Jumia expansion hits snag

The company quits Rwanda, Tanzania and Cameroon markets

Kampala, Uganda | JULIUS BUSINGE | E-commerce has been slowly gaining traction in Africa in recent years. As a result, the popular talk has been that e-commerce firms are making money off people’s obsession with surfing and shopping on the internet.

That assertion seems to be untrue as evidenced by Jumia’s announcements on quitting the Rwanda, Tanzania and Cameroon markets.

However, the company’s executives at Jumia Uganda told The Independent on Nov.08 that the local subsidiary is doing well.

Jumia listed on the New York Stock Exchange in April, becoming the first Africa-focused start-up worth more than $1bn, according to the Financial Times.

Though the shares peaked $49.77 weeks after its listing, they [shares] have fallen to $5.96, giving it a market capitalisation of just $458.3million. This is about a tenth of its all-time high.

Jumia said the decision to quit the markets relates to failure by the online company to make money to sustain operations.

The company said they are engaged in taking e-commerce to profitability and drive penetration of JumiaPay, an online payment platform.

“Sometimes we make decisions to change the scope of countries or categories. . . but it is in the normal life of a company to adjust the focus, but the strategy remains very much the same,” said Sacha Poignonnec, the firm’s co-chief executive.

Jumia makes money from sales made by vendors that use their online platform to sell goods to online shoppers. The goods include electronics, home appliances, fashion and more.

In a statement, Jumia group executives said that as part of their ongoing portfolio optimization effort, they had come to the difficult decision to cease their operations in Tanzania effective Nov.27.

“It is more important now than ever to put our focus and resources where they can bring the best value and help us thrive,” the group statement reads in part.

It adds that while their operations in Tanzania provided many opportunities for customers and vendors, this decision would help the company to achieve greater success in the future.

However, it said that it would continue to support customers to transact through its classifieds portal, previously called Jumia Deals.

For Cameroon, group officials said its transactional portal was not suitable to the current environment in the country which forced group executives to effect a difficult decision to suspend its e-commerce operations effective on Nov.18.

After these developments, it remains unclear whether more operations will be closed in other markets.

However, Abdesslam Benzitouni, the group head of communication told Quartz Africa – a news entity – that Jumia has no closure plans in the short-term in the other countries where they continue operating.

It is currently in Nigeria, Egypt, Morocco, Kenya, Côte D’Ivoire, South Africa, Tunisia, Algeria, Ghana, Senegal and Uganda.