Jumia’s GMV for Physical Goods Sees Growth in Five Countries, Lowest Losses Since IPO
In Q3 2023, Jumia, the leading e-commerce platform in Africa, reported a significant milestone as it achieved growth in Gross Merchandise Volume (GMV) for physical goods in five countries. This marks a positive turn for the company, which also recorded its lowest adjusted EBITDA losses since its IPO in 2019. Despite facing challenges such as high inflation and import restrictions, Jumia’s strategic actions and commitment to core categories have begun to yield positive results.
Improvement in Financial Performance
Jumia’s adjusted EBITDA loss in Q3 2023 stood at $15 million, a substantial decrease of $32 million compared to the same period last year. This represents a 67% year-over-year decline and a 70% reduction on a constant currency basis. The company’s year-to-date adjusted EBITDA loss also decreased by 61% compared to the first nine months of 2022, amounting to $61 million. Additionally, Jumia’s liquidity improved, with a reduction in its position of $19 million in Q3 2022, a 71% year-over-year decrease.
Challenges and Strategic Initiatives
Jumia attributes the decline in active customers and orders to various macroeconomic conditions such as high inflation and import restrictions. The average inflation level across Jumia’s footprint is 13.5%, with countries like Ghana, Egypt, and Nigeria experiencing record-high inflation and currency devaluations. To address these challenges, Jumia implemented strategic streamlining initiatives, including suspending certain operations in markets where economic viability was deemed unsustainable.
Growth in GMV for Physical Goods
Despite the overall decline in GMV for physical goods, Jumia experienced growth in this segment in five countries. Ghana, Uganda, and Senegal were specifically mentioned by CEO Francis Dufay, who did not disclose the other two countries. These five countries collectively contribute 49% of Jumia’s overall GMV for physical goods. Efforts in core categories such as phones, electronics, home living, fashion, and beauty have contributed to an improvement in average order value and facilitated improved repurchase rates.
Partnership with Starlink and Payment Volume
Jumia’s partnership with Starlink, a satellite internet company, is an integral part of its strategy to enhance its assortment, supply, and brand offerings. The company plans to distribute Starlink’s residential kits in Nigeria initially and is exploring expansion to other African countries. Jumia’s total payment volume (TPV) in Q3 2023 amounted to $48.1 million, with JumiaPay transactions showing positive growth. JumiaPay accounted for 44.7% of orders placed on the platform, reflecting increased adoption.
Revised Financial Outlook
Jumia has revised its guidance for adjusted EBITDA losses and expects them to be between $80 million and $90 million for the year, representing a significant reduction compared to previous estimates. This positive financial outlook has instilled confidence in investors, leading to a surge in Jumia’s stock.
Overall, Jumia’s growth in GMV for physical goods in five countries and its improved financial performance demonstrate the effectiveness of its strategic initiatives. Despite facing macroeconomic challenges, the company remains committed to delivering a diverse and updated product range to African consumers.