High inflation hits Jumia as it loses 1m customers in Nigeria, others

Jumia, the lead Africa’s e-commerce giant has lost over a million customer across Africa. Jumia in its second quarter 2023 financial results, reported a 28.1 per cent decline in its customer base as inflation bites harder in its major operating markets Nigeria, Ghana, and Egypt. The company said its active consumers declined by 1 million year-on-year to 2.4 million during the period from 3.4 million recorded in the same period of last year. Jumia’s Gross merchandise value (GMV), that is, the value of goods sold on the platform also declined by 25.1 per cent from $271.1 million in second quarter of 2022 to $202.3 million in second quarter of 2023. 

According to the financial report, orders for products on the platform also declined by 36.5%. From 10.3 million orders in Q2 2022, the company slipped to 6.5 million in the same period this year. Despite the decline in revenue and customer numbers, the Jumia Group’s CEO, Francis Dufay, said the company is making progress in its bid to reduce losses. Commenting on the Q2 financials, Dufay said “We continue to deliver strongly on our overriding objective of loss reduction and progress towards profitability. In the second quarter of 2023, both Adjusted EBITDA and Operating losses decreased by 66 per cent year-over-year, reaching the lowest loss levels in over 4 years.  “Considering this strong progress, we are updating our Adjusted EBITDA loss guidance for the full year 2023 to $90-100 million, compared to $100-120 million previously.

“We are navigating challenging macro conditions with discipline and focus, doubling down on our efficiency efforts. Compared to the second quarter of 2022, Fulfillment Sales & Advertising expenses were down 50 per cent and 74 per cent, respectively. We are also starting to reap the benefits of our actions on overhead costs with G&A excluding share-based compensation decreasing by a third year-over-year, reaching a 4-year low at $17.7 million.”   Noting that the inflation in Nigeria, Ghana, and Egypt is hitting the company badly, Dufay lamented that consumers in these markets have had their purchasing power eroded hence, the reduction in spending.  “Usage performance continued to be affected by the difficult operating environment with record levels of inflation impacting consumers’ spend as well as sellers’ ability to source goods. 

In this context, we continue making fundamental enhancements to our platform to secure better supply and pricing while offering a more convenient experience to consumers and sellers. We remain confident in the long-term growth potential of our markets and our ability to capture this opportunity in a profitable manner,” he said.  Jumia said that the average inflation level across its footprint reached 14.1 per cent in June 2023 with highs of 42.5 per cent and 35.7 per cent registered in Ghana and Egypt, respectively. In Nigeria, inflation rose to an 18-year high of 22.8% in June 2023.