Jumia posts $19m in Q3 losses, lowest since New York IPO
Jumia, a prominent e-commerce player in Africa, slashed its operating losses to $19 million in the third quarter of 2023, marking a reduction of more than half. This positive development comes amid challenges, as the company experienced a decline of 800,000 active customers compared to the same period last year.
The significant reduction in losses can be attributed to heightened cost discipline. With a cash balance of $54 million and a liquidity position of $147 million, Jumia implemented substantial expenditure cuts. Under the leadership of Francis Dufay, the company undertook strategic measures such as relocating senior executives from Dubai to Africa, downsizing its workforce, and shifting focus away from low-ticket item deliveries.
As part of its cost-cutting initiatives, Jumia trimmed its sales and advertising expenditure to $4.3 million, opting for reduced advertising on expensive channels and cutting back on consumer incentives. The decline in advertising spending is substantial, with a 73% drop compared to Q3 2022. Additionally, the company curtailed its general and administrative spending to $17 million as part of its efforts to enhance financial efficiency.
Jumia’s latest performance aligns with its plan to strengthen foundational elements for growth in core categories. Notably, there has been a substantial reduction in active customers and orders compared to the previous year, a deliberate outcome of the company's strategic streamlining initiatives initiated in Q4 2022. The e-commerce giant intentionally opted to recalibrate its product and service portfolio as part of these efforts. This involved suspending its first-party grocery offering, logistics-as-a-service, and food delivery operations in specific crucial markets where economic viability was deemed unsustainable. Furthermore, the decrease in numbers and GMV can be attributed to various macroeconomic conditions. High inflation has notably impacted customers' purchasing power, while import restrictions have limited retailers' ability to acquire products. The average inflation level across Jumia's footprint is 13.5%, with countries like Ghana, Egypt, and Nigeria experiencing record-high inflation and currency devaluations this year.