The rising competition for the e-commerce sector in Africa especially from startups is giving the continent’s first unicorn and largest e-commerce firm sleepless nights. This is because Jumia Technologies has come to the realization that the trail they blazed has created an ecosystem others have found attractive and worth trying as fresh competition from start-ups in the African e-commerce and logistics market after the Covid-19 pandemic increased demand for online deliveries.
Jumia which is seen as one of the pioneers of internet trading in sub-Saharan Africa still trails the rest of the world due to challenges including weak Internet connections and unreliable addresses. But lockdowns to contain the coronavirus have attracted more entrepreneurs to the sector says Jumia co-CEO Sacha Poignonnec. Trying to dismiss the development with a wave of the hand Poignonnec noted that greater competition is to be welcomed, given there are still so few people in the region that transact online, adding that “I would rather grow the market than just try to take everything.”
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Jumia has watched gains of the last two year slip during the pandemic, a development analysts describe as shocking judging from the fact that other continental giants such as Amazon and Alibaba recorded very huge profits within same period. Jumia’s situation is not unconnected with Africa’s poorly developed infrastructure and low internet penetration coupled with absence of personal data that helps in financial systems infrastructure. To overcome this, Jumia expanded into food delivery which turned out to be the saving grace as it helped to increase sales and Jumia’s footprint in existing markets, which are led by Nigeria
Jumia investors have experienced a roller-coaster ride since the stock debuted in New York last year. Persistent losses, allegations of corruption in the Nigerian sales force and a damning short-seller report contributed to an initial share price slump, but the arrival of the coronavirus has helped fuel a doubling in market value in 2020. That was tempered somewhat by a 30% stock decline this week after second quarter results. MTN Group, Africa’s largest wireless carrier and an early investor is the company, said in June that it is evaluating its stake in the company. Jumia may offer MTN’s shares in the group as part of a potential new equity offer within the next three years if the Johannesburg-based firm decides to sell, Poignonnec said.
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Expanding into food has helped to increase sales and Jumia’s footprint in existing markets, which are led by Nigeria, according to the co-CEO. That’s involved adding grocery and pharmacy orders as well as restaurant takeaways, he said. Jumia’s logistics unit is also now open to third parties wishing to use the company’s network of drivers to deliver packages, adding another revenue stream.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry