By Charles Abuede
Sacha Poignonnec, co-chief executive officer of Jumia Technologies AG, has said it is time to lay the groundwork for the next phase of growth in the company, with the e-commerce giant looking ahead of an immediate objective of generating profits from its spearheading African e-commerce business, spreading out longer-term plans to spin-off divisions and enter new countries.
Jumia, popularly referred to as the Amazon of Africa, was begun in Lagos by Frenchmen Poignonnec and Jeremy Hodara in 2012, where it started to stand out because of the business visionaries’ aspiring arrangement to bring internet business to a continent with weak internet connections and banking systems, chaotic transport and unreliable addresses.
However, the New York initial public offering at first attracted a surge of interest, yet a condemning report by short sellers Citron, who affirmed fraud, sent the stock into a descending spiral.
Poignonnec said in an interview that laying the groundwork for growth will partly focus on Jumia’s division that helps convey goods between buyers and sellers in 11 African countries, including Nigeria, Egypt and Uganda, and the payments business that allows them to settle transactions. The co-CEO said the company may eventually look to gyrate the divisions off into separate entities.
“We created something that does not really exist in Africa, which is an end-to-end logistics partner on the continent. We have built it from the get-go so that one day we are in the position to carve it out if we want to,” he explained.
Meanwhile, the subject of when the Berlin-based organisation will become profitable has loomed over the technology group since a prominent New York listing in 2019; and keep in mind that Jumia has been cautious lately not to set itself a deadline. That narrative began to change recently, when stay-at-home alerts during the Covid-19 pandemic started to paint a more certain image for e-commerce companies – even in Africa.
Citron said in October its analysts had “learned a lesson” and wouldn’t wager against Jumia’s rally, even as difficulties, such as slow times of delivery remain in the business.
Thus, Jumia has opened its African logistics network to third parties, assisting with adding volumes and haggle better pricing on delivery and control costs, Poignonnec said. The company, has, however, benefited from disinclination so far by industry giants Amazon.com Inc. and Alibaba Group Holding Limited to significantly spread out on the continent, with Naspers Limited’s Takealot, one of few similar businesses.
“The focus is on reducing losses and controlling costs, and deciding where to allocate our resources,” Poignonnec said. Meanwhile, Jumia’s third-quarter operating loss was $33.9 million, down 49 per cent from the previous year; while its stock has flooded since and has expanded by over 500 per cent in the last 12 months, with the shares traded at 1.4 per cent lower on Thursday in New York, and placing the company’s value at about $3 billion.
Furthermore, Poignonnec said that Jumia left three African markets a year ago, yet will consider different open doors in the much longer-term including Ethiopia. And thus, being Pan-African empowers investors to get an introduction to the continent instead of one nation, he stated, while partners such as wireless carrier MTN Group Ltd. and financial group MasterCard Incorporated who invested in Jumia before the IPO last year can work with the group across several markets.
“No one questions the relevance of e-commerce as a business and the opportunity in Africa is massive. Seven years ago, people were questioning how we are even going to do this, now the only question remains on profitability. Other growth choices include gaming and video streaming,” said the CEO.
Frontpage February 3, 2020