JumiaPay, the payment platform of Africa’s e-commerce company, Jumia Technologies AG, has posted a 38 per cent decline in transactions.
According to Jumia’s first quarter (Q1) for this year released at the weekend, the company however reported a total revenue of $46.3 million, reflecting a marginal decline of three per cent on a year-over-year basis. However, when constant currency is considered, the revenue increased by a noteworthy 24per cent.
Jumia CEO, Francis Dufay, said the company is shifting its strategy to pursue a different approach to growth. This involves three key elements: firstly, enhancing the supply and variety of products available by attracting reputable brands and suppliers in important e-commerce sectors like phones, electronics, home appliances, fashion, and beauty. Secondly, improving the tools and processes used to manage vendors on the Jumia platform, thereby enhancing the overall experience for customers. Lastly, the company aims to expand its consumer base by effectively targeting underserved markets in urban centres and rural areas, where traditional supply and retail options are limited, and tapping into the large consumer populations in these area.
He said the Q1 results demonstrate excellent progress towards the goal of achieving profitability. Despite facing challenging macroeconomic conditions and temporary headwinds, Jumia, he stated, remained focused on driving sustainable long-term growth for the business.
Despite the decline in transact on JumiaPay, 29 per cent of orders placed on the platform during the period under review were completed, underscoring the continued importance of JumiaPay as a preferred payment method for customers.
Jumia said it remained committed to making JumiaPay a more effective enabler of its e-commerce business. In Kenya, it successfully rolled out JumiaPay payment on delivery, resulting in 20per cent of postpaid orders completed using JumiaPay in March. These initiatives demonstrate Jumia’s dedication to refining its payment services and reducing the inefficiencies associated with cash-on-delivery, which will further strengthen its position in the e-commerce market.
According to the report, its gross profit which reached $28.6 million, representing a five per cent increase compared to the same period last year. The growth was even more substantial, reaching a monumental 24per cent on a constant currency basis. The gross profit margin as a percentage of GMV improved significantly, rising to 14.4per cent compared to 10.8 per cent in the same quarter last year. Its focus on driving operational efficiencies and implementing strategic initiatives led to significant year-over-year growth in gross profit, demonstrating its ability to deliver value to its stakeholders.
The company said its new management redoubled efforts to drive sustainable long-term growth for the business, building upon the previous management’s blueprint from the fourth quarter of 2022. As a result, the e-commerce giant experienced a substantial reduction in losses by optimising its revenue streams, enhancing logistics services, and adopting a disciplined marketing approach.
Jumia’s Q1 results showcased a significant reduction in losses and a commendable effort towards profitability. The company’s operating loss decreased by a remarkable 54per cent year-over-year, reaching its lowest quarterly level in over four years at $31 million. This substantial reduction in losses can be attributed to Jumia’s successful cost reduction initiatives, with all operating costs decreasing sequentially and on a year-over-year basis.
There was also 70per cent reduction in marketing and advertising expenses. This disciplined approach to marketing investments has led to an improvement in marketing efficiency ratios, with sales and advertising expenses per order decreasing by 58per cent and as a percentage of GMV improving by 451 basis points. Despite the significant cut in marketing expenditures, Jumia still managed to achieve growth in revenue. While overall revenue experienced a slight decline of three per cent year-over-year, it demonstrated a substantial 24per cent increase on a constant currency basis. Marketplace revenue, particularly commissions, experienced significant growth, increasing by 40 per cent year-over-year. This growth was driven by commission take-rate increases implemented in mid-2022. Jumia’s ability to reduce marketing expenses while maintaining revenue growth reflects a fundamental shift in their approach to sustainable and cost-effective growth.
Jumia’s focus on cost reduction across various expense categories has yielded positive results. Fulfilment expenses decreased by 34er cent year-over-year, aligning with the decline in orders, while fulfilment expenses per order showed a notable improvement of 20per cent. Sales and advertising expenses witnessed a remarkable reduction of 69per cent year-over-year, indicating a more disciplined approach to marketing investments. Technology and content expenses decreased by nine per cent year-over-year, showcasing the company’s commitment to enhancing the consumer experience and operational efficiency. General and administrative expenses also decreased by 16per cent year-over-year, reflecting the impact of organisational changes implemented in Q4 2022. These cost reduction efforts contributed to an overall operating loss reduction of 54per cent year-over-year. With a focus on enhancing the fundamentals of the platform and implementing comprehensive cost efficiency measures, Jumia remains on track to achieve long-term growth and profitability.
Thenation