eCommerce company, Jumia, has released its 2019 second-quarter financial results which show 94 per cent growth in Gross profit, gross merchandise volume (GMV) – a term for sales in online retail -increased by 69 per cent compared to Q2 last year.
This exceeded its target of 56 to 60 per cent, and its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) loss as a percentage of GMV decreased by 5.62 percentage points.
Jumia’s financial strategy is centred on four key pillars: top-line growth, monetization, cost efficiencies, and JumiaPay.
“We continue to deliver on our financial strategy of generating strong growth of our top-line drivers, while accelerating monetization, driving cost efficiencies and developing JumiaPay. During the second quarter of 2019, our GMV increased by 69 per cent year-on-year and our Gross profit grew by 94 per cent,” Sacha Poignonnec, co-founder and co-chief executive officer, Jumia, said during the Jumia earnings call.
Speaking to the press on Thursday 22 August 2019 at the Jumia Nigeria head office in Lagos, Juliet Anammah, CEO, Jumia Nigeria explained that the company’s operating loss, amounting to €66.7 million, decreased as a percentage of GMV by 148 basis points (1.48 percentage points) and its GMV increased this quarter by 69 per cent compared to the second quarter of 2018, due to a variety of factors, including strong marketplace growth and robust consumer acquisition and re-engagement momentum.
“These increases are a result of our continued focus on selection, price and convenience, as we strive to be the preferred online shopping destination for consumers in Africa for all their daily needs. During the second quarter of 2019, we continued to increase the assortment available on our platform and to engage with consumers through relevant local commercial campaigns such as our “Mobile Week” and “Ramadan” campaigns,” she said.
Although Jumia revealed that it delisted some J-force members – its decentralized sales force that were identified as fraudulent after it found cases where “improper orders were placed and subsequently cancelled,” Poignonnec said: “we identify an incident and then we take corrective actions, we take any sanctions and then we improve it. So it’s always about creating better data-driven systems, where the system can flag any potential issue, and when this flag is created, that we are able to investigate or analyze. We are tightening controls to make sure that we identify patterns when we see patterns or concentration in orders.”
According to Antoine Maillet-Mezeray, chief financial officer, Jumia, “this is an isolated instance that had only a modest GMV impact and virtually no impact on our financial statements. We are constantly reviewing and improving our systems and controls to help us avoid such instances in the future.”
Anammah told BusinessDay that the actions of the few bad eggs in no way impacted its financial statement and that the company will report goings on as investigations continue.
“J-force creates jobs for hundreds of people and so it will be unfair to cancel the whole thing because of a few bad eggs. We would continue to find ways to make things better,” she said.
The number of Active Consumers on June 30, 2019, was 4.8 million, up from 3.2 million a year ago and 4.3 million at the end of the first quarter of 2019. In parallel with the strong increase in GMV and Active Consumers, Marketplace revenue increased by 90 per cent compared to the second quarter of 2018 as Jumia continued to drive monetization from diversified streams of revenue including commissions, fulfilment, value-added services and marketing and advertising services.
Jumia says it is focusing on JumiaPay – an integrated payment method that facilitates its digital payment, which will be driven on the back of the development of the marketplace.
JumiaPay is now offered in six countries – Nigeria, Egypt, Ivory Coast, Ghana, Morocco and Kenya. Collectively, these six countries represented a combined population of almost 440 million people in 2018, according to data from the United Nations Population Division.
The e-commerce company has also expanded the scope of JumiaPay beyond its physical goods marketplace.
“As of December 31, 2018, JumiaPay was only available within our physical goods marketplace. It is now also available within our on-demand services, Jumia Food, and hotel booking portals, Jumia Travel, in selected countries,” Anammah said.
