Jumia reports revenue drop in Q3 2024 amid currency pressures but sees growth in customer engagement. Its Q3 2024 revenue declined by 14%, which was heavily influenced by currency depreciation in key markets.
Jumia’s financial performance in Q3 2024 reflects the challenging economic landscape for African businesses, with the eCommerce giant reporting a 14% year-on-year revenue decline to $36.5 million.
The drop, largely attributed to currency depreciation in major markets like Nigeria and Egypt, has cast a shadow over otherwise promising operational gains.
While gross merchandise volume (GMV) decreased by 10% in U.S. dollar terms, it showed growth in constant currency, indicating that Jumia’s core metrics may be stronger than they appear on paper when local currency pressures are excluded.
Customer engagement on the rise
Despite financial hurdles, Jumia saw a 6% increase in the number of orders, reflecting continued user interest and engagement. Active customer growth and a 27% boost in orders in constant currency signal robust underlying demand across Jumia’s key markets, including Nigeria, Egypt, and Kenya.
Additionally, the company’s payment platform, JumiaPay, saw substantial growth, contributing to the company’s strategy of enhancing digital transactions. With over two million JumiaPay transactions in Q3, a 30% year-over-year increase, Jumia is betting on digital payments to sustain customer retention and attract new users.
Mitigating economic and operational challenges
Jumia’s decision to exit unprofitable markets, such as South Africa and Tunisia, aligns with its strategy to focus on growth in core areas. These exits allow for the reallocation of resources to markets with higher e-commerce potential.
This refocusing also aligns with cost-cutting measures and improved operational efficiency, which Jumia CEO Francis Dufay sees as critical to reaching profitability.
Dufay noted that Jumia has had to balance customer acquisition with prudent cost management, which included streamlining logistics and reducing its overall cash burn.
Sales and marketing costs, for example, have been reduced in recent quarters as Jumia prioritizes organic growth from returning customers, and operations have been adjusted to navigate inflationary pressures and competitive local markets.
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Strengthening liquidity to fund future growth
To address cash flow constraints, Jumia recently completed a secondary share offering, raising nearly $100 million to bolster its balance sheet.
According to Dufay, this injection of capital will support Jumia’s efforts to accelerate its profitability path by funding strategic projects aimed at improving the platform’s customer experience and strengthening its vendor network.
The capital boost also provides Jumia with some cushion to continue its expansion into underserved African markets where the demand for e-commerce is growing despite economic headwinds.
Path to profitability
As Jumia navigates economic fluctuations, it is keeping profitability in sharp focus. In addition to market exits, Jumia has curtailed some business units, such as Jumia Food in several African countries, as part of its streamlining efforts.
The company also plans to continue strengthening its supply chain by collaborating more closely with local and global suppliers to ensure competitive pricing and reliability for customers.
In the near term, Jumia’s performance may continue to be affected by external pressures, particularly currency volatility and inflation.
However, the company’s shift towards cost efficiency, core market concentration, and digital payment integration is intended to help it weather these challenges. The company remains cautiously optimistic, with Dufay indicating that Jumia is poised for more sustainable growth.
As African economies face currency instability, Jumia’s adaptation to local market realities and focus on high-potential areas underscores its commitment to emerging as a profitable leader in the African e-commerce landscape.
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