Jumia Technologies, founded in 2012 by Sacha Poignonnec, Tunde Kehinde, Jeremy Hodara, and Raphael Kofi Afaedor in Lagos, Nigeria; is a publicly-traded technology company that essentially focuses on retail and logistics. It has been nicknamed the “Amazon of Africa” for having many similarities with the American giant that controls most of the world’s retail industry. Today, Jumia operates in 14 countries which include Egypt, Morocco, Côte d’Ivoire, Kenya, Tunisia, Tanzania, Cameroon, Algeria, and Uganda, just to name a few.
It is undeniable that Jumia has become a continental success. Jumia has a market capitalization of $489.40 million. From 2020 to 2022, Jumia’s total revenue considerably soared from $171 million in 2020 to $217 million in 2022 and a gross profit increased from $114 million to $124 million within those years. However, like most technology companies driven by growth and aggressive innovation, Jumia is not yet profitable. The latest data show that it had a net profit margin (NPM) of -88.26% as we can see in the following table. It ought to be said that Jumia became the first African unicorn company from the technology sector to be listed on the New York Stock Exchange (NYSE) in 2019. What made Jumia a giant in the African market?
source: AnnualReports.com
Jumia’s founders prioritized growth through the use of technologies to address the needs of most Africans. With globalization as the main economic model ruling the world, African countries ought to rely more on technology if they want to remain competitive in the global market. The growth of the internet on the African continent became prominent, especially in cities. Jumia could satisfy African customers who live in the cities but not those in the remote areas because the internet is quasi-non-existent in these areas. The delivery service in African services has significantly expanded since most people have an online account where they make instant purchases, and the items ordered get delivered in a timely fashion. Jumia’s business model has improved the level of consumption in many African countries. In 2021, Jumia launched a payment service provider called “JumiaPay” in Egypt upon regulatory approval. The PSP came as part of Jumia’s strategic partnership with the National Bank of Egypt, with the goal of facilitating online payments and the distribution of various digital and financial services.
The customer acquisition cost (CAC) of Jumia should be relatively low in the forthcoming years since consumers will naturally flock to the biggest player in the region once advances in infrastructure facilitate a better environment for online shopping. The subsidiaries of Jumia such as JumiaPay, and Jumia Food have started to increase their market size and more people are becoming consumers of Jumia’s services. The African market is still at its early stage in terms of opportunities for business development, and Jumia came early in the game. This technology company is progressively building a monopoly in the African market.