JumiaPay records a 37.8% decline in transactions but Jumia's gross profit grows by 5% 

May 23, 2023
2 min read

After an initial period of dominance, African eCommerce companies have been hard hit by the macroeconomic developments in the countries they serve.

B2C companies like Jumia and Konga first got into the ring, but as purchasing power dwindled, B2B companies got into the act, hoping to capitalise on the informal nature of businesses on the continent.

But even that seems to have been affected by the same challenges B2C companies faced, and a recent report details how they have struggled to maintain positive unit economics.

Jumia, one of the sector's pioneers, has been working to reduce its losses by making personnel changes in 2022 and shutting down certain aspects of its business. Those changes appear to be yielding results, as its Q1 2023 report shows.

Operating losses at the eCommerce company fell by 54% year-over-year to $31 million, even as gross profits rose to $28.6 million, a 5% year-on-year change.

Francis Dufay, who was appointed CEO in 2022, restated the company's commitment to hitting profitability.

"We are committed to taking the business to profitability, and the first quarter of 2023 results demonstrate very good progress towards this goal. Our cost reduction initiatives are clearly bearing fruit, with all operating costs decreasing in the first quarter of 2023, both sequentially and on a year-over-year basis."

While its operating losses have dropped, quarterly active consumers, orders, and total payment volume for Q1 2023 also saw a year-over-year decline. Quarterly active consumers went from 3.1 million in Q1 2022 to 2.4 million in Q1 2023; orders fell from 9.3 million to 6.9 million, while total payment value fell 31% from 70.7 million to 48.6 million in the same period.

JumiaPay also saw transactions fall 38% year-over-year to 2 million, while the number of orders completed using the JumiaPay app also fell from 34% to 29% year-over-year.

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Since its launch in 2017, Jumia's executives have repeatedly touted the potential of JumiaPay. In 2019, former CEO, Sacha Poignonnec, disclosed that the company planned to drive the adoption of JumiaPay using its eCommerce platform.

That has worked out for the most part, as the number of transactions has increased steadily from 7.6 million in 2019 to 12.5 million in 2022. The value of transactions has also grown, going from $133.8 million in 2019 to $285.3 million in 2022.

Consequently, the company stated that it intends to double down on it and make it a "more effective enabler of its eCommerce business by reducing the challenges associated with cash-on-delivery."

Already, it has launched the JumiaPay pay-on-delivery option in Kenya, allowing users to pay with a card, mobile money, or bank transfer. Following that, it reports that 20% of post-paid orders done by Kenyans in March 2023 were completed using JumiaPay.

Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.

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