What is going on in Jumia? For Q3, the ecommerce commerce reported revenue of $42.7 million, which was up 8.5% year over year. That was a very poor result! Yet, the numbers keep growing, now 7.3 million active customers. But that was partly possible because it spent $26.8 million on sales and marketing in H1 2021; $24 million in Q3 alone. That crystallized to heavy losses: “ $64 million operating loss in Q3 and a $156 million operating loss through the first three quarters of this year.”
As I have written: the most important innovation in business is the Business Model. Jumia needs to evaluate its business model and not just its operational efficiency and execution. The most valued ecommerce in Nigeria and Africa by 2023 will not be Jumia because some B2B ecommerce are growing at high double digits, in the same market Jumia operates. That tells you where Jumia needs to spend more effort.
But for all, the double play strategy is working: JumiaPay is an opportunity. It would be worth more than the whole value of Jumia if it is now a separate company. Watch out for investors to make that case by 2023!
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In other words, all the money poured into marketing only attracted a yawn, something is still not clicking.
I think a proper diagnosis is needed with respect to how the marketing budget was spent, it does appear like wrong targets…
Jumia seems to carry plenty baggage, a rethink on its model and operational strategy may be necessary; at the moment, it’s still crawling, rather than jogging.