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Jumia reports decrease in operating loss in Q3 as JumiaPay volume increases by 50%

By Chisom ADA

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JumiaPay

Pan-African ecommerce platform, Jumia has reported a year-on-year gross profit increase of 22% in its 2020 Q3 report released on Tuesday.

The report showed an improvement in the operating loss which decreased by 49% compared to the previous year.

The report according to the company is an indication that the Jumia brand is making significant progress towards profitability.

Commenting on the report, Co-Chief Executive Officers of Jumia, Jeremy Hodara and Sacha Poignonnec, said “Having established Jumia as the leading pan-African e-commerce platform, we have focused over the past 12 months on firmly advancing towards breakeven. The significant progress achieved was mostly attributable to the thorough work we have done on the fundamentals of our business, with limited support from external factors such as COVID-19. The business mix rebalancing initiated late last year has increased our exposure to everyday product categories and, combined with enhanced promotional discipline, supported unit economics. We are making significant progress on our path to profitability with Adjusted EBITDA loss in the third quarter of 2020 decreasing by 50% year-over-year.”

Jumia’s fintech solution product, JumiaPay also recorded a year-on-year increase in Total Payment Volume (TPV) by 50%. “we continued to drive robust growth of JumiaPay by more than doubling the penetration of JumiaPay TPV to over 25% of GMV in the third quarter of 2020, a clear sign of our ability to drive prepayment adoption on our platform efficiently. We believe the fundamentals of our business have never been stronger, setting a robust foundation for the long term, profitable growth of Jumia,” Hodara said.

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JumiaPay Transactions increased by 6% from 2.1 million in the third quarter of 2019 to 2.3 million in the third quarter of 2020, with Transactions above €10, which include prepaid purchases on the Jumia physical goods marketplace and Jumia Food platforms, growing by almost 90% over the same period.

Overall, 34.1% of Orders placed on the Jumia platform in the third quarter of 2020 were paid for using JumiaPay, compared to 30.6% in the third quarter of 2019.

As contained in the report, annual active consumers on Jumia reached 6.7 million in the third quarter of 2020, up 23% year-over-year as the brand continued focusing on both consumer acquisition and existing consumers’ re-engagement.

Orders on the platform however reduced to 6.6 million, representing a 5% year-over-year fall. This according to the company is due to a 20% decrease in digital services transactions on the JumiaPay app, while orders on the rest of the platform were stable.

The report also indicated that Jumia is making meaningful progress in the reduction of the overall rate of Cancellations, Failed Deliveries and Returns (“CFDR”).

The CFDR rate as a percentage of GMV decreased from 31% in the third quarter of 2019 to 23% in the third quarter of 2020. The CFDR rate as a percentage of Orders decreased from 23% in the third quarter of 2019 to 14% in the third quarter of 2020.

The company also stated that it made multiple enhancements across logistics and marketing operations that led to a decrease in fulfilment and marketing expenses for the third quarter of 2020 by 20% and 55% respectively, on a year-over-year basis.

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According to the company, the portfolio optimization completed last year, along with overhead rationalization, contributed to a decrease in G&A costs excluding share-based compensation of 24% year-over-year in the third quarter of 2020.

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