Jumia’s latest fourth quarter earnings result shows the largest e-commerce operator across Africa is not yet any closer to turning a profit.
The number of customer orders increased 49% year-on-year as active customers topped 6.1 million during the quarter driven by its popular Black Friday promotions in November. It comes after Jumia’s decision to shut down operations in Rwanda, Tanzania and Cameroon in a bid to optimize resources in markets that “present the best opportunities” to support growth.
While it still maintains operations in 11 African countries and continues to pursue customer acquisition, Jumia is still reporting million-dollar losses. In the fourth quarter, operating losses expanded by 15% to €61.1 million ($66.5 million) year-on-year while full year operating losses widened by 34% to €227.9 million ($248 million). The company attributes increased losses to higher expenses, including fulfillment costs.
The company saw a drop in gross merchandise volume by 3% to €301 million in the quarter due to drop in phones and consumer electronics sales by as much as 20%. Phone sales had been a big driver of Jumia’s early success but is a competitive “big ticket item”market. The company said it is adjusting its product mix to improve its path to profitability by making a push into fast moving consumer goods (FMCG), fashion, beauty and personal care as well as digital services to encourage repeat purchase and consumer lifetime value.
Despite streamlining its operations to fewer African countries and exploring more solutions to solve last-mile delivery problems, immediate growth prospects may yet be hobbled by the ongoing viral outbreak in China with.
“We are starting to face some challenges to fulfill our cross border sales,” Jumia CEO Sacha Poignonnec said during the earnings call yesterday (Feb. 25) in reference to products sourced from China. “Many of the sellers in our marketplace are starting to face procurement issues so this can affect both product availability and prices.”
Jumia’s share price tumbled in the wake of the earnings call. The stock closed down dipped 28% on the New York Stock Exchange.
Longer term, while it continues to tinker with its e-commerce business operations in pursuit of growth and profits, Jumia is betting on a pivot to fintech separating its JumiaPay service for use on other platforms. After being launched as a payment option on its platform, transaction volume and value has grown rapidly over the past year on the service which is live in six African countries.
With Jumia now eyeing a full spin-off of the service, it will be targeting a share of Nigeria’s growing electronic payments market. Last year, Poignonnec confirmed plans to open up JumiaPay to process transactions for third party users online, through QR codes and via point of sale systems.
Sign up to the Quartz Africa Weekly Brief here for news and analysis on African business, tech and innovation in your inbox