Jumia’s stock market debut could not have started off better. There was huge excitement when Jumia became the first tech company focusing on Africa to be listed on the New York Stock Exchange.

Investors rushed in to help, the share price increased more than 70% on that day. However, the excitement was short-lived.

Sacha Poignonnec, co-chief executive officer of the company said to the BBC that 700 million people live in the countries we serve. She spoke on the BBC’s floor.

When I met with Jeremy Hodara (his co-CEO), it was September 2009. The firm had been through a very difficult few years. The share price plummeted, but it came back. Backers had bailed and the company had withdrew from trading in thirteen of its 14 foreign countries. There were also reports that fraud was being brought up in New York courts.

However, the promise of millions more consumers connected to the internet is not over. Jumia is also still a popular e-commerce site that focuses on Africa. Although its technical and management expertise are based in Africa, it is nevertheless a major player.

Consumer spending in Africa will reach $2.5tn by 2030. Jumia continues to sell goods in 11 countries. Jumia operates a marketplace that allows thousands of businesses to sell their goods. It also has Jumia Pay, a financial arm. Customers can shop, order pizza and pay utility bills all from Jumia’s platform.

Jumia’s stock price has returned to its levels on the date of its stock exchange debut due to a mix of exiting non-profitable markets, and an interest in ecommerce fueled by the pandemic.

He said that ecommerce is not as big on Africa than traditional retail when asked how the Jumia journey turned out. The opportunity to make a difference is enormous, even though it’s a lengthy journey. We’re going step-by-step.”

The platform initially became popular as an electronic shopping site. However, the majority of consumers make such purchases only a handful of times per year. Therefore, the company is trying to get more people to use the platform to shop for everyday products like clothes and grocery items.

Hodara states that these products are more profitable than electronics purchased in the past.

After all logistical costs, we generate nearly $1 in profit every time an order is delivered. We want to invest in tech and marketing growth. So that our unit and profitability can be assured, we are taking this direction.

Jumia plans to keep spending aggressively on tech and advertising. This could cause investors concern. When will Jumia finally make a profit again?

M. Hodara replies, “We don’t communicate a timeline but we are trying to post consistent results.”

Pan-African businesses face a major challenge in meeting the diverse needs of different markets across the continent. Although Africa’s opportunity is presented as being continent-wide I question Mr Hodara to see if it isn’t more nuanced.

He says, “Serving Egyptian customers isn’t the same thing as serving Nigerian ones. Working with Moroccan sellers doesn’t have anything to do in Kenya with selling in Kenya.”

“This is how you operate, it’s very local. You have to navigate the particularities of each country while maintaining economies of scale using technology.

Jumia has been challenged on its credentials as “African” company by having two French founders, and senior leaders based in Africa. According to Mr Hodara, Jumia does not engage in this controversy because it is neither fair nor relevant. It is relevant for consumers across the continent.

His reply was, “Our buyers are Africans, our sellers African, and our employees African. This is how we are creating hundreds of thousands jobs on Africa.” “We are opening a Cairo tech centre, Egypt. We will have around 100 developers, and we plan to continue doing more. Africa is our goal.

Jumia is not the only “unicorn” in Africa. These are privately owned tech companies worth more than $1bn. This compares to 100 Chinese and 200 US.

However, there are many possibilities for the continent. The continent has a growing and youthful population and high levels of internet penetration. These opportunities can be further enhanced if the right environment is provided.

Google has announced that it will invest $1bn to support internet connectivity in Africa. These funds are in addition to the millions already invested in infrastructure projects in Africa to increase access.

According to Mr Hodara, Jumia’s willingness to confront the challenges of e-commerce and Africa in the early stages is what allows it to be a leader in this area.

He says that because of the complexity involved in operating on the continent, there are unique barriers to entry which make it difficult for others to do what he is doing.

Jumia, despite the fact that there are many ecommerce startups popping up all over the continent, still enjoys the highest number of customers with 10,000,000 more visits per month than Takealot.com in South Africa.

E-commerce will continue to rise in Africa. However, Jumia’s early starters need to be adopted quickly by African consumers to ensure their success and that of others.

Source: BBC.com

Share Your Comment Below

[gs-fb-comments]

LEAVE A REPLY

Please enter your comment!
Please enter your name here