How Jumia Processed 26.5 million Orders and Generated N63.6 Billion Revenue in 2019
Africa’s e-commerce giants, Jumia, has claimed that it processed 26.5 million orders and generated about N63.6 Billion in Revenue in 2019. While the figures might seem impressive, the company however posted losses in 2019. This is according to the recently released Q4 and full-year Jumia financial report.
The Jumia Financial report, which is the company’s first full-year financial report after debuting on the New York Stock Exchange (NYSE), showed that the annual number of active consumers on the platform rose by 54%; from 4 million recorded in 2018 to a record 6.1 million.
The company also surpassed the milestone of over 1 billion visits during its Black Friday Campaign in 2019.
Growing revenue but growing fulfillment cost
In 2019, Jumia’s e-commerce services in its African market generated revenues of about N63.6 billion, representing a 24% increase from the N51.2 billion recorded in 2018.
However, the fulfilment expense which includes expenses related to third-party logistics, warehouses and pick-up stations increased to N30.7 billion, a 54% spike from the N20 billion spent in the previous year.
This resulted in a cumulative loss of about N591.2 million after deducting fulfillment expenses from the N30 billion gross profit recorded. However, in the last quarter, there was a positive change as the company recorded a gross profit of N397.2 million after deducting fulfillment expenses.
Since its inception in 2012, the e-commerce has expanded its pan-African operation gradually and is now available in 11 markets across the continent.
Last year, the e-commerce giant had an 85% increase in orders from 14.4 million in 2018 to 26.5 million in 2019. Also, the total amount of goods sold (Gross Merchandise Value, GMV) rose significantly to N435.5 billion from the N328.6 billion recorded in 2018.
However, the Q4 report shows a 3% contraction in GMV, with GMV growth in phones and consumer electronics contracting by about 20% year on year (YoY). Jumia CEO, Sacha Poignonnec attributes this decline to business re-balancing towards higher consumer value.
“We initiated a rebalancing of our business mix towards higher consumer lifetime value business, r educing promotional intensity on certain product categories, while driving growth of the more affordable, higher purchase frequency ones. While this led to a softer GMV growth trajectory, it has supported consumer acquisition and usage growth. “Sacha Poignonnec, Chief Executive Officers of Jumia
According to the Jumia financial report, the business mix rebalancing is expected to continue to negatively impact GMV development over the next two quarters.
JumiaPay transactions tripled in 2019
Jumia experienced a major boost in its online payment app as the number of transaction on JumiaPay rose exponentially from 2 million in 2018 to 7.6 million in 2019.
Similarly, the total payment value (TPV) on the payment platform rose by 127% to N49.3 billion from the N21.7 billion recorded in 2018. Also, JumiaPay was used for 29% of Jumia’s e-commerce orders.
The report attributed the success of JumiaPay on-platform to increased customer education and expansion of digital services.
JumiaPay is currently available in 6 African markets including Nigeria. The report reflects the company’s commitment to generate more revenue from digital payment products and also pushes its plans to make JumiaPay a standalone payment service across Africa.
Around December last year, Jumia started shutting down some of its operations across the continent in what appeared to be a restructuring drive. Since then they have shut down operation in Cameroon, Rwanda and Tanzania.
Poignonnec explained that the exits were aimed at increasing support for the company’s long term growth and profitability.
While we continue to believe in the long-term potential of these countries, we decided to allocate our resources to the geographies that we currently believe present the best opportunities to support the Company’s long-term growth and path to profitability.Sacha Poignonnec, Chief Executive Officers of Jumia
The company reported that the countries and assets it exited accounted for less than 10% of the recorded GMV, Gross profit and Operating loss for 2019.
A summary from the Jumia financial report shows that the company still has a high fulfillment cost that will affect profitability despite the high revenue generated.
Surprisingly, the report didn’t disclose information about earnings from their listing on the NYSE, which is perhaps the company’s biggest business decision in 2019. However, the share price which debuted at $14.50 in April 2019 currently sells at $3.99.
The geographic diversification of Jumia’s market opens it up to a population of more than 600 million people. However, with increasing competition from e-commerce platforms like MallforAfrica, Konga and DHL, Jumia has to find a more profitable model to comfortably keep their e-commerce crown in Africa.
If you’d like to get featured on our Entrepreneur Spotlight, click here to share your startup story with us.
Get latest Technology news, reviews, business-related content with a deliberate emphasis on the African narrative and insightful analysis in Nigeria – straight to your inbox.