Nigeria and one of Africa’s leading e-commerce companies, Jumia, has reported a loss after tax of €37.6 million (about N17 billion) in the second quarter of 2020 following the rampaging effect of COVID-19.
According to earlier forecasts, e-commerce firms were expected to be one of the major beneficiaries of COVID-19 pandemic as consumers gravitated to online orders to meet essential needs.
However, the losses were a much improvement from the €66.7 million loss reported in the same period in 2019 as Jumia strives to dig itself out of a massive loss hole. But the losses wiped out Jumia’s revenue of €34.9 million Euros reported in the quarter under review.
On Customer Acquisition, Jumia reports it now has 6.8 million active customers in the second quarter of 2020, up by 40% when compared to the same quarter in 2019. Orders also reached 6.8 million, up by 8%, while GMV was €228.3 million, down 13% on a year-over-year basis.
While explaining the losses, Jeremy Hodara and Sacha Poignonnec, the Co-Chief Executive Officers of Jumia said:
“We have made significant progress on our path to profitability in the second quarter of 2020, with operating loss decreasing by 44% year-over-year to €37.6 million.
This was achieved thanks to an all-time high gross profit after fulfillment expense of €6.0 million and record levels of marketing efficiency with Sales & Advertising expense decreasing by 51% year-over-year.
We are navigating these uncertain times of COVID-19 pandemic with strong financial discipline and operational agility which positions us to emerge from this crisis stronger and even more relevant to our consumers, sellers, and communities.”
A cursory look at the results reveals Jumia reported revenue of €34.9 million compared to €38.8 million in the same period in 2019. While Jumia reported significant revenue growth in key platform revenue segments such as commissions, fulfillment, marketing and advertising, it lost big in its First Party revenue.
The First Party revenue are closed sales leads generated when customers directly visit an e-commerce website or call or contact them directly to make purchases.
Jumia reported that First Party revenue fell a whopping 49.1% year-on-year to €11 million compared to €21.6 million in the same period in 2019. Despite the drop in revenues, Jumia experienced a growth in gross profit as a change in its business model helped reduce the direct cost of sales. In the quarter under review, gross profit rose 38.2% to €23.3 million.
The company claims cost-cutting was driven by cost efficiency initiatives. For example, it explains that it ‘changed the volume pricing model from a price per successfully delivered package to a price per successful stop which led to an 8% reduction in cost per order for a given route.
It also claimed it adopted a mother-daughter warehouse system which brings warehouses stocked with ‘essential products’ closer to customers, thereby helping reduce last-mile delivery cost.