As the world and indeed individuals, governments and businesses grapple with the wrenching effect of Coronavirus pandemic on socio-economic activities, Jumia – the leading pan-African e-Commerce company with presence in 11 African countries, on Wednesday, 13 May announced its financials for the first quarter of 2020.
One salient point worthy of note about this financial report is that, despite the challenges occasioned by the outbreak of the coronavirus, Jumia has again affirmed stronger potentials of e-Commerce system as a key driver of the digital economy that countries can one, leverage to buoy social distancing thereby containing the increasing community transmission of the virus, and two, reflate their economies both during this crisis period and post COVID-19.
Analysis of the financial report, for instance, shows Jumia is smart on cost efficiency across four key metrics including a rise in Gross Profit after fulfilment expense by a record €2.5 million to close at €18.4 million, a year-over-year increase of 21% by Q1 2020. This is up from €15.2 million in Q4 2019. The second area is adjusted EBITDA loss (€35.6 million), which decreased by 10% year-over-year from 5.4% in Q4 2019, reaching its lowest level in the past 6 quarters.
On the third metric, Sales & Advertising expense in Q1 2020 was €8.9 million, the lowest level since 2017, and a year-over-year decrease of 25%, while 12-month Sales & Advertising expense per Annual Active Consumer decreased by 26% from €11 in the first quarter of 2019 to €8 in the first quarter of 2020. On the fourth, operating loss in the period in the review was €43.7 million, a 4% decrease year-over-year.
The report also examined the impact of COVID-19 on businesses – a combination of short-term supply and logistic challenges with unique e-commerce adoption opportunities. Lockdown and shutdowns resulted in cross-border business disruption with local sellers’ ability to import negatively impacted by cargo disruption. Confinement measures also restricted sellers’ ability to drop off their packages for delivery.
Similarly, shutdowns of restaurant kitchens in a number of countries, including large QSR chains and logistics challenges limited the capacity to fulfil consumer demand. Curfews made it challenging to fulfil orders. In South Africa, processing and delivery of fashion orders were suspended for a few weeks. There was also reduced warehouse order processing capacity due to safety measures (safety distance, shift splits etc).
In fact, the report indicated that Gross Merchandise Value (GMV) was €190 million, a year-over-year decrease of 11% compared to GMV adjusted for perimeter changes as well as previously reported improper sales practices of €214 million in the first quarter of 2019. This trajectory was attributable to the continued effects from the business mix rebalancing initiated in 2019 as well as the supply and logistics disruption caused by the COVID-19 pandemic.
Commenting, Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia, said: “The onset of the COVID-19 pandemic in the first quarter of 2020 brought about a complex combination of health, economic and operational challenges. Our first priority was to help our employees, consumers and communities stay safe. On the operational side, we took prompt action to ensure business continuity and adjust our logistics to meet high standards of safety and hygiene.”
The pandemic notwithstanding, Jumia has proven that e-Commerce and e-payment adoption opportunities can increase demand for brands, put essentials in the hands of more people while they are keeping safe and maintaining social distancing; help sellers to sell on Jumia faster. In the quarter in review, more brands and sellers were eager to join the Jumia marketplace by Jumia cross-border.
Strong demand from offline convenience retailers to join the Jumia on-demand platform and increasing advertisers’ interest for online channels were also reported as consumption shifted towards online. The surge in online demand for essentials starting in the second half of March, demand strength supporting Sales & Advertising expense efficiencies and opportunity to accelerate consumption shift towards online also helped to accelerate e-payment adoption. Jumia contactless delivery has also promoted the usage of JumiaPay and provides an opportunity to drive digital payment adoption.
JumiaPay in fact bolstered company growth in the quarter with the Total Payment Volume (TPV) reaching €35.5 million, a year-over-year increase of 71%, taking on-platform TPV penetration from 10% in the first quarter of 2019 to 19% in the first quarter of 2020. On the whole, JumiaPay Transactions for the new quarter reached 2.3 million, a year-over-year increase of 77%, representing 35% on-platform penetration in terms of Orders. This is a slight contrast to 71% year-over-year TPV growth and 77% year-over-year transactions growth in Q4 of 2019.
Hodara and Poignonnec have this to say: “We believe the COVID-19 pandemic proves that e-commerce has a key role to play in helping consumers safely access essential goods and providing an efficient distribution channel for brands and sellers, at a time when offline channels are disrupted. We are more than ever confident about the relevance of Jumia and the gradual adoption of e-commerce by both consumers and sellers. In 2019, we focused on what is proving to be crucial to navigate this crisis: affordable, high purchase frequency product categories and cost-efficiency.
We are driving Annual Active Consumers growth, which was up 51% year-over-year, and orders, up 28%, at the same time as reducing Sales & Advertising expense by 25% over the same period. Our Adjusted EBITDA loss decreased by 10% year-over-year, reaching the lowest level in the past 6 quarters, as we make progress on our path to profitability.”
Jumia’s 2020 first-quarter report also shows marketplace revenue growth of €19.1 million compared to €26.0 million reached in Q4 2019. This slide is indicative of the challenging operating environment for most businesses amidst the spread of Coronavirus and unabating disruptions to socio-economic activities including disruption to supplies and logistics services during the enforcement of lockdowns.
Thus in light of the emerging new normal realities that COVID-19 has brought upon the world, and with people, governments, and businesses coming to terms with the new realities, e-Commerce operators like Jumia give brighter prospects for stabilising socio-economic activities as long as Coronavirus pandemic lasts.
A friendlier environment that enables players in the e-Commerce and supplies/logistics value chain to operate more efficiently is advocated. The government should ensure that all the barriers that inhibit free movement of essential goods including agricultural produce across borders are eliminated. e-Commerce operators should also be involved in the policy formulation as a significant component of the Organised Private Sector (OPS).a