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Jumia’s woes deepen; shuts down in seven countries



Jumia reports $50.5m revenue in Q3 2022


Barely seven months after its much celebrated listing on the New York Stock Exchange (NYSE), Africa’s e-commerce giant, Jumia, is fighting for survival as it battles several troubles that are threatening to bring it to its knees.

Jumia is an e-commerce firm consisting of its marketplace, which connects sellers to consumers; its logistics service, which enables the shipment and delivery of packages from sellers to consumers and its payment service, which facilitates transactions among the active participants on its platform in selected markets.

According to Business Hallmark findings, Jumia’s current travails are not unconnected with recurring operating loss, underdeveloped logistical infrastructure and traffic problems, political instability and customer trust in several of the countries where it operates.

At the last count, the firm has closed shops in four countries, Cameroon, Gabon, Rwanda and Congo and is scaling down in two others, Tanzania and Uganda. The move by Jumia to close its subsidiaries in the African countries, it was gathered, is an attempt to cut down on its operational cost as projections to meet its profitability targets by 2022 have gone awry.

According to the 2018 financial report of the company obtained by BH, the firm, which generates most of its revenue from commissions from third-party sellers, has never made profit since its founding. The revenue the company generated has not been enough to cover operating expenses, with losses in 2018 totaling €170.7 million. Accumulated losses as of December 31, 2018 totaled €862.0 million, the report stated.

However, the firm in an email reaction to our correspondents enquiry, tried to explain the troubling financial situation.

“We expect that our operating expenses will continue to increase as we intend to expend substantial financial and other resources on acquiring and retaining sellers and consumers, growing and maintaining our technology infrastructure and sales and marketing efforts and conducting general administrative tasks associated with our business, including expenses related to being a public company.

“We intend to retain all available funds and any future earnings to fund the development and expansion of our business,” the statement said.

Jumia’s failure to declare profit, it was gathered, is also a worry to many of its partners who had invested several millions of dollars in the business. A source close to the Nigerian arm of the business confided in BH that apart from the majority owners of the company, all the investors that came in later at several stages to stake money in the firm do not have anything to show for their investments.

He disclosed that while Jumia had never paid dividend to its investors, there are no plans to pay in the foreseeable future.

“I can tell you without mincing words that Jumia is not planning to pay a dividend any time soon. The only avenue where investors could get returns on their investments is through stock price appreciation.

The company also said it is still working on a target of breaking even “towards the end of 2022.”

Another major problem currently hampering the firm’s profitability is the unstable political climate in several of the countries where it operates. Checks revealed that Jumia currently operated in African markets that are still developing logistics, delivery and digital payment capabilities. While delivery is most times too expensive or too time-consuming to compete with traditional retailers, cashless payment is challenging.

Some of the markets where Jumia operates, namely Congo, Cameroon, Egypt and Uganda are going through political instability. Terrorism and violent crime have also had serious effect on Jumia’s growth, by restricting the delivery of ordered products.

Several of Jumia’s delivery agents have been robbed and killed while their attackers relieve them of their goods and money. In 2018, Jumia reported that one of its warehouses in Kenya was robbed of about €500,000 worth of merchandise.


In 2018, a delivery agent was killed in Port Harcourt in Rivers State while delivering a phone and his corpse was dropped in a septic tank. While Boko Haram is wreaking havoc in Nigeria, with the disruption of the economy in the northeast, militancy and kidnappings in the South East and South-South had also adversely affected Junia’s fortunes.

Worried by these attacks, the management of Jumia Nigeria toyed with the idea of scrapping the cash on delivery policy, but quickly dropped it when it found out that over 95% of its Nigerian customers prefer to pay on delivery after thoroughly inspecting their products.

“Since customers are worried about being scammed and are uncomfortable sharing their information online, we have to continue with the cash on delivery policy. If you have those kinds of mental barriers, one way to break them is to say you’re not sure, fine, use cash on delivery — and when the things come to you, you decide if you want it,” said Juliet Anammah, chief executive of Jumia Nigeria.

When the affected governments are not fighting internal revolt or insurgency, which largely disrupt planning and supply, they make inconsistent policy changes, such as price controls and currency devaluations that are not conducive to doing business.

Jumia is also daily losing the trust of its customers who have to contend with failed deliveries and late collections. According to findings, many customers, including those that don’t have a bank account or don’t trust online payments, choose to pay upon delivery.

On many occasions, delivery agents could not complete deliveries because they did not meet customers at home. A customer has to be home to accept the package. Failure to complete a delivery is a continuing problem, with 14.4% of Gross Merchandise Value (GMV) in 2018 either a failed delivery or returned. Delivery verification is also a problem.

“For example, in Kenya, where approximately 95% of our Jumia’s consumers paid in cash or with cash equivalents on delivery in 2016, we discovered in early 2018 that €720,000 of cash payments remained uncollected in 2016, the large majority of which was never subsequently collected,” Jumia said.

A civil servant who used to patronize Jumia for his needs, Bello Lawal, said he last stopped doing business with the firm over one year ago, when it failed to address the concerns of delays and payment. He disclosed that he now patronise classified sites such as, where he can speak directly to the seller, arrange a meeting, view the goods and decide whether to purchase.

Another major headache the firm is also grappling with is the fallout of third parties selling most of its goods. Findings revealed that about 90% of the items sold on Jumia in 2018 came from third-party sellers, which puts the company at risk of any issues that the third-party might engage in, like fraud, while Jumia sells the other 10% of items directly.

Shortly after it listed on the NYSE, the company said it uncovered instances of improper orders placed and subsequently cancelled on its marketplace platform wrongly inflating its order volume. Some of the improper sales practices, the company said, were carried out by its own personnel in “Jumia Force,” its network of commissioned agents

Cumulatively, the improper orders generated around €16 million ($17.5 million) in gross merchandise volume (GMV) value between the last quarter of 2018 and the first two quarters of 2019, the report shows. GMV is a metric used by e-commerce companies to highlight the total value of merchandise sold through the site.

Jumia claimed the fraudulent orders had no impact on its financial statements even though it acknowledged the reported GMV figure for Q2 2018 had been adjusted in light of the improper transactions. Jumia management also revealed the employees involved have since been suspended pending a review.

However, the explanation has done little to assuage the negative speculation the company’s stock has endured over the past few months. After the initial bullish run on the New York Stock Exchange which saw its share price peak at $49.77 after its landmark IPO, Jumia’s stock has remained bearish due to lawsuits and investigations amid claims of fraud.

Jumia confirmed that “several class action lawsuits have been filed” against the company and its officers in New York over “alleged misstatements and omissions” in its IPO prospectus. It also noted that the lawsuits “remain in their preliminary stages.”

At the close of trading on Wednesday, November 27, price of a unit of Jumia on NYSE was $6.30+0.37 (+6.24%)

A financial expert, Mr. Chinedu Orji, who spoke to BH, said the ongoing travail of the company has confirmed the argument that Jumia grew too fast beyond its capabilities.


“The company grew so large that it couldn’t handle its aftermath. As you know, growth is not the same as profitability. However, I think Jumia is safe in Nigeria, which serves as one of its major revenue drivers”, Orji said.

It would be recalled that Jumia’s main rival in Nigeria, Konga, backed by Naspers, was last year sold to Zinox, a data centre and computer firm, after cutting roughly 60 per cent of its staff. A number of other ecommerce sites have downsized, shut down or pivoted into other businesses.

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