In April 2019 when Jumia got listed on New York Stock Exchange, it was a proud moment for the African e-commerce giant because it was the first company on the continent to do so. The entry into the iconic NYSE underlined Jumia’s growth trajectory and its ambition for future expansion.
Everything went according to plan at the beginning. Jumia listed at $14.50 a share, valuing the company at $1.1bn. Just four days later, its stock hit $49.77, raising its value to an African startup record of $3.8bn.
Jumia’s Fraud Crisis
But the euphoria didn’t last. Less than one year after the historic milestone, the company suffered a spectacular decline that shook it to the roots as a result of allegations of fraud and concealed losses.
What followed was embarrassing fraud lawsuits in New York courts and a public relations disaster over its identity.
The nightmare quickly impacted the company’s share price which plummeted to an all-time low of $2.15 by August.
As a result, the company was forced to pull out of three of its 14 country markets – Rwanda, Tanzania and Cameroon – in quick succession and tried to chart a path to profitability.
And as if that was not bad enough, the company’s original owner, German technology investor Rocket Internet, dumped its entire 11% stake, further worsening the crisis.
“Jumia’s first year on the NYSE is a proper reflection of the value of the company,” said Rebecca Enonchong, a Cameroonian tech entrepreneur and a critic of the firm.
This was a make or mar situation for the e-commerce company. However, within a year of the crisis, the company’s fortune dramatically turned around and its share price surged to an all-time high of $69.89 by February of 2020.
(Jumia’s shares now trade at just over $6.20 as of June 17, largely because of the crash in the wider equities market globally).
One man that is credited for the transformation is Jeremy Hodara, Jumia co-CEO. He has steadied the ship by being laser-focused on profitable business models and profitable growth by implementing a system of gradual monetization and cost discipline.
In a recent interview, Jeremy explained that the reason for Jumia’s turnaround in fortune is the determination to create growth opportunities by tapping into new markets and growth possibilities.
According to Jeremy, “The most exciting thing about e-commerce is that first, you build large assets for your own use, but it becomes relevant for other stakeholders over time. For us, we have an application and website with very engaged visitors, and we’re exploring having third-party advertisers who place ads on the platform.
“Our logistics service is also another way. We’re building tools and technology to equip our logistics partners and help them become more productive. This drives our costs per delivery down and is the type of benefit that comes with scaling.”
Hodara has also positioned Jumia to make significant inroads into payment and fintech by investing in JumiaPay which is now a major driver of growth for the company. In Q1 of 2021, the payment platform grew by 21% as payment volume grew from $35.5million to $42.9million.
Who is Jeremy Hodara
Jeremy is a French businessman and one of the four founders of Jumia. The other co-founders are Sacha Poignonnec, Tunde Kehinde and Raphael Kofi. Before starting Jumia, Jeremy used to work at McKinsey in France, India and USA.
It was during his time at Mckinsey that he saw the e-commerce opportunity in Africa and started working towards it.
How Jeremy Started Jumia
With the help of his four friends, Jeremy launched Jumia in Lagos, Nigeria in 2012 and then expanded to other countries across Africa such as Egypt, Morocco, Ivory Coast, Kenya and South Africa.
Jumia whose services have expanded to include E-commerce, Internet, Retail, Marketplace, Payment, Logistics recently announced a partnership with UPS which will enable it to access more than 200 countries.
Having been able to riggle out of its previous crisis, Jeremy says Jumia is now fully focused on adding value to Africa’s largely untapped e-commerce by creating products that engender customer satisfaction. However, the future look a bit trickier for the company following Amazon’s recent entry into the Nigerian market.
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