Jumia Technologies, often referred to as the Amazon.com or JD.com of Africa, is a leading e-commerce platform operating in 11 countries across the continent. The company has recently undergone a successful turnaround strategy, cutting its losses by 54% year-over-year and prioritizing cost-cutting measures for profitability. One key aspect of its strategy is targeting secondary cities with populations under 100,000, where there is an undersell of demand and potential for growth in the e-commerce market.
Key Points
1. Jumia is known as the “Amazon.com of Africa,” operating a comprehensive e-commerce platform and offering various services such as payment processing, logistics, and food delivery.
2. The company has implemented a turnaround strategy focused on cost-cutting and profitability measures, which has led to a significant reduction in losses year-over-year.
3. Jumia is targeting secondary cities in Africa with its strategy to embed itself into the commerce infrastructure and expand its user base. The company has seen success in smaller cities by establishing local teams and pick-up stations to introduce and promote its services to the population.
Jumia, often referred to as the Amazon or JD.com of Africa, is an electronic marketplace that offers various services including payment processing, logistics, and food delivery. The company has recently undergone a seven-month turnaround strategy with the goal of becoming profitable. As a result of this strategy, Jumia has managed to reduce its losses by 54% year-over-year.
One of the key elements of Jumia’s strategy is its focus on serving smaller cities with populations of less than 100,000. The company aims to embed itself into the commerce infrastructure of these cities by operating pick-up stations where locals can learn about and use Jumia’s services and marketplace platforms. Jumia has had success with this approach in the Ivory Coast and plans to replicate it in other secondary cities.
In terms of its services, Jumia operates an electronic marketplace similar to Amazon, connecting sellers with consumers. It also offers a payment processing service called JumiaPay, comparable to Alibaba’s AliPay. Additionally, Jumia provides logistics services for package delivery, as well as restaurant delivery, utility bill payments, and airtime recharge.
While Jumia faces competition from other e-commerce companies like Konga and Amazon, it has been making progress in its turnaround efforts. In the first quarter of 2023, the company’s revenues decreased by 2.7%, but its losses decreased by 54%, reaching the lowest level in four years. CEO Francis Dufay has stated that cost-cutting measures have been successful, with fulfillment costs dropping by 34%. Jumia expects its adjusted EBITDA loss for the full year of 2023 to be between $100 million and $120 million, an improvement from the $207 million loss in 2022.
Dufay has emphasized the importance of the company’s secondary city strategy in driving growth. By focusing on smaller cities, Jumia can tap into underserved markets and introduce locals to its services. The company has found that there is demand for quality and affordable products in these cities, despite the perceived challenges of operating in Africa.
In many ways, Jumia’s approach to secondary cities is similar to Dollar General’s strategy of opening mini-box stores in small towns. By establishing a presence in these areas, Jumia can protect its market share from global marketplace platforms like Amazon, which may struggle with the logistics of serving rural areas.
Overall, Jumia is on a path toward profitability through its turnaround strategy. The company is prioritizing cost-cutting measures and profitability over growth. With its focus on secondary cities and the success it has seen in the Ivory Coast, Jumia is well-positioned to continue its expansion and reach more customers in Africa.
