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- Jumia: Africa’s Wildcard Empire 🌍
Jumia: Africa’s Wildcard Empire 🌍
Finlay Williams
November 14, 2024
\2 minute wacky businesses, you can tell your buddies about 🧠
Africa. Known for its vibrant culture, sprawling landscapes, and… Jumia. Imagine Amazon crossed with Uber, served with a side of grit. Jumia, with annual revenue around $217M, is Africa’s version of Amazon. Expect Jumia is best described as Amazon’s hardcore cousin…
Logistical Nightmares and Complex Markets 🧐
In 2012, ex-McKinsey consultants Sacha Poignonnec and Jeremy Hodara joined forces with Tunde Kehinde and Raphael Kofi Afaedor, launching Jumia in Nigeria and quickly expanding into major markets like Egypt, Kenya, and Morocco. These aren’t what most would call “ideal environments”, they were rugged, diverse markets that required real groundwork. Instead of relying solely on tech, Jumia focused on rolling out a network of warehouses and delivery hubs to build a logistics backbone in a region notorious for complex supply chain COUGH… issues.
Jumia quickly recognised that trust in online payments was low, and leaned into a cash-on-delivery model. Although a massive pain in the ass, they leveraged this to build trust in new markets. And then came JumiaPay, a locally-tailored payment platform, which turned their biggest pain point into a growth engine.
What are the nuggets? 💎
🌍 Origin: In 2012, with backing from Rocket Internet, MTN, and Millicom, Jumia tackled the African market head-on. Every failure, from broken deliveries to culture clashes, helped them refine a hyper-local model.
🌍 Inflection Moment: In 2019 Jumia hit the NYSE, becoming the first African startup to go public. Their stock exploded, then plummeted after fraud allegations by Citron Research, leading to a steep price drop.
🌍 Controversy: When Citron Research accused them of inflating key metrics, the stock dropped 50% within a week. In response, Jumia's leadership, including CEO Sacha Poignonnec, firmly denied the fraud claims, stating the company "completely stands by" its filings with the U.S.. Jumia regrouped, scaled back to core markets, and tightened their operations, leaning into sustainable growth.
🌍 Funding Struggles: Over €300M in backing from MTN, Rocket Internet, and Goldman Sachs by 2016 kept the wheels turning, with Mastercard investing €50M in 2019. However, they faced a major issue with these underdeveloped markets.
🌍 Profitability Grind: After years of bleeding cash, Jumia hit the brakes on rapid expansion in 2019. They slashed operations in weaker markets like Cameroon and Tanzania, halved marketing spend, and doubled down on high-potential regions like Nigeria. They also cut low-margin products and scaled up JumiaPay, which boosted profit margins by keeping payments in-house. Jumia is in a unique spot, they first have to figure out the how, and then how to do it profitably.
🌍 Big Moves: Jumia diversified with JumiaPay, Jumia Food, and Jumia Travel, and launched a logistics service for third parties, turning a cost centre into a revenue stream. In 2023, they signed a major partnership with Starlink, paving the way for improved internet and delivery capabilities across Africa. By providing these services they literally produced new markets that weren’t previously accessible, alongside building additional revenue streams.
🌍 Amazon-Style Strategy: Jumia’s approach to Africa echoes Amazon’s U.S. playbook: they built warehouses, mastered last-mile delivery, and launched JumiaPay, creating a seamless ecosystem. Just like Amazon, they realised that controlling logistics and payments was key to owning the customer journey in a challenging market.
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