Jumia is shipping bigger losses but its plans to build an African fintech leader are on pace

Employees work at the production hall of Jumia office in Abidjan December 17, 2014.
Employees work at the production hall of Jumia office in Abidjan December 17, 2014.
Image: Reuters/Luc Gnago
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The latest earnings call by Jumia shows the largest e-commerce player in Africa is still trying to figuring out how to make e-commerce work—but its partial fintech pivot might yet work.

In the third quarter of this year, Jumia’s gross merchandise volume (GMV) went up 38.7% year-on-year while its active customer base reached 5.5 million, up by 700,000 from the previous quarter. The total number of orders was also up 95.2% year-on-year but the average order value dropped 29%.

But the familiar theme of widening operating losses as part of its financial statements remains in place as the e-commerce giant was in the red for about €54.6 million ($60 million) in the third quarter of the year.  It’s in keeping with a trend that has already seen the company accumulate over $1 billion in losses as it maintains its costly model of warehouse operations and the pursuit of growth in 14 African markets across several business verticals.

Jumia’s third-quarter earnings comes amid a months-long share tumble on the New York Stock Exchange which has seen it lose its unicorn status. Its stock has fallen from a post-IPO peak of $49.77 which saw it valued at nearly $4 billion to a current price of $5.75 (at 3.15pm eastern time yesterday) and a market cap of less than $470 million. The stock price has dipped 13% since trading began today in the wake of the earnings call.

Trojan horse

But as it continues to search for the winning e-commerce formula, Jumia is increasingly turning its sights on fintech through Jumia Pay, its in-house payments solution with the goal of not just creating an appendage to its online marketplace but also a major standalone player in the expanding payments space across the continent.

“E-commerce marketplaces are very powerful engines to drive payments. Everywhere in the world some of the leading payment companies were born out of and grown by marketplaces,” Jumia CEO Sacha Poignonnec said on the earnings call yesterday (Nov. 13). “We are following the same path…to ultimately create the leading payments system in Africa.” One obvious example of this “path” would be PayPal, which was spun out of retailer, eBay.

After being launched as a payment option on its platform, Jumia is reporting rapid growth in transactions and payments volume on Jumia Pay which is now live in six countries. Poignonnec says the service is a “key priority” especially given the “huge value creation potential in the long-term.”


Within the Jumia ecosystem, the utility of an in-house payment solution helps resolve problems of failed payments at checkout—a bane of e-commerce companies especially in low-trust markets. Driving the adoption of Jumia Pay also provides Jumia with the added long-term benefit of ultimately improving efficiency and easing out the often problematic cash-on-delivery option. The security-related issues with the option were particularly highlighted when a third-party courier rider was murdered while delivering a Jumia order in April 2017.

Outside the Jumia ecosystem, Poignonnec says Jumia Pay is also targeting a larger share of the electronic payments market. In addition to payment processing for third party users, Jumia Pay’s off-platform strategy also includes facilitating payments through QR codes as well as powering mobile point of sale systems.

In stepping beyond its marketplace, Jumia will be joining a crowded field of heavily-backed fintech companies which continue to draw interest from investors, especially global payments giants. Just this week, Interswitch became Africa’s first fintech unicorn after Visa purchased a 20% stake for $200 million.

For its part, Jumia counts Mastercard as an investor with Poignonnec describing the backing from the global card giant as “great validation” of Jumia Pay and “a tremendous catalyst for further development and innovation.”

Jumia’s fintech plans also include building a financial services marketplace to allow its customers and sellers access loans and insurance. Its Jumia Lending service currently supplies third party financial institutions with data to determine credit worthiness of its merchants and offer them working capital loans. Poignonnec says Jumia Lending has, so far, facilitated around $5.5 million worth of loans while making commissions of the sale of these loans.

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