Coming on the heels of its financial woes last year, eCommerce giant Jumia has reported a 5% growth in its gross profit and a 54% reduction in operating losses in the first quarter of 2023.
After failing to achieve its goal to be profitable by 2022 despite its cost-reduction moves, Jumia—the “Amazon of Africa”—appears to be stemming the tide. In its Q1 2023 financial results [pdf], the eCommerce giant says it recorded a significant reduction in operating losses as it hopes to hit profitability.
According to the report, Jumia’s operating loss in the first quarter of 2023 was $30.9 million, representing a 54% decline year-over-year, its lowest quarterly level in over 4 years. Similarly, the company’s revenue fell by 3% year-over-year to $46.3 million. However, its gross profit hit $28.6 million in the first quarter of 2023, a 5% jump year-over-year.
TechCabal earlier reported how Jumia’s staggering liquidity position—due to its declining stocks—has left the company with difficult fundraising options to reduce costs. With a new CEO, Francis Dufay, the company hopes to rewrite its story from a giant business losing runway amid losses to a thriving and profitable one with optimised internal operations.
“We’re in a tough macroeconomic environment. We’re also deeply reviewing our strategy. We also need to make radical changes to ensure we get to profitability and make better use of our cash,” Dufay said in an interview with Rest of World in March. In the Q1 2023 report, he restated his commitment to taking Jumia to profitability, saying the company is “focused on both cost efficiency and usage growth.”
According to Jumia’s Q1 2023 numbers, its quarterly active consumers and orders declined by 22% and 26%, year-over-year respectively. Similarly, gross merchandise value (GMV) and total payment value (TPV) fell by 22% and 31.3%, respectively. The GMV is the total value of items sold on an e-commerce website within a period, while the TVP is the value of payments that are completed through the payments platform and excludes the transactions processed through the company’s gateway products.
While quarterly active consumers dropped from 3.1 million in Q1 2022 to 2.4 million in Q1 2023, orders also fell from 9.3 million to 6.9 million in the period under review. GMW dropped from 252.7 million to 198.2 million, just as the total payment value fell from 70.7 million to 48.6 million.
According to the report, JumiaPay’s TPV fell to $48.6 million in the first quarter of 2023, representing a 31% decline year-over-year, with the JumiaPay app TPV accounting for almost 60%. The company attributed this decline to its decision to move away from highly promotional services on the app that drives limited consumer lifetime value.
Similarly, transactions on JumiaPay dropped by 38% year-over-year to 2.0 million. 29% of orders placed on the Jumia platform in the first quarter of 2023 were completed using JumiaPay, compared to 34% in the first quarter of 2022. The report says the decline in penetration is largely due to the reduction of JumiaPay app services in terms of transactions.