concluded that the company is in a good shape and should continue to lower its expenses while rolling out new ways to generate more revenues, maximise and increase profits.

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Well, Lord-Triple may have sounded rude but it doesn’t make Kizer right. JumiA has always been an market place open to sellers; been like that for a couple of years now. I am a digital marketer & have sold products in Millions for clients on the platform. But then, they are not as grounded as Konga in Naija like Kizer rightly pointed out. Probably because they are trying to operate in well over 20 countries in Africa while Konga is most concerned about their Nigerian market.

& yes, they have struggled with their sister companies as well, Kaymu for instance has been long dissolved and fully integrated into JumiA platform as “JumiA Market”. Woke up one morning to see my store had been converted to a JumiA store. They have also struggled with their food delivery company “Hello Food”, their land acquisition company " Lamudi", car sales company “Carmudi”. Of all their sister companies, " Jovago" seems to be the only real survivor thou they are struggling to keep their head above water clearly loosing market share to the leading player Hotels.ng

JumiA needs to concentrate, restrategize & find a focus, the platform is already broad enough. We can as well give them a break, it took Amazon 20yrs to turn profitable

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This is why it is good we have more platforms writing about company results. No matter how one embellish the truth, all is not well with over 90% of companies in Nigeria let alone eCommerce, a sector that has less than 1% of the total retail sales in the country.

Jumia, Konga, Yudala and everyone else need not just time but strategic focus to be spearheaded by the right people who can be very open to change. Only Lagos, Abuja and maybe Port Harcourt has some level of relative interest in eCommerce. eCommerce startups will have to decide where they want to play.

There is still time but the cash to go along might not suffice that is the more reason we should not compare Konga or Jumia with Amazon. Amazon is in very developed markets with eCommerce getting up to 25% to 30% of all retail sales. There is also a strong investor appetite to place bets on innovative ventures, therefore Amazon had a better environment than what Konga or jumia are exposed to.

I am keen on seeing these companies succeed and even listing on the NSE. But only time will tell if they can weather the storm.

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This is a very audacious claim. Can you back it up with facts , please?

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Since the recession started last year, most companies lost close to 70% of their revenue on a year on year basis. Do your research virtually all blue chips listed on the NSE posted a major drop in their revenue (EBITDA) throughout last year. They are just recovering and even at that they are heavily leveraged. So if big companies have seen major drop in revenue, small companies who benefit from them suffer more.

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Quite thoughtful. Someone help Jumia define why they are into eCommerce in the first place. Expansion can cause loss of focus really, expanding when you are expanding into new markets.

Above all, should we keep having new eCommerce businesses springing up in Nigeria, considering the daunting problems the ‘big guys’ are facing?

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I’ve been thinking about this too, maybe it might be just a wee bit too early for e-commerce in Nigeria or the “big guys” are just jumbling it all up.

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This is what I think; I believe Jumia’s model is flawed from the beginning. I will share why and what I believe could work for them based on personal experience.

First let me start by saying I have bought from Amazon (by proxy) far more times than all online retails stores in Uganda combined. And the reason is very simple. I don’t need Jumia to buy the same stuff I can get down town Kampala in less than 2 hours with so much ease. And here’s why offline shopping is far more convenient;

  1. Jumia promises 3-4 days delivery. I could just pick the item in 30 minutes on my way back from work.
  2. I have the liberty to inspect the item, and probably bargain with the vendor when I shop offline.
  3. I don’t have to burn my airtime instructing the delivery guy the location of my home. Also we don’t have to agree before hand on acceptable delivery time when am at home.
  4. This might not apply to me, but for some families, offline shopping in big city malls is a whole experience. Using escalators, shopping carts and eating out can be a fan activity (watch Trevor Noah - Zambia loves escalators https://www.youtube.com/watch?v=n7GxnhQjBaw).

So why would I shop with Amazon instead of Jumia when both are online retail stores or better when Jumia is in the country?

The answer is simple; Inventory. Amazon has well over 480 million products in its catalogue at the best prices. Jumia has perhaps 100,000 max, not sure. This give me choice which Jumia doesn’t afford me. I have crunched the Jumia site very times for specific products each time being disappointed that they don’t have what I am looking for. Amazon does most of the times.

If I were Jumia, this is what I would do.

I would not entirely throw away the existing model. But what I would do is introduce global shopping opening up the African continent to the global marketplace. I would be a middleman helping African traders ship products from stores in China, India and the Europe. I would help African middle class ship products from Amazon, ebay, best buy, walmart etc. I might even experiment on accelerating inter-state African trade which has been nearly non-existent for years enabling for instance a trader in Kampala ship clothing material from vendor in Ghana.

In fact I would simply pretend to be an online store, but in actual sense, I would be a shipping and logistics company providing an automated and user-friendly way to connect African consumers and producers/traders to the global marketplace in ways that traditional giants such as DHL, Aramex have failed. I would abstract the complexities of customs, taxes, global trade rules and regulations, global (and later local) shipping and logistics from end-users so much so that they are willing to pay me to deliver their products.

That said, I believe online stores such as goodexpress or mall4africa are onto something because they actually do what I have described above on low-budget. Mall4africa for instance has introduced a feature where African traders can sell their products to customers in the USA. I believe they are solving a particular pain point because its been incredibly difficult to sell stuff outside of African markets (particular America, Europe) compared to buying from those markets. Rocket Internet has a particular advantage to do some of these things given their European roots and deep pockets, but unfortunately, they are busy xeroxing models that don’t really work in Africa.

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They already have foreign vendors on the platform. One poster above was complaining about it funny enough. In fact I think all major e-commerce platforms in Africa already welcome foreign sellers. I’m telling you people have tried everything in the last 10 years in e-commerce in Africa. Maybe (like with most online categories in Africa) the market is simply not THAT big and we would be better off building small niche stores that can be profitable with small teams. People need to learn from Linda Ikeji and Seun. That is the approach that works more online in Africa.