Troubles continue for Jumia, CEO remains optimistic
There is no end sight for Jumia’s troubles as profits continue to elude Africa’s biggest e-commerce platform.
Jumia, this week, released its financial results for the Q2 2023, which show orders are down 37% compared to Q2 2022, and active clients are down 28%. There were 6.5 million orders in Q2 this year, compared to 10.3 million in the same quarter last year.
According to Jumia, the number of active users decreased by one million from 3.4 million in Q2 2022 to 2.4 million in Q2 2023. This resulted in the gross market value of items sold on the platform declining 25.1%, from $271.1 million in Q2 2022 to $202.3 million in Q2 2023.
Despite the declining sales and customer numbers, Jumia Group CEO Francis Dufay stated that the company is making headway in lowering losses.
Jumia has lost $2 billion since its beginning, but Dufay said the company continues to reduce losses on a quarterly basis, which he attributed to strategy execution with discipline and attention.
He said: “Q2 2023 was the fourth consecutive quarter of loss reduction on a year-over-year basis, with a material acceleration in the base of loss reduction. In Q2 2023, we cut both adjusted EBITDA and operating losses by two-thirds, reaching the lowest levels in over four years.
“This was achieved thanks to significant savings across the full cost structure. We cut our operating expenses by almost half in Q2 2023, compared to Q2 2022.”
Dufay added: “We are reaching record levels of efficiency, particularly in fulfilment and sales and advertising expenses, while improving our customer value proposition. And that's a very important point.
“We are not driving cost savings at the expense of our standards of operation. We are operating more efficiently with a leaner cost structure while improving the quality of our supply, expanding our logistics reach, and providing our customers and sellers with a better value proposition overall.”
A ray of hope?
Dufay also highlighted that the company is developing Buy-Now-Pay-Later (BNPL) solutions, along with third-party partners, to facilitate purchases on its platform.
Jumia wants users to access consumer finance solutions from third-party partners, who are responsible for credit underwriting and loan disbursement, via its JumiaPay platform.
Dufay detailed several ongoing activities to achieve these goals. He said: “Egypt is one of the most advanced countries in our footprint in the development of BNPL and instalment solutions with partnerships with over 10 banks and fintech players, as of June 2023.
“We believe JumiaPay has strong development potential off-platform, to process payments on behalf of third party merchants. We intend to drive off-platform development in a disciplined manner, starting in the countries where we have already obtained the relevant licences to do so, that is Nigeria and Egypt.
“A number of improvements to our on-platform solution are transferable to our off-platform product, including the BNPL solutions.”