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Jumia slips to lowest loss in four years under new management

In the first quarter of 2023, the new management of Jamia implemented its strategy in the first quarter, riding on the blueprint of the previous management in the fourth quarter of 2022. Result? Jamia saw a significant reduction in its losses: Adjusted EBITDA loss fell 51% year-over-year to $27 million to meet the company’s end-year target. $100–120 million in adjusted losses. Similarly, operating loss decreased 54% from Q1 2022 to $30.9 million, according to the company’s most recently released financials.

Streamlining efforts in Q4 2022, where Jumia reduced its workforce by 20%, affecting 900 roles across its 11 markets, played a key role in reducing losses. Although General and administrative expenses for the first quarter of 2023, which declined by 32%, don’t do that Yet Q4 2022 reflects the full impact of the workforce reductions, as Q1 2023 still includes the salaries of some employees from previous months. Jumia CEO Francis Dufay told TechCrunch that more layoffs could be coming as the company expects to reduce G&A costs by $28 million by the end of the year.

Spending in fulfillment, merchandising and advertising, and technology decreased by 33%, 61%, and 9%, respectively, from the Q1 2022 numbers. “We are reviewing how we do logistics and supply chain by negotiating with suppliers and saving on packaging costs, for example. We have improved truck routes, which have minimal impact on customers and vendors, but enabled us to save a lot of money,” Dufay said, referring to Jumia’s cost-cutting measures. “We also greatly reduced marketing spend which was a huge driver this quarter as we believe That we can build the right fundamentals for growth with very little marketing spend.” The CEO noted that Jumia will continue to “authorize” its business in these departments and introduce greater efficiencies as part of its ongoing process to create a low-cost structure that engages fewer customers.

Jumia’s quarterly active users declined by 22% to 2.7 million in Q1 2022 from 3.1 million. As a result, orders and GMV decreased 26% and 22% year-over-year, respectively. Factors responsible for the decline in these categories include continued macro challenges with high inflation affecting the spending power of consumers, the ability of sellers to source goods and the devaluation of nine out of 10 currencies used on the Jumia platform .

In addition, the numbers come down from Jumia deliberately restructuring its product and service portfolio in Q4 2023, which will include moving its first-party grocery offering, logistics-as-a-service and food delivery operations to specific key markets. including suspension. In addition, the fintech arm’s TPV and transaction volume fell 31% to $48.6 million and 38% to $2 million, respectively, significantly reducing the promotional intensity behind many services on the JumiaPay app. Jumia in its financial report mentioned that fintech services witnessed over 25% GMV decline and over 40% order drop in the first quarter of 2023. Combined with the FMCG category, which includes grocery products, Zoomiapay reports a 55% decline in items sold and 34% decline in GMV during the first quarter of 2023.

“We have deliberately chosen to curtail and reduce certain activities in certain categories, which has greatly affected sales as we had a lot of customers who were hunting for good deals and bargains, especially on Jumiapay,” said Dufay. he said. “We knew what would happen, but it was the right thing to do for the business because it wasn’t creating the right customer value.”

Dufay said the e-commerce giant is moving towards a new model of growth, which involves three things – improving supply and assortment relevance (by attracting high-quality brands and suppliers to the platform) With a focus on core e-commerce categories such as phones, electronics, home appliances, fashion and beauty), IEnhancing seller management tools and processes to improve seller experience in Jamia, and to grow its customer base, penetrate its addressable markets more effectively by tapping into large consumer pools located in inner cities and rural areas Where general supply and retail coverage is poor. ,

Over the past few months, Jumia has opened new logistics routes and pickup stations in smaller cities outside populated areas, including Ivory Coast and Senegal. Dufay said the company is making good progress and that “several new cities are now part of our network and we are now in the marketing activation phase to advertise and educate consumers in many of them.” Dufay claims that repeating this process in Uganda, Kenya, Tunisia, Morocco, Nigeria and other markets will provide Jumia millions of loyal customers with better repurchase rates.

Despite falling key customer metrics, Jumia’s revenue remained nearly flat, falling 3% year-over-year to $46.3 million. The momentum resulted from an increase in the commission take rate implemented in mid-2022. Meanwhile, Jumia ended the quarter with a liquidity position of $205.4 million, consisting of $86.9 million in cash and cash equivalents and $118.6 million in fixed deposits and other financial assets.

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