Africa’s e-commerce giant, Jumia, has faced a challenging second quarter in 2024, marked by a significant $20.2 million operating loss and a 17% decline in revenue.
However, despite these setbacks, the company has shown signs of improvement, managing to reduce its year-over-year losses by 8% from the $22.1 million operating loss recorded in the same period last year. This underlines the firm’s ongoing efforts to curb expenditures and move closer to profitability.
Detailed Financial Performance
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In the second quarter of 2024, Jumia’s revenue dropped to $36.5 million, down from the $44 million reported in the same quarter of the previous year. This decline in revenue is a reflection of the challenging market conditions and currency devaluations in several of its operating countries.
The company’s gross merchandise value (GMV)—the total amount customers paid before deductions like fees, discounts, or returns—also decreased by 5% year-over-year, reaching $170.1 million. These financial metrics highlight the economic pressures faced by Jumia, impacted by both purchasing power and supply availability in key markets.
Despite the financial setbacks, Francis Dufay, Jumia’s Group CEO, remains optimistic about the company’s future. He noted that the strategic measures implemented to reduce losses and edge closer to profitability are beginning to show results.
“Our performance this quarter reinforces our belief that our strategy is working. Our deep understanding of the African e-commerce market as well as our unique asset base and strategy position Jumia for growth as we progress on the path towards profitability,” Dufay stated.
Since taking over as CEO, Dufay has been committed to a rigorous cost-cutting strategy. This included reducing the workforce by approximately 900 jobs and shutting down Jumia Foods in 2023, a move aimed at reducing operational costs and enhancing financial health.
“Jumia continues to take a disciplined and targeted approach to marketing spend, focusing on more efficient marketing channels such as search engine optimization (SEO), customer relationship management (CRM), and relevant offline local channels, while also leveraging its JForce network,” Dufay added.
These efforts have resulted in a more loyal and higher quality customer base, with a 262 basis point year-over-year improvement in repurchase rates in the first quarter of 2024.
Growth in JumiaPay
One of the bright spots in Jumia’s financial performance has been the growth of JumiaPay, the company’s payment platform. The second quarter saw JumiaPay transactions rise to 1.9 million, a 31% increase year-over-year.
This growth was driven by greater penetration of JumiaPay on delivery, coupled with cashback campaigns and incentives introduced during the quarter. The company emphasized ongoing efforts to streamline the user experience on JumiaPay and increase the number of cashless orders, positioning JumiaPay as a vital component of its e-commerce platform.
Jumia has managed to secure sufficient inventory and maintain a diversified product assortment at competitive prices, keeping consumers engaged on its platform. This is despite the tough economic conditions in Africa, particularly in major markets like Nigeria and Ghana.
Significant currency devaluations in some of its largest markets have posed challenges, affecting both purchasing power and supply availability. Nevertheless, Jumia’s ability to adapt and continue offering value to its customers underscores its resilience and strategic agility.
However, Francis Dufay highlighted the importance of strategic focus in navigating the challenging macroeconomic environment.
“Our performance this quarter reinforces our belief that our strategy is working. Our deep understanding of the African e-commerce market as well as our unique asset base and strategy position Jumia for growth as we progress on the path towards profitability,” he stated.
The company’s disciplined approach to marketing, emphasizing more efficient channels like SEO and CRM, has been instrumental in attracting a more loyal and high-quality customer base.
While the challenging macro environment in Africa, characterized by significant currency devaluations, has impacted Jumia’s financial performance, the company’s success in maintaining a diverse product range and competitive pricing continues to attract consumers. Jumia’s ability to secure inventory and navigate supply chain challenges positions it well for future growth, despite the current economic headwinds.