LONDON — An e-commerce business has proven that Africa is not only the continent of the Big Five animals, elephants, lions, buffaloes, leopards and rhinos, it is also a continent that can grow unicorns, the $1bn kind. There are now three unicorns in Africa, South Africa’s Promasidor Holdings, Cell C and Jumia in Nigeria, which is regarded as the African Amazon. Jumia listed on the New York Stock Exchange at an initial opening price of $18.90 on 12 April and has doubled in value in the first five days of trading. This is good news for the largest shareholder in Jumia, MTN. Jumia co-CEO and co-founder Sacha Poignonnec explained to Bloomberg’s Carol Massar and Jason Kelly the vision they have for the company… – Linda van Tilburg
In America there’s Amazon and in China there’s Alibaba. In Latin America there’s MercadoLibre, and in Africa there’s Jumia. We offer the similar services, as you guys know them very well and consumers use Jumia to access services and goods. They can buy a lot of products but also book hotels, order food online and all sorts of services and we operate at the marketplace – we help sellers contribute their products and services through Jumia.
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We operate in 14 countries of Africa. There are 54 countries in this continent, there are a lot of countries, and we operate in 14 of those, which cover about 75% of the African internet users. In Africa there are 400m internet users, consumers are very connected, and our largest market is Nigeria with about 25-30% of the business and we have 35% in North Africa, 15% in West Africa, 15% in East Africa and 10% in South Africa. The consumers, when they transact on Jumia GMV (Gross Merchandise Volume), which we then turn into revenues through commissions and value-added and marketing services that we provide to the sellers. So, we operate as the market place that is B2B, if you will and the majority of our revenue comes from the commissions and the services or marketing services that we provide to the sellers for the transactions paid from Jumia.
So, did you say the majority is B2B (business-to-business)?
No, we provide a platform for the sellers, so businesses, and then they provide their service to the consumer so, it needs to be we are the sellers of the businesses, and the consumers are the users.
Right, I just want to throw out some numbers for our listeners because you’ve got, from what I understand, 7 years of growth for the company. You’ve got more than 4m customers, as you’ve mentioned, in 14 African countries. Your revenues jumped by almost 40% last year to about $147.3m. You’re not profitable at this point. You’ve got about 80,000 active sellers on the platform. What’s the profit picture look like for you? When do you hit profitability?
So, of course, we can’t give very precise outlooks but we have a very sizeable growing business and the users are discovering e-commerce and if you look at the number of users, the internet users in particular, in our market – there were 400m internet users than last year, 4m transacted on Jumia, that’s 1%, right? So, we have a lot of room ahead of us to grow the user base and the adoption. As we do that, we have a very healthy business model, which has clear revenues and which has a very healthy cost structure. So, we believe that with growth, together with cost-optimisation and monetisation the profitability will be achieved through those levels.
Against all that has been said about Jumia’s IPO, this picture should remind us as Africans that anything is possible! Let’s talk less and do more! Scale is the magic word!!! pic.twitter.com/ekQcfQjlCA
— Onyeka Akumah (@onyekaakumah) April 12, 2019
But I guess and wonder, because you talk about you’ve been around for several years. You’ve had 7 years of growth, will it take another 7 years to be profitable or much less time?
The future will have to tell about that. We are really focused on the execution of the business, making sure that it is very healthy. That every year, as we have seen in the past, we both work on drawing the user base and drawing the GMV. But also, increasing the monetisation and the cost efficiency, so for us it’s all about continuing to do that.
How much do you worry about those names you mentioned at the beginning of the conversation, Amazon, Alibaba, coming in and eating into some of your business?
Well, Africa is a very unique continent, from many aspects, right, and the execution of e-commerce is very unique also, in Africa. It’s about how you do business with the sellers, how you do business with the consumers, create the adoption. Also, how you do the logistics, and the payment and it’s a lot of adaptation through the very unique cities of Africa, and within Africa, only in Africa, building this company for the African consumers and sellers, and executing that business just for them. So, we think that we have a lot of passion to do that in Africa and that’s very unique, that’s where we’re focussed about everything.
