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    Innovation Village | Technology, Product Reviews, Business
    You are at:Home»Business»Jumia Gross Merchandize Value Decreases After Cut in Promotions
    Jumia

    Jumia Gross Merchandize Value Decreases After Cut in Promotions

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    By AdeO on February 26, 2020 Business, Ecommerce, Financial report, Jumia, Report

    Jumia reported the value goods and services consumers ordered on its online-shopping platform slipped in the fourth quarter, as the company offered fewer promotions and sales of electronic devices fell.

    Jumia said gross-merchandise value, or the value of orders regardless of cancellations or returns fell to 301.2 million euros in the quarter from EUR311 million in the fourth quarter last year.

    The company attributed that decline in part to weaker demand for phones and other gadgets, plus its decision to reduce promotions as it tries to generate earnings.

    Jumia also shut operations in Cameroon, Rwanda and Tanzania last year. Like other money-losing companies, Jumia faces investor pressure to show it can operate profitably.

    “We decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” co-Chief Executive Sacha Poignonnec said on a call with analysts.

    American depository receipts for Jumia fell 10% in morning trading to $4.50. The company sold stock priced at $14.50 a share in an initial public offering last April.

    Overall, Jumia reported EUR49.3 million in revenue for the fourth quarter, up 14% compared with the year earlier. Its loss for the period rose to EUR63.6 million from EUR53.1 million.

    Jumia, which raised money from investors including French liquor maker Pernod Ricard SA and South Africa’s MTN Group Inc., has faced skepticism from investors about its model and operations.

    The company faces challenges developing an e-commerce business amid major infrastructure, traffic and internet-access challenges in many African markets.

    Last year, Jumia fired employees and suspended others as it opened an investigation into improper sales practices in some markets.

    Those sales accounted for less than 3% of gross-merchandise value in 2018 and less than 2% last year, the company said Tuesday. It has completed a review of the matter and said it has added new measures to prevent such practices in the future.

    Jumia ended last year with 6.1 million active consumers or shoppers who had placed an order on its platform during the previous year, up from 4 million at the end of 2018.

    Orders, regardless of whether they were completed or returned, increased to 8.3 million in the fourth quarter from 5.5 million the year earlier.

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