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Jumia Plans to be Profitable After a Hardship in 2019


TechInAfrica — Jumia, the first technology startup in Africa to list on the New York Stock Exchange (NYSE), is aimed at becoming profitable after facing a challenging year in 2019, according to a report from Reuters on January 22.

“We’re going to be extremely disciplined and very focused on our path to profitability,” Co-Founder Jeremy Hodara told the news outlet.

Hodara said the eCommerce company will move to increase earnings from third-party merchants.

This African unicorn’s NYSE shares have dropped almost 70 percent since its initial public offering (IPO) in April 2019.

“Clearly it’s a bit uphill, but I think in the end if investors believe they’re going to make money on the story, they’re going to buy into it,” said Sarah Simon, senior analyst at Berenberg. “But they have to prove themselves.”

Jumia, which was at one time valued at nearly $4 billion, closed down its online shopping platform in Cameroon and Tanzania and also stopped its food delivery service in Rwanda.

Its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) in the third-quarter hit €45 million, over 27 percent in the span of 2019.

Analysts cautioned it could be difficult to raise additional funds, as the startup ate up cash from time to time. But Hodara said that its expenses will drop as Jumia grows.

JumiaPay, the company’s online payment channel, is pivotal in its expansion plans, according to Hodara. Plans include further servicing third parties, regardless of their participation in its eCommerce platform.

In an addition, Jumia is also considering the expansion of fee-based services offered to sellers in addition to the warehouse space, marketing services, and search engine optimization already offered.

Hodara said, “A fantastic world would be a world where you have zero commission as a seller … and your entire monetization is made out of additional services you sell to the sellers.”

When Jumia went public in April 2019, the move was perceived as a sign for the future prospects of eCommerce in Africa, home to some 1.3 billion people, of whom at least 725 million have mobile devices. On its first day of trading, shares for the company, which was often called Africa’s Amazon, traded at about $22, surging to 54 percent.



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