Jumia, the largest e-commerce operator in Africa, saw its losses narrow slightly even as revenue dropped by 7% in the first quarter of 2020, as the impact of the coronavirus pandemic varied by product category and country.
Shares on the New York Stock Exchange tumbled 21% after its earnings call where it revealed an operating loss of €43.7 million ($47.3 million), a decrease of 4% from a year ago. Its gross merchandise volume, a measure of gross sales, dropped by 11.3% to €190 million as sales of consumer electronics and phones dropped. The year-over-year quarterly comparison was also affected by the pandemic.
South Africa’s tough lockdown measures resulted in Jumia suspending deliveries of fashion items entirely for weeks while sellers on its marketplace in several markets continue to grapple with supply chain disruptions for products sourced from China. A reduction of staff in its warehouses, in line with social distancing protocols, also means it faces “capacity limitations” while the closure of some partner restaurants have resulted in a sharp drop in orders on its Jumia Food platform.
But it’s not all doom and gloom. Despite challenges, which chief executive Sacha Poignonnec says will “continue to play out in coming quarters,” Jumia’s latest earnings report suggests the outbreak and its accompanying measures have also had positive effects, including “unprecedented interest” from potential partners. “More sellers are keen to embrace e-commerce and join Jumia because offline distribution channels have been disrupted,” Poignonnec said.
While the effects on China and cross-border business have hit the electronics and fashion product categories hard, Poignonnec says Jumia has a four-fold surge in grocery sales, especially in Tunisia and Morocco where lockdown measures resulted in a 100% spike in sales at different points in the last two months. At a time when several businesses face the prospect of losing customers, Poignonnec says Jumia’s “focus on everyday product categories is supporting usage and consumer adoption” amid the outbreak.
While down by 4% year-on-year, the quarterly operating loss adds to the company’s long-running loss-making streak.
Jumia Pay—the fintech solution Jumia is betting on to become a key revenue source after a spin-off—continues to be a bright spot in its results as total payment volume reached €35.5 million in the first quarter, a 71% year-over-year increase. It had 2.3 million transactions on the platform a jump of 77%.
Payments volume on Jumia Pay were also down 22% compared to Q4 2019 which likely saw increased activity due to Black Friday sales in November. The trajectory is being attributed to offering JumiaPay since last year in Morocco, Ghana and Kenya.
The payments platform has also been expanded to Tunisia and is now operational in seven African markets also including Nigeria, Egypt and Ivory Coast.
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