African e-commerce unicorn Jumia trains eye on profit after rocky 2019

Photo: Reuters

E-commerce unicorn Jumia Technologies, which last year became Africa’s first tech firm to list in New York, will focus on proving it can turn a profit after a bruising 2019, one of its co-founders told Reuters.

Jeremy Hodara said the company aims to capitalise on its payment platform and infrastructure network and to boost revenue from services for third-party sellers on its online marketplace.

“We’re going to be extremely disciplined and very focused on our path to profitability,” Hodara told Reuters on Tuesday at the company’s office in Lagos.

Jumia, which hit a peak value of close to $4 billion, has seen its shares fall by nearly 70% since its IPO last April.

They tumbled after short-seller Citron Research cast doubt on its sales figures, which dealt a major blow to investor confidence.

Late last year, it shut its e-commerce service in Cameroon and Tanzania and halted food delivery in Rwanda. Hodara declined to say whether more markets could face the axe.

Its third-quarter adjusted EBITDA loss widened to 45 million euros, up nearly 27% from a year earlier, and as it burned through cash, analysts warned that raising more could be a challenge.

“Clearly it’s a bit uphill, but I think in the end if investors believe they’re going to make money on the story, they’re going to buy into it,” said Sarah Simon, senior analyst at Berenberg. “But they have to prove themselves.”

Hodara declined to comment on whether Jumia planned to seek more outside cash, but said that as the business scaled up, costs would come down. Improvements to its algorithms were also helping, he said.

JumiaPay, the company’s online payment platform, is a key part of the growth plan, Hodara said. The company is interested in making it and its logistics network available to third-parties, even those not selling on its e-commerce platform.

Jumia has tested this on a small scale, but said widespread access – where, for example, an individual could drop a package at a Jumia hub in Lagos and have it delivered to a friend in Nairobi – could come eventually.

“We have a very significant footprint of physical locations across the continent where we can inject packages and parcels and distribute it. That’s unique,” Hodara said.

In the near term, the company is also looking to increase the extra services it offers to sellers, for a fee, in addition to the warehouse space, marketing services and search engine optimisation it already offers.

“A fantastic world would be a world where you have zero commission as a seller…and your entire monetisation is made out of additional services you sell to the sellers,” he said.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.