Jumia Business Analysis: GMV, Top Markets & eCommerce in Africa

Jumia Business Analysis: Key Insights 

• GMV Development: Jumia saw substantial GMV growth before the pandemic, but it faced declines post-pandemic. A gradual recovery is expected as the company shifts focus to a third-party marketplace strategy.

• Largest Markets: Nigeria remains Jumia's largest market, contributing 40% of its GMV. Morocco, Kenya, Egypt, and Ivory Coast follow, showcasing Jumia's extensive presence across the continent.

• Top-Selling Products: Electronics topped Jumia's sales in 2023, followed by personal care, hobby and leisure items, fashion, and furniture and household goods.

• Zando: Part of the Jumia Group, Zando leads the online retail space in South Africa. It focuses on fashion and now offers international products through Zando Global, also partnering with significant names.

• Recent Developments: In Q1 2024, Jumia’s GMV increased by 5% to US$181 million and revenue by 19% to US$49 million, despite currency devaluations. Jumia ended Jumia Food in 2023 to focus on more profitable areas. JumiaPay saw a 52% rise in transactions, boosting growth and profitability.

   

Jumia, the pan-African eCommerce giant, has been making waves since it became Africa's first unicorn (valued at over US$1 billion), as well as the first African start-up to be listed on the New York Stock Exchange. Despite not being among the top online marketplaces globally by GMV, Jumia stands as the second most valuable German eCommerce company, trailing only behind Zalando. 

Imagine a platform that connects over 64,000 sellers with millions of customers, providing seamless deliveries across the African continent. How did Jumia evolve from a first-party retailer to a dynamic third-party marketplace? What are the strategies and challenges that define its journey? Let's dive into the intricacies of Jumia Marketplace. 

What is Jumia Marketplace?

Jumia is a pan-African eCommerce platform operating in 11 African countries. Based in Berlin, the company leverages technology to provide innovative, convenient, and affordable online services in Africa. Jumia also supports business growth by helping sellers reach and serve customers more effectively through its platform. 

Jumia’s platform includes a marketplace that connects over 64,000 sellers with customers, a comprehensive logistics network for efficient shipment and delivery of packages, and JumiaPay, a proprietary payment service that facilitates transactions across select markets on the platform. 

 Jumia GMV: Pre-Pandemic Growth Didn’t Last 

Despite growing at an impressive rate before the pandemic, Jumia couldn’t sustain its success:

• Jumia's GMV (Gross Merchandise Volume) of US$547 million in 2017 increased by 71% in the following year, reaching US$937 million by 2018.

• Continuing its success with a more modest growth rate (26%) in 2019, Jumia suffered a 21% decline in GMV, dropping to US$932 million by 2020.

• With minimal growth rates through 2021 and 2022, Jumia contracted by 28% last year.

• While our forecast for 2024 shows a further 7.4% decline in GMV, Jumia should bounce back next year as we forecast 3.1% growth.

Increase in Third-Party Activity 

Originally a first-party online retailer, Jumia shifted towards a more third-party marketplace strategy in 2016. 

Jumia balances between first-party and marketplace channels. Country-by-country, market-by-market, Jumia looks for the channel split that creates the most value for customers and presents the best opportunity for the category mix. This dynamic strategy is reflected in the evolving distribution of Jumia’s marketplace GMV. 

• In 2017, first-party activity on Jumia’s online marketplace stood at 15%.

• However, this share declined over the years, reaching a low of 6% in 2020.

• As the pandemic's impact softened, the first-party activity share started to increase again.

• Standing at 13% last year, we project that this share will reach up to 16% by 2025.

Jumia's approach involves building categories in various ways across different markets, ensuring that the channel split aligns with customer value and market opportunities. This flexible strategy has allowed Jumia to adapt in the competitive market.

What is the Largest Market of Jumia? 

We talked about how Jumia is a pan-African platform. But in which markets is Jumia thriving the most? Based on 2023 GMV:

• Nigeria accounts for 40.1% of the marketplace's GMV, followed by Morocco with 17.9%.

• Kenya and Egypt also contribute significantly to Jumia's GMV with shares of 10.7% and 7.5% respectively.

• Ivory Coast accounts for 6.5% of GMV.

• The remaining 17.3% of GMV is spread across other countries, highlighting Jumia's extensive reach across different markets.

Top Jumia Domains 

Building on that, let's also look at how much net revenue Jumia's online stores in these countries generated in 2023:

• At US$33.7 million net sales in 2023 (leading the Nigerian eCommerce market), jumia.com.ng is the top Jumia online store.

• Jumia’s Moroccan online store, jumia.ma, is at #2 with net sales of US$15 million.

• The Kenyan domain follows at #3, having made net sales of US$9 million last year.

• While Jumia’s Egyptian online store is at #4 (US$6.3 million), the Ivory Coast domain rounds out the top 5 at US$5.4 million. 

What Products Sell Most on Jumia? 

In 2023, electronics emerged as the top-selling product category on Jumia:

• After electronics with 28.4% of the marketplace's GMV share, personal care products account for 19.1% of Jumia's GMV in 2023.

• The hobby and leisure category also has a significant share at 15.2%.

• Fashion items account for 14% of the GMV, while furniture and household goods contribute 9.4% of the GMV. 

Zando: Jumia’s South Africa Extension 

Zando, part of Jumia Group, is one of South Africa's leading online retailers, celebrating its 12th anniversary this year. Leveraging technology, Zando bridges the gap between urban and rural areas, offering fashion (making up 75% of its 2023 GMV) and convenience to even the most remote locations. 

Recently, Zando launched Zando Global to counter fast-fashion giants Shein and Temu. This division provides South African consumers with international products, ensuring local reliability with easy returns and rigorous product checks. Partnering with Buffalo International Logistics, Zando ensures seamless deliveries. 

Additionally, Zando has partnered with Brick Up Africa CC to offer Lego products, enriching its diverse catalog and promoting creativity among South African families.

Jumia Business Analysis:
Recent Developments 

Going back to Jumia, the platform has faced significant challenges and opportunities over the years. Despite a volatile economic environment, the company has shown resilience and strategic agility. 

Here’s a closer look at Jumia’s financial health, strategic decisions, and key initiatives driving its growth: 

Jumia’s Financial Performance 

Jumia Technologies AG reported mixed financial results in the first quarter of 2024. GMV rose by 5% year-over-year to US$181.5 million, and revenue increased by 19% to US$48.9 million. 

However, the company faced a loss before income tax of US$39.6 million, primarily due to currency devaluations in Nigeria and Egypt and higher finance costs. Despite these challenges, CEO Francis Dufay emphasized Jumia's strategic focus on strengthening core business and improving cash efficiency, reflecting the company's resilience amidst macroeconomic challenges in Africa.

Jumia Food: A Discontinued Effort 

Jumia's food delivery service, Jumia Food, was discontinued in December 2023 across seven African countries. The decision stemmed from intense competition and challenging market conditions, with deep-pocketed rivals like Delivery Hero (Glovo) and Yandex (Yango Delivery) aggressively expanding. The market's low barriers to entry and irrational economics, such as heavy discounting and free delivery offers, made sustaining Jumia Food untenable. 

Over the years, Jumia has diversified its business with other offerings than Jumia Food, such as Jumia Travel, Jumia Deals, and Jumia One. 

Jumia Food once accounted for 11% of the company's GMV and was the second-largest category behind fashion. The exit from the food delivery market impacted hundreds of gig workers, leaving many struggling to find new employment opportunities. Despite its popularity, the move was part of Jumia's broader strategy to focus resources on its more profitable physical goods eCommerce segment. 

JumiaPay: Driving Cashless Transactions 

Jumia's proprietary payment service, JumiaPay, has become a significant driver in the company's quest for profitability.

In Q1 2024, JumiaPay transactions increased by 52% year-over-year, with total processing volume reaching US$45.4 million. The service now accounts for 32.5% of Jumia orders on physical goods, up from 20% previously. 

The continued rollout of JumiaPay in key markets like Nigeria and Kenya is enhancing cashless transactions, positioning JumiaPay as a crucial enabler of Jumia's eCommerce platform. 

Jumia Business Analysis: Closing Thoughts 

Despite a challenging macro environment, Jumia continues to show resilience and strategic focus. The company's market cap stands strong at US$1.41 billion, with efforts to streamline operations and reduce costs yielding positive results. 

As Jumia navigates currency fluctuations and competitive pressures, its focus remains on leveraging technology to connect urban and rural communities, ensuring a diverse and accessible online shopping experience across Africa.

Sources: Nasdaq, StockNews, Jumia, BBC, CompaniesMarketCap, Reuters, Zawya, TechCrunch, Rest of World, ECDB