• Saturday, December 09, 2023
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Jumia eyes Nigerian rural market to boost profitability

Jumia eyes Nigerian rural market to boost profitability

In a bid to deepen penetration in the African market and boost profit margins, Jumia has announced plans to switch attention to Nigeria’s rural market.

According to the pan-African e-commerce platform, Nigeria is home to one of the youngest populations in the world, with a good number of its population still residing in rural areas.

“These areas are often overlooked by traditional retailers, leaving consumers with limited access to a wide range of products and services,” Jumia said in its report titled ‘E-Commerce in Rural Areas’.

Jumia noted that the demand for accessible, innovative, and affordable online services across various sectors is on the rise in Nigeria, “reflecting the evolving consumer preferences and lifestyle changes in the nation”.

Massimiliano Spalazzi, CEO of Jumia Nigeria, said the company’s commitment to driving economic growth and improving lives through the expansion of e-commerce to secondary cities and rural areas.

“Bridging the digital divide and empowering communities with access to a wide range of products and services through our online platform is a testament to our mission,” Spalazzi said.

“We take immense pride in revolutionising shopping in the country, enabling SMEs to grow, and creating job opportunities for the youth,” Spalazzi added.

Jumia noted that the rise of e-commerce in Africa has made it easier for rural consumers to access products that were previously unavailable.

“These consumers, while not all technologically savvy, can leverage e-commerce to meet their everyday needs from groceries to electronics, fashion and more,” Jumia said.

Experts agree that Jumia’s move to deepen its rural market may not immediately fruit the kind of changes that radically upturns its balance sheet towards a positive EBITDA. But it holds a promise to boost Jumia’s average orders and gross merchandise value recorded from Nigeria.

Between the last quarter of 2022 and the first quarter of 2023, orders on Jumia dipped by 3 million units, which is reflected in its reduced gross merchandise value and quarterly revenue.

To prevent these business-altering kinds of dips, analysts said Jumia must increase its presence in new markets and gradually plug into more markets where middle-class Africans can purchase items.

There are over 50 million Nigerians in this category, according to data from Resource Recycling.

The Jumia report further underscored the important role played by JForce, a network of over 43,000 independent sales consultants, in educating consumers about Jumia’s offerings.

“Through localized and offline marketing channels, JForce introduces rural populations to the world of e-commerce, fostering growth and driving brand adoption,” the report said.

Read also: JumiaPay Nigeria partners Trove Finance to simplify investing

It noted that Jumia has become a catalyst for thousands of young entrepreneurs in Nigeria, offering them the opportunity to become their own bosses through e-commerce.

“These entrepreneurs earn commissions through sales on the Jumia platform, contributing to their economic empowerment,” Jumia added.

As Jumia celebrates its 11th Anniversary, this report highlighted the company’s dedication to driving sustainable growth, empowering communities, and closing inequality gaps across the continent.

Over the years, Jumia has consistently splurged on marketing and advertising costs as it continues to position itself in the African market.