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Jumia Counting On Services To Rebound From 70 Pct. Shares Drop

Africa commerce keypad

African unicorn Jumia, the first technology startup in Africa to list on the New York Stock Exchange (NYSE), is focused on becoming profitable after a troubling 2019, according to a Reuters report on Wednesday (Jan. 22).

“We’re going to be extremely disciplined and very focused on our path to profitability,” Co-Founder Jeremy Hodara told the newswire.

Hodara said the eCommerce firm — at one time valued at nearly $4 billion — will move to increase earnings from third-party merchants.

Jumia’s NYSE shares have dropped almost 70 percent since its initial public offering (IPO) in April 2019.

“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.”

Jumia shuttered its online shopping platform in Cameroon and Tanzania and also stopped its food delivery service in Rwanda. 

Its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the third-quarter hit €45 million, more than 27 percent over the previous year. 

As the startup ate up cash, analysts cautioned it could be difficult to raise additional funds. But Hodara said that as Jumia grows, its expenses will drop.

The firm’s online payment channel — JumiaPay — is pivotal in its expansion plans, according to Hodara. Plans include further servicing third parties, regardless of their participation on its eCommerce platform.

The company is also considering the expansion of fee-based services offered to sellers in addition to the warehouse space, marketing services and search engine optimization already offered.

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

When Jumia went public in April 2019, it was seen as a sign for the future prospects of eCommerce in Africa, home to some 1.3 billion people, of whom at least 725 million have mobile devices. On its first day of trading, shares for the company — often called the Amazon of Africa — jumped some 54 percent, trading at about $22. 

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