Jumia Recorded Over 4.4 million Cancellations, Returns and Failed Orders Despite a Successful 2020
E-commerce giant, Jumia has continued its gradual move towards profitability after recording its second positive quarterly gross profit after fulfilment expense in the fourth quarter of 2020.
According to the report, the company’s gross profit after fulfilment expense reached a record €8.4 million, compared to €1.0 million in the
the fourth quarter of 2019.
According to Jumia’s co-CEOs, the increase in profit was fueled by the decrease in Fulfillment, Sales & Advertising and General & Administrative
“We continued to make significant strides towards breakeven during the fourth quarter of 2020. Gross Profit after Fulfillment expense reached a record €8.4 million during the quarter. In parallel, efficiencies across theJeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia.
full cost structure allowed us to decrease Fulfillment, Sales & Advertising and General & Administrative expenses by 18%, 34% and 36% respectively, year-over-year.”
A breakdown of the quarter shows that Jumia’s Gross Merchandise Volume (GMV) hit €231m, a 23% increase from the preceding quarter. The e-commerce company explained that the growth was spurred by the Black Friday campaign in November 2020.
It pointed out that more than 41,500 sellers participated in the campaign. There’s also a 141% growth in items sold as more than 4.8 million packages were sent out during the campaign. This is more than double the monthly average for the rest of the year.
Despite the growth, revenue generated year-on-year dropped 15% to €41.8 million for the quarter. However, gross profit increased by 12.5% to €27.9 and adjusted EBITDA loss decreased by 47.1% from €53.4 million in 2019 to €28.3 million in 2020.
Jumia’s 2020 in numbers
An examination of Jumia’s 2020 shows mixed results. but in general, it seems to be a positive year. The annual active consumers on the platform increased by 12% from 6.1 million in 2019 to 6.8 million in 2020.
However, the growth was considerably lower than the the 54% growth in consumers gained in 2019.
Similarly, the number of orders recorded increased by 5.1 % from 26.5 million in 2019 to 27.9 million in 2020. However, 16% (4.4 million) of the total order recorded accounts for cancellations, failed deliveries
In terms of GMV, Jumia fell 18.9% from €1.03 billion in 2019, to €836.5 million. The company attributed the drop to its focus shift from phones and electronics to every-day consumer products like groceries and beauty products to drive consumer adoption and usage.
The report shows that the shift led to a 19% decline in the average value of orders from €35.4 in 2019 to €28.7 in Q4 2020. This caused the GMV drop despite the increase in the number of orders during the year.
On the flip side, the shift also led to the reduction of losses per order, dropping from €6.5 to €3.5 in the fourth quarter.
35% Decrease in Operation Loss
In terms of revenue, Jumia generated €139.6 million in the full year of 2020, a 13% drop from the sum generated during the same period last year. However, Marketplace revenue reached €93.8 million during the year, up 19.6% compared to the revenue in 2019.
According to the report, the growth was mostly driven by an increase in Commissions, Fulfillment and Marketing & Advertising revenue, which increased by 38.5%, 20.7% and 26.6% year-over-year respectively.
Although revenue dropped, the e-Commerce giant was able to reduce its operating cost during the year. The company recorded a loss of €149.2 million, a 35% reduction from the €227.9 million lost last year.
Similarly, sales & advertising expense also reduced. The company spent €32.5 million, a decrease of 42% from the €56 million spent in 2019. Jumia attributed the drop in cost to the enhancement performance marketing strategy across search and social media channels.
JumiaPay grows by 58%
Jumia’s payment platform, JumiaPay, continued its stellar growth, recording a total payment value (TPV) of €196.4 million in the year 2020. This is a Whopping 58% growth from the amount transacted last year.
In general, the platform’s volume of transactions increased by 26% from 7.6 million in 2019 to 9.6 million in 2020.
To further boost revenue, Jumia opened up its logistics services to third-party businesses in November 2020. So far, it has processed 500 thousand packages for up to 270 corporate clients and SMEs across five countries..
The e-commerce sector was reportedly one of the big winners of the COVID-19 lockdown. However, while Jumia figures appear to be growing, it doesn’t show the big boom that was expected.
Jumia co-CEOs, Sacha Poignonnec and Jeremy Hodara, however, explained that the pandemic did not bring any drastic changes to consumer behaviour in 2020, unlike some analyst believed.
All things considered, Jumia’s move to focus on essential services and its drastic reduction in expenses seemed to have paid off in 2020. The company recorded a gross profit of €92.8 million, a 22% increase from last year.
Looking forward, Jumia revealed that its focus continues to be on breaking even and reducing its Adjusted EBITDA loss in absolute terms in 2021.
It, however, noted that the ongoing COVID-19 pandemic, as well as the ensuing economic challenges, may negatively impact consumer’s purchasing power.
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