Jumia’s announcements that it will close its Jumia Foods operation in Rwanda and hand over the operations of Jumia Travel to a partner are the latest in a series of steps the Nigerian e-commerce business is taking as part of its ongoing “portfolio optimisation strategy.”
In recent weeks it has also closed its e-commerce businesses in Cameroon and Tanzania and laid off staff in Kenya as it seeks to address cumulative losses of $1bn. It continues to operate in 11 countries across Africa (Nigeria, Kenya, South Africa, Egypt, Ghana, Morocco, Uganda, Senegal, Ivory Coast, Tunisia, and Algeria).
“Sometimes we make decisions to change the scope of countries or categories,” co-chief executive Sacha Poignonnec explained in remarks reported by the Financial Times. “It is in the normal life of a company to adjust the focus, but the strategy remains very much the same.”
That strategy has four key pillars, he told an earnings call last month: “driving the growth of Jumia usage, developing our strategic priority in the fintech space with JumiaPay, driving monetisation and continuously improving cost efficiencies.”
It appears the business is sacrificing some geographical and vertical coverage in order to concentrate on the development of its payments platform, reallocating resources to that end, including some of the sales and advertising budget.
Poignonnec reported that JumiaPay on-platform total payment volume increased by 95% year-over-year (Q3) , while the number of JumiaPay transactions jumped by 262% over the same period.
“JumiaPay is really core to our marketplace proposition because we want to ensure frictionless consumer experience at checkout,” he said. “JumiaPay is key for us because it drives operational efficiency and removes some of the complexities associated with cash-on-delivery.”
Usage is also growing, he added, with 5.5 million annual active customers, up 2 million on last year and the number of orders placed in Q3 up 95% year on year. And he expects the figures to continue to grow with the recent launch of Jumia Mall, which allows brands to create an online store – which will help in addressing the “mental barrier” around product quality that online consumers in Africa face.
One observer suggested that small businesses tapping into social media have advantages in this respect. “Small businesses on Instagram are beginning to eat into Jumia . . .[by] doing things faster, cheaper and with a sense of security,” according to Uzoma Dozie, a tech investor and former CEO of Nigeria’s Diamond Bank.
He argued that “when [consumers] go to Instagram, they see pictures of people they know wearing the clothes – there’s not that social aspect to it on Jumia, which is more transactional.”
Sourced from Financial Times, Seeking Alpha, Gadgets Africa; additional content by WARC staff