Jumia’s third quarter financial performance reflects the tough economic conditions for African businesses. Jumia showed in its Q3 2024 report a 14% year-on-year decline in revenue to $36.5 million. The decline was mainly due to currency devaluations in key markets such as Nigeria and Egypt, which overshadowed operating profits that would have been expected otherwise. Gross merchandise volume (GMV) declined 10% in USD terms but showed an increase in constant currency terms. This suggests that Jumia’s core metrics could be stronger than they appear on paper once local currency flcutuations are removed.
Increased customer engagement
Despite the financial hurdles, Jumia saw a 6% increase in order volume, reflecting continued user interest and engagement. The active customer growth and 27% increase in orders in constant currency terms indicate robust underlying demand in Jumia’s key markets such as Nigeria, Egypt and Kenya. Additionally, the company’s payments platform, JumiaPay, saw significant growth, contributing to the company’s strategy to improve digital transactions. JumiaPay transactions exceeded 2 million in the third quarter, up 30% year-over-year. Jumia is embracing digital payments to maintain customer loyalty and attract new users.
Jumia’s decision to exit unprofitable markets such as South Africa and Tunisia is in line with the company’s strategy to focus on growth in its core areas. These exits will allow it to reallocate resources to markets with greater e-commerce potential. The restructuring is also in line with cost-cutting measures and increased operational efficiencies that Jumia CEO Francis Dufay sees as key to achieving profitability.
Dufay noted that Jumia needs to balance customer acquisition with careful cost management, such as streamlining logistics and reducing overall cash burn. For example, sales and marketing costs have been reduced in recent quarters as Jumia prioritizes organic growth from repeat customers. Additionally, operations have been adjusted to address inflationary pressures and a competitive local market.
Moving on the Road to Profitability
To address cash flow constraints, Jumia recently completed an initial public offering, raising nearly $100 million to bolster its balance sheet. Dufay said the capital injection will support Jumia’s efforts to accelerate profitability by funding strategic projects aimed at improving the platform’s customer experience and strengthening its supplier network. The capital injection also provides a buffer for Jumia to continue its expansion into underserved African markets, where demand for e-commerce is growing despite economic headwinds.
Jumia keeps a constant eye on profitability as it deals with economic fluctuations. In addition to exiting markets, Jumia is also restricting some business segments, such as Jumia Food, in several African countries as part of its rationalization. The company also plans to further strengthen its supply chain by working more closely with local and global suppliers to ensure competitive prices and reliability for customers.
Given the currency instability in African economies, Jumia’s adapting to local market realities and focusing on high-potential segments underscores its commitment to establishing itself as a profitable leader in Africa’s e-commerce landscape.
