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African e-commerce company Jumia plans to maintain a strategy that has ramped up inventory supply from Chinese vendors and made Nigeria its largest market, to achieve profitability at the end of next year, CEO Francis Dufay told Semafor.
Jumia reported 87% year-on-year growth in the volume of items sold by international sellers on the platform, especially from China and Turkey, in the first quarter of this year. The company started importing goods from Chinese vendors two years ago to make up for a dearth of suppliers in Africa who can deliver a wide variety of large orders at scale with favorable prices, Dufay said. But it was also a strategy to counter the rise of Chinese online retailers on the continent, he said.
After mostly facing local players for years, Jumia’s competition in Africa now includes Chinese players especially Temu and Shein. Temu entered Nigeria in late 2024 and immediately became the most downloaded app in the country. Its aggressive marketing strategy persuades users to buy a vast range of items at cheaper prices. Dufay recognises Temu’s threat and plans to grow Jumia’s sales from China to compete.
Revenue for the first quarter rose 39% year-over-year to $50.6 million, with both the volume and monetary value of orders fulfilled rising by more than 30%. Pre-tax losses also rose within the period to maintain a trend of losses that stretches back to the company’s New York initial public offer in 2019. But the company said it will attain positive cash flow by this year’s fourth quarter.
A current strain on Jumia is a rise in operational costs due to higher fuel prices as a result of the Iran war. “We can’t really charge customers for it because their willingness to pay is limited,” said Dufay. Still, the war’s effects will not significantly change the company’s midterm financial goals, he added.
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The change in strategy has also included a realization that African e-commerce customers do not have as much disposable income as the company had assumed over the last decade, Dufay said, and that focusing on serving them as they are makes for a more efficient company.
“When you want to establish in Nigeria or Kenya or Egypt, the reality is that your core customers make $300 per month. We’re targeting relatively poor customers with limited purchasing power,” he said.
Côte d’Ivoire had been Jumia’s largest market by sales but Nigeria overtook it in this year’s first quarter, Dufay said, with a 42% year-on-year growth in gross merchandise value. Jumia’s growth approach is now to take a model that has adequately served the Ivorian lower middle class over a decade and replicating it “better and faster” in Nigeria — where a previously turbulent macroeconomic climate marked by record inflation has stabilized and is turning a corner — and the seven other markets the company operates in, Dufay said.
Step Back
Following Dufay’s appointment in late 2022, Jumia started moving away from an era of trying to sell everything to every customer, accompanied by splashy big-budget advertisements online and on street billboards. The company’s managers were formerly based in Dubai, but Dufay works out of Abidjan where he had been country manager since 2014.
Jumia has become a smaller company in the last four years, shuttering in three countries — South Africa, Tunisia and Algeria — and quitting services like food delivery, travel and classifieds. But it is a company that is better focused and able to deliver goods to actual consumers willing and able to pay in the eight countries, Dufay argued.
“Jumia was chasing way too many opportunities in way too many countries that did not make sense, and in some verticals that were just not viable even if well executed,” Dufay said. “We have to focus because we don’t have infinite resources.”
Notable
- The 21.98% pre-market trading rise in Jumia’s stock price on Thursday signaled “investor optimism about the company’s growth trajectory,” the financial data outlet Investing.com said after the Q1 earnings were published.