Business Maverick

Business Maverick

Jumia Sees Startup Rivals Competing for Africa Online Sales

epa07508688 Workers package goods inside a Jumia distribution centre at the Jumia Kenya offices in Nairobi, Kenya, 15 April 2019. On 12 April, Jumia Technologies AG, founded in 2012, officially announced its listing on the New York Stock Exchange (NYSE). According to a press release and media reports, Jumia is said to be the leading pan-African e-commerce platform operating in six regions in Africa, which consist of 14 countries including Kenya and the first tech start-up from Africa to float on Wall Street. Jumia's e-commerce platform has more than 81 thousand active sellers transacting online with millions of consumers and directly employing more than five thousand team members in Africa. EPA-EFE/Daniel Irungu

Jumia Technologies AG is facing fresh competition from startups in the African e-commerce and logistics market after the Covid-19 pandemic increased demand for online deliveries.

Jumia Technologies is seen as one of the pioneers of internet trading in sub-Saharan Africa, which trails the rest of the world due to challenges including weak internet connections and unreliable addresses. But lockdowns to contain the coronavirus have attracted more entrepreneurs to the sector, according to Jumia Co-Chief Executive Officer Sacha Poignonnec.
Jumia Surges On U.S. Debut As Africa's Amazon Goes Public
A Jumia Technologies distribution warehouse in Lagos.

Greater competition is to be welcomed, given there are still so few people in the region that transact online, the Frenchman said in an interview. “I would rather grow the market than just try to take everything,” he added.

Jumia investors have experienced a rollercoaster ride since the stock debuted in New York last year. Persistent losses, allegations of corruption in the Nigerian sales force and a damning short-seller report contributed to an initial share-price slump, but the arrival of the coronavirus has helped fuel a doubling in market value in 2020. That was even higher before a 30% stock decline this week after second-quarter results.

The shares fell 2% to $13.47 on Friday, valuing Jumia at more than $1 billion. The initial public offering price was $14.50.

Read More: Amazon of Africa Drops After Missing High Bar Set Amid Pandemic

MTN Group Ltd., Africa’s largest wireless carrier and an early investor is the company, is evaluating its stake in the company, sometimes dubbed the Amazon of Africa. Jumia may offer MTN’s shares in the group as part of a potential new equity offer within the next three years if the Johannesburg-based firm decides to sell, Poignonnec said.

Expanding into food has helped to increase sales and Jumia’s footprint in existing markets, which are led by Nigeria, according to the co-CEO. That’s involved adding grocery and pharmacy orders as well as restaurant takeaways, he said. Jumia’s logistics unit is also now open to third parties wishing to use the company’s network of drivers to deliver packages, adding another revenue stream.

The rapid growth of food delivery across emerging markets may make Jumia an acquisition target, Nirgunan Tiruchelvam, an analyst at Tellimer Markets, said in a July note to clients.

Gallery

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.