Jumia’s Q3 report indicates its significant progress towards profitability

NIGERIA – Jumia, leading e-commerce platform has reported a year-over-year rise in gross profit in the third quarter ended September by 22% reaching €23.2 million (US$27.45m).

The report showed an improvement in the operating loss which decreased by 49% compared to the previous year, reaching a three-year low of €28.0 million (US$33.1m).

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However, its Gross Merchandise Value (GMV) was €187.3 million (US$221.6m), down 28% year-over-year, as the effects of the business mix re-balancing initiated late last year continued playing out during the third quarter of 2020.

The company further revealed that the sales & advertising expense was €6.2 million (US$7.3m), the lowest quarterly amount since 2017 and a year-over-year decrease of 55%.

“Having established Jumia as the leading pan-African e-commerce platform, we have focused over the past 12 months on firmly advancing towards breakeven.”

Jeremy Hodara and Sacha Poignonnec – Co-Chief Executive Officers of Jumia

The report according to the company is an indication that the Jumia brand is making significant progress towards profitability with Adjusted EBITDA loss in the third quarter decreasing by 50% compared to the previous year.

“Having established Jumia as the leading pan-African e-commerce platform, we have focused over the past 12 months on firmly advancing towards breakeven.

“The significant progress achieved was mostly attributable to the thorough work we have done on the fundamentals of our business, with limited support from external factors such as COVID-19,” said Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia.

Jumia’s fintech solution product, JumiaPay also recorded a year-on-year increase in Total Payment Volume (TPV) by 50% reaching €48.0 million.

TPV penetration doubled from 12.2% of GMV in the third quarter of 2019 to 25.6% of GMV in the third quarter of 2020, a clear sign its ability to drive prepayment adoption on our platform efficiently.

The platforms transactions increased by 6% from 2.1 million in the third quarter of 2019 to 2.3 million in the third quarter of 2020.

Overall, 34.1% of Orders placed on the Jumia platform in the third quarter of 2020 were paid for using JumiaPay, compared to 30.6% in the third quarter of 2019.

As contained in the report, annual active consumers on Jumia reached 6.7 million in the third quarter of 2020, up 23% year-over-year as the brand continued focusing on both consumer acquisition and existing consumers’ re-engagement.

Orders on the platform however reduced to 6.6 million, representing a 5% year-over-year fall.

This according to the company is due to a 20% decrease in digital services transactions on the JumiaPay app, while orders on the rest of the platform were stable.

The company also stated that it made multiple enhancements across logistics and marketing operations that led to a decrease in fulfillment and marketing expenses for the third quarter of 2020 by 20% and 55% respectively, on a year-over-year basis.

According to the company, the portfolio optimization completed last year, along with overhead rationalization, contributed to a decrease in G&A costs excluding share-based compensation of 24% year-over-year in the third quarter of 2020.

Jumia recently expanded its scope by opening its logistic arm to third party businesses who wish to leverage its network, technology and expertise for last mile deliveries across 11 countries in the region.

The ecommerce company has indicated that the new offering is aimed to enable the third parties to efficiently undertake their logistics operations which is a major cost driver.

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