E-commerce firm Jumia released its Q4 report on Wednesday showing 12% gross profit increase year-on-year despite pandemic-induced market woes.
Although compared to 2019, the growth was slower; the online marketplace reported adjusted EBITDA loss decreased by 47% year-on-year. Highlights of the report show that Jumia’s Gross Merchandise Volume (GMV) leaped to €231m, a 23% increase from the preceding quarter.
The company attributed the growth to some of the innovative strides it made toward the end of 2020, which include Jumiapay, advertising and logistics.
“We continued to make significant strides towards breakeven during the fourth quarter of 2020. Gross Profit after Fulfillment expense reached a record €8.4 million during the quarter,” said Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia.
The report said Black Fridays campaign, which ran over the course of 4 Fridays in November 2020, contributed to growth recorded in the Q4. Jumia pioneered the Black Friday event on a pan-African basis in 2014 and, for its sixth edition, crossed a number of milestones.
The Black Friday campaign brought consumers a broad assortment of relevant products at attractive prices offered through a gamified and engaging experience, pushing the page views across our platforms to 1.5 billion, up 34% when compared with the 2019 event. The Black Fridays’ video content registered almost 100 million views, 3 times higher compared to the 2019 event.
Our top three selling categories in terms of items sold were fashion, beauty and home & lifestyle, the report said.
“While 2020 has been a challenging year operationally with COVID-19 related supply and logistics disruption, it has been a transformative one for our economic model, as we firmly put the business on track towards breakeven,” added Hodara and Poignonnec.
Sales & Advertising expense was €10.2 million, a year-over-year decrease of 34%. General & Administrative costs, excluding share-based compensation expense, reached €21.8 million, a decrease of 36% year-over-year.
Adjusted EBITDA loss was €28.3 million, decreasing by 47% year-over-year. JumiaPay TPV reached €59.3 million, increasing by 30% year-over-year. On-platform TPV penetration increased from 15.6% of GMV in the fourth quarter of 2019 to 25.7% of GMV in the fourth quarter of 2020.
Jumia said logistics was the backbone of the success recorded via Black Fridays, handling 4.8 million packages during the event, more than double the monthly average for the rest of the year. Logistics also reached new milestones of delivery speed with 55% of packages reaching consumers in less than 24 hours, compared to 44% in 2019.
Black Fridays also boosted Jumia’s Advertising growth. 2020 marked the first full year of operation for Jumia Advertising, with accelerating momentum in the fourth quarter of 2020.
In 2020, Jumia Advertising ran over 1,000 advertising campaigns on behalf of 370 advertisers including high profile partners such as Unilever, Nivea, L’Oreal, Xiaomi, Huawei, Intel and many more. To support the long-term growth of Jumia Advertising and accelerate the shift from analog to digital advertising in Africa, we are establishing strong relationships with brands and advertising agencies, the report said.
Jumiapay is another sector of the business which yielded growth, though mix balancing affected the run in Q4.
According to the report, annual Active Consumers reached 6.8 million in the fourth quarter of 2020, up 12% year-over-year with continued growth in both new and returning consumers. Orders reached 8.1 million, down 3% year-over-year on the back of a 14% decrease in digital services transactions on the JumiaPay app, while Orders on the rest of the platform were stable.
But GMV was €231.1 million, down 21% on a year-over-year basis, as the effects of the business mix rebalancing initiated late 2019 continued playing out during the fourth quarter of 2020. The business mix rebalancing drove an approximately 19% decrease in average order value from €35.4 in the fourth quarter of 2019 to €28.7 in the fourth quarter of 2020, affecting overall GMV performance.
On-platform penetration of JumiaPay as a percentage of GMV increased to 25.7% in the fourth quarter of 2020 from 15.6% in the fourth quarter of 2019.
JumiaPay Transactions increased by 10% from 2.4 million in the fourth quarter of 2019 to 2.7 million in the fourth quarter of 2020, with Transactions above €10, which include prepaid purchases on the Jumia physical goods marketplace and Jumia Food platforms, growing by 55% over the same period.
“Overall, 33.1% of Orders placed on the Jumia platform in the fourth quarter of 2020 were paid for using JumiaPay, compared to 29.5% in the fourth quarter of 2019,” the report added.
Jumia struggled in 2020 through various targeted changes as its e-commerce business nosedived amidst scandalous allegations of dubious practices by short-selling article from Citron. But the company lost its unicorn status as its shares plummeted. Last year also saw one of its biggest shareholders, MTN exit the company.
However, the e-commerce company recorded a decent return, diversifying its business to include new sectors that have supported growth.
Poignonnec said raising approximately €203 million in a primary offering in December 2020 helped Jumia to scale through its troubles.
“This strengthened our balance sheet, enhanced our unit economics and overall positioned Jumia to scale efficiently towards profitability. Beyond the near-term objective of breakeven, our long-term focus remains on fueling the growth of our e-commerce and payment platforms in Africa for decades to come,” he said.