Any hope for Jumia?
Jumia is bleeding market cap after this week's quarterly report. It is now worth $310 million, down from $3.9 billion. It is indeed very painful that this ecommerce pioneer in Nigeria has dropped from $49 to $4.10 per share since IPO last year.
This is the summary: “The concern with Jumia is that it's not cutting its losses quickly enough, and could run out of cash before it gets to profitability. The company's operating loss was 61.1 million euros in the fourth quarter, 15% higher than the 2018 quarter, and it lost 51 million euros in operating cash, a 17-million-euro increase year over year”. If Jumia manages its costs better, the numbers are actually promising. Full report here.
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I took time to peruse the entire report, Jumia has a future, irrespective of their loss-making dance currently; but they need to act fast in many key areas to be able to enter profitability mode, before the cash runs out. The JumiaPay holds good promise.
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In some instances, their spending appeared to be like public (government) spending, where you just spend money simply because there is money to spend, with inadequate measures when it comes to RoI. There are many question marks regarding spending on fulfilment, sales and adverts; the losses are heavily tied to these areas, so the real value captured on them need serious assessment and scrutiny.
Again, stats tell of a lot lies; the governance structure on the platform segment needs to be revisited, and also the nature of deals that can be struck with key merchants is key to increasing active user base and reduction of returned/failed/cancelled transactions. There are discounts and promotions that are counterproductive, they must be regularly identified and discarded.
They may need to shed more markets, with respect to geographic spread, spending in Africa is accompanied with visible 'value for money', since it's not the US, cash is highly limited here.
Hope alive for Jumia!