Jumia Reports N17 Billion Loss Despite Covid-19 Sales

Africa’s e-commerce giant, Jumia has reported a loss after tax to the tune of 37.6 million Euro (N17.1billion).

In its second-quarter 2020 report, the company said the loss is a progress compared to what it recorded in the second quarter of 2019 which was 66.7 million Euro.

Jumia’s latest loss discarded the general insinuations that the coronavirus lockdown was favourable to E-commerce businesses as consumers inevitably switched to online shopping for their essential needs.

The loss wiped out Jumia’s revenue of 34.9 million Euro reported in the quarter under review.

However, the company’s Customer Acquisition spiked in the second quarter of 2020 to 40% when compared to the same quarter in 2019.

The report said orders also rose to 8% – 6.8 million – while Gross Merchandise Value (GMV) was 228.3 million Euro, down 13%.

GMV is the total value of merchandise sold over a given period of time.

According to the Co-Chief Executive Officers of Jumia, Jeremy Hodara and Sacha Poignonnec, the company has been financially prudent amid the Covid-19 crisis.

The executives said, “We have made significant progress on our path to profitability in the second quarter of 2020, with Operating loss decreasing 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.”

The financial report also reveals that Jumia recorded significant revenue growth in key Platform revenue segments such as Commissions, Fulfillment, Marketing and Advertising but it lost significantly 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 them directly to make purchases.

The First Party revenue declined by 49.1% – to 11 million Euro – from the 21.6 million Euro in the second quarter of 2019.

The company’s gross profit however surged. Experts believe this was due to a change in its business model which helped reduce the direct cost of sales. The gross profit rose by 38.2% – 23.3 million Euro.