Jumia rides on new growth strategy to post record-high orders in Q3
Africa’s e-commerce giant, Jumia has reported its highest third-quarter orders on record in the period ended September 30 2021, as analyzed from its financial results.
According to the company’s Q3 earnings report, the African e-commerce leader gained 500,000 active customers which led to 1.9 million more orders within the period.
In the period under review, the company’s highest quarterly record of 8.5 million orders in the third quarter of 2021 was 8 percent more than the same period in 2020.
According to Jumia co-CEOs, Jeremy Hodara and Sacha Poignonnec, the growth acceleration strategy initiated at the end of the second quarter of 2021 is starting to pay off.
“Our growth acceleration strategy, initiated at the end of the second quarter of 2021 is starting to pay off. We are making investments in Sales & Advertising and Technology to further enhance consumer education, brand consideration as well as the relevance and convenience of our platform,” the CEOs said.
The CEOs say the growth rate may not be sudden, but progress will be seen in profitability over the next few months.
Breakdown of the company’s financials for the review period showed that its operating losses for the third quarter of 2021 rose to $64 million, 250 percent higher than the quarter’s $25.5 million gross profits.
The performance reported in the review period was largely due to Jumia’s recent increase in its focus on sales and advertising, particularly through the use of popular online marketing channels such as Facebook and Google, as it strives to maximize the efficiency of these investments.
Analysis of the company’s financials showed that in the second quarter of this year Jumia spent $17.1 million on sales and advertising during the quarter, this increased to $24 million in Q3.
“We believe that these investments are long-term in nature and that accelerating growth will ultimately contribute to profitability, leveraging the strong efficiency gains achieved throughout 2020 and the first half of 2021. We are more confident than ever about the strong growth potential of our markets and our ability to build a growing business across e-commerce and fintech activities.”
Further breakdown of Jumia’s financials in the period under review showed that the volume of fast-moving consumer goods that was sold almost doubled in Q3. With over 2 million orders, food delivery, on the other hand, recorded a growth of over 40 percent, exceeding the previous mark set in the fourth quarter of 2020.
This was not in line with Jumia’s strategy that supports the shift to selling more groceries and other items that are frequently consumed, away from the products that were formerly in high demand like phones and electronics whose availability has been disrupted over the past year by ongoing global supply chain crises.
The company’s Gross Merchandise Value (GMV), calculated by dividing the total value of all goods sold by the number of orders fulfilled, rose to $238.1 million, an increase of 8 percent year-over-year and 9 percent on a constant currency basis from $223.5 million reported during the second quarter.
The report also showed that consumer electronics and gadgets accounted for 36 percent of GMV in the third quarter of 2021, down from 43percent in the previous quarter.
The fastest-growing area in terms of GMV was JumiaPay digital and financial services, which nearly doubled year over year thanks to significant growth in consumer financial services.