Jumia: The e-commerce start-up that fell from grace

A Jumia saleman tries to market products to bystanders in Lagos on June 12, 2013.Image copyright
Getty Images

A year after its debut on the New York Stock Exchange, e-commerce start-up Jumia has shut down in three African states, struggled to turn a profit and got dumped by its original owners, writes former BBC Africa Business editor Larry Madowo.

The two CEOs of Jumia announced earlier this month that they were taking a 25% pay cut to support the online retailer manage costs during the coronavirus pandemic.

In 2019, the duo and the company’s chief financial officer collectively earned $5.3m (£4.27m) in base salaries and one-time bonuses. But Jumia’s losses rose 34% to $246m, the eighth straight year without profits.

A silver lining arrived with lockdowns that shut down much economic activity but led to a surge in online shopping. Before the rush, the African online retailer had ended last year with 6.1 million active consumers on its websites, up from 4 million previously.

Africa pride

As the virus spread, Jumia expanded grocery and sanitary offerings, introduced contactless delivery options and promoted cashless payments. It also started selling essential items in South Africa using its fashion retail subsidiary Zando’s infrastructure.

The two Frenchmen who run Jumia as co-CEOs, Jeremy Hodara and Sacha Poignonnec, reduced their salaries just days before the first anniversary of its initial public offering (IPO) on the New York Stock Exchange (NYSE).

A Jumia scooterman arranges product to be delivered to clients at the Ikeja warehouse of the company in lagos on June 12, 2013


Online retailer Jumia:

Founded in 2012

  • Key markets: Nigeria, Egypt and Kenya

  • Main shareholder: South Africa-based mobile phone giant MTN

  • High points: April 2019 listing in New York; share price reaching $49.77

  • Low points: fraud claims; share price sinking to $2.15 in August 2019

  • Big promise: Will be profitable by 2022, a decade after launch

Source: Various media outlets

When it listed last April, Juliet Anammah walked up to the security check-in tent outside the world’s most famous stock trading venue.

Another woman standing nearby snapped a photo of a large banner draped over the front of the iconic building emblazoned with the Jumia logo reading: “The 1st African tech start-up to be listed on the NYSE.”

“I’ve worked on Wall Street for 25 years and I’ve never seen an African banner there,” she told Ms Annamah, then the firm’s country CEO in Nigeria.

Spectacular decline

Jumia is a three-headed online giant: a marketplace with one billion annual visits largely dominated by third-party sellers, a logistics arm that handles shipments and deliveries, and a payments platform.

Ms Anammah led her colleagues in ringing the bell above the trading floor of the stock exchange at exactly 09: 30 on 12 April 2019.

“There was no champagne later to celebrate. We’re still a start-up,” she remembered recently at her office Lagos.

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Media captionA Jumia Food customer orders food on the app

Jumia listed at $14.50 a share, valuing the company at $1.1bn. Just four days later, its stock hit $49.77, raising its value to an African startup record of $3.8bn.

It would not last. Within a few weeks, Jumia’s stock suffered a spectacular decline, weighed down by allegations of fraud and concealed losses, a scathing report by a notorious short-seller, embarrassing fraud lawsuits in New York courts and a public relations disaster over its identity.

The share price sunk to an all-time low of $2.15 last August and has not budged.

The company exited three of its 14 country markets – Rwanda, Tanzania and Cameroon – in quick succession and tried to chart a path to profitability.

Tumultuous year

A week before its first birthday on the stock market,

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