Friday 13th of June 2025

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Tag: Jumia

E-commerce in Africa is getting a much needed boost from Coronavirus pandemic lockdown

Posted on by Oscar Alochi

Running e-commerce businesses in Africa’s overwhelmed cities can be a thankless task due to the basic infrastructure gaps and a reluctant customer base.

Take Nigeria Africa’s largest internet market, where e-commerce ventures face inefficient logistics and informal home addressing systems as well as uncertainty about the actual size of the addressable market. These problems are also often seen in other African markets and sometimes makes business untenable: Jumia, the largest e-commerce operator across Africa, shuttered its business in Rwanda, Tanzania and Cameroon over the past year.

But it turns out the ongoing Covid-19 pandemic may yet ease one of the lingering challenges faced by e-commerce businesses in African markets. While many of these ventures have attempted to engineer a shift in local social behavior in customers, the pandemic’s restrictions mean the choice of shopping online is  finally getting a PR or marketing boost out of necessity and safety.

Even though Africa has had a billion-dollar IPO for an e-commerce company and smartphone penetration is growing, the reality is that shopping online is still a fanciful prospect for most ordinary Africans. Even Jumia which was backed by the likes of Goldman Sachs and MasterCard, and once valued at over $4 billion by enthusiastic investors soon after its IPO, has been brought down to earth by the realities of promising but tough, underdeveloped markets across the continent.

While there are some interested customers, e-commerce players require much higher levels of mainstream consumer adoption and retention to build viable businesses in a space where most still remain comfortable with shopping offline or are not yet fully convinced by the benefits of online shopping including wait times for delivery or the trust factor needed for online payments. But lockdowns across the continent during the ongoing Covid-19 pandemic are helping to accelerate a change in attitudes with consumers in many pockets exploring e-commerce out of necessity.

Jumia has reported a spike in both customer and seller interest as demand for groceries and essentials grew four-fold in the first quarter compared to last year, chief executive Sacha Poignonnec said during the company’s earnings call last week. In Morocco and Tunisia, sales have also doubled at different times over the last month.

Photo courtesy of  Afrika Tech

Content courtesy of Quartz Africa

Jumia IPO on New York Stock Exchange

Posted on by Fashion Tribe Influencer

The accelerating growth rate has convinced the company’s co-founders, former McKinsey & Co. colleagues Sacha Poignonnec and Jeremy Hodara, to pursue an initial public offering in New York this week on Friday 12th April 2019.

Jumia Africa’s Amazon is set for a New York IPO as Online Retail Takes Off 

Jumia is planning to sell 13.5 million American Depository Shares at $13 to $16, raising as much as $216 million. The listing is meant to give the company financial flexibility and increase awareness of the brand among investors, the firm said in a regulatory filing last month.

Often tagged as Africa’s Amazon.com Inc., Jumia has been able to grow in markets largely untapped by the U.S. heavyweight, which is hampered by a lack of distribution infrastructure on the continent. To tackle the issue of vague addresses in many African cities, Jumia has built a network of leased warehouses, pick up and drop off locations and brought in a string of delivery partners to ensure reliable service.

Less than 1 percent of retail sales in Jumia’s African footprint are conducted online compared with nearly 24 percent in China, the company said in the filing, citing Euromonitor International data. That makes the continent ripe for internet sellers as more Africans adopt smartphones and get access to mobile broadband. Jumia’s revenue jumped by almost 40 percent last year to 130.6 million euros ($147.3 million).

De-risking Africa

The company, which has headquarters in Berlin and got early funding from German startup incubator Rocket Internet SE, isn’t profitable. Jumia reported a loss for 2018 of about 170 million euros and has warned prospective IPO investors that it has accumulated losses of 862 million euros since its inception and relies on external financing to compensate for negative cash flow.

Still, investors tend to give e-commerce companies leeway because customer growth and market share are seen as more important, according to Seema Shah, a consumer analyst at Bloomberg Intelligence in New York. While the company competes with the likes of Amazon’s Souq.com and Naspers Ltd. in individual markets, Jumia has said it believes it’s the only pan-African e-commerce site.

“If an online retailer develops a name and offers a good consumer experience, people feel safer to use it,” Shah said. For the IPO to be successful, investors will have to see Jumia as “a chance to play in Africa with less risk.”

French drinks firm Pernod Ricard SA, the maker of Absolut vodka, invested 75 million euros in December, giving the firm a 5.1 percent stake and vaulting Jumia into unicorn territory with a 1.4 billion euro valuation. Mastercard Inc. followed with an agreement to buy 50-million euros in stock in a private placement alongside the planned IPO. Prior to the offering, Jumia’s biggest shareholder is South African wireless carrier MTN Group Ltd. with a 30 percent stake, followed by Rocket.

Other investors include Millicom International Cellular SA, another mobile-phone company operating in parts of Africa, and Goldman Sachs Group Inc.

Buenos Aires-based e-commerce firm MercadoLibre Inc. has a similar profile, Shah said. The company also largely beat Amazon to the punch in emerging markets, using a New York share sale in 2007 to expand in Latin America, offering shares at $18 each. The stock now trades above $500 and the group raised $1.85 billion in a fresh share sale last month.

Content courtesy of Bloomberg & Nairobi fashion hub

 

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