Shares of African e-commerce giant Jumia plummeted on Wall Street Monday, wiping out much of the gains seen earlier this year. The stock opened sharply lower, trading at $4.35, a significant drop from its June peak of $13.10.
The disappointing performance comes just a week before Christmas, dashing investor hopes for a sustained recovery after a brief rally. Jumia’s market capitalisation has now fallen by more than half from its peak above $1.32 billion in June 2024. The decline reflects the ongoing challenges faced by the e-commerce player since its 2019 New York Stock Exchange (NYSE debut), a period marked by consistent financial struggles.
Optimistic for a turnaround, Jumia tapped Francis Dufay, a former CEO of Jumia Ivory Coast to run the company in November 2022. Dufay’s first act was to prune headcount by nearly half, cut advertising spending and customer incentives. Additionally, Jumia unbundled its food delivery service and exited countries that showed a lack of promise.
Despite these measures, Jumia continues to face headwinds. Currency devaluation in key markets like Nigeria and Egypt has hampered growth. The value of total orders (GMV) declined to $162.9 million despite the number of orders increasing to 5.9 million, according to third-quarter results of 2024. Revenue also dipped to $36.4 million, down 13% year-over-year while active users stayed at 2 million.
To support its growth strategy, Jumia has recently raised $100 million through secondary share sales and expanded its supplier base and logistics network. The company claimed it had a successful Black Friday with 1.8 million of its active 2 million users in participation. These customers made 2.6 million orders amidst soaring inflation and currency depreciation. Dufay strongly believes this is progress.
Jumia’s share price is up 29.46% since the start of the year(YTD) as the business continues to leverage its JForce network and digital marketing efforts like SEO to retain customers. It also recently struck a deal with Palmpay leveraging its 30 million customer base to increase order volumes. The partnership already positions PalmPay as a serious contender to JumiaPay, Jumia’s fintech arm.
In 2025, the 12-year-old e-retailer will contend with Chinese online retailer Temu which recently earned the badge as the most downloaded app in Nigeria on both Android and Apple app stores. This is in addition to pent-up competition from social commerce including Whatsapp, TikTok and Instagram sellers taking advantage of ecommerce tools.
Earlier this year, Jumia’s expansion into South Africa was hampered by stiff competition from the prosus-backed Takealot, forcing the company to eventually withdraw from the market. With Amazon expanding to Egypt and Temu taking on Nigeria, Jumia’s chances of success are reliant on its nine markets concentrated in West and East Africa. Temu ‘s popularity in Nigeria—a core market for Jumia has been reliant on its huge marketing blitz, a similar strategy that worked on US shoppers. The Chinese retailer reportedly spent nearly $2 billion on ads in 2023.
Jumia has enjoyed immense success with its shift to physical goods and an offline drive of deploying pickup stations in remote areas, to capture underserved populations. It must now be ready to compete if it will upturn money spenders like Temu and Amazon, who have a significant presence on the continent.
