Business/Career Tech

Jumia going up or down? Crashing?

Cyber Data Hub
Spread the love

Jumia has been around for a while now and they’ve dominated the market above other e-commerce companies like Konga and Jiji.

But have you ever wondered how much Jumia is earning as profit from its annual revenue? I know that I do.

Amazon one of the biggest e-commerce platforms in the world didn’t earn a profit till 2001 after 7 years of being in business. This year Jumia will be 10 years old and have a lot of revenue already. Is it a profitable company or are they just burning investors’ money?

The table below shows Jumia’s revenue from 2017 to 2020.

jumia_revenue

If you’ve been active on the stock market, you’ll see that Jumia has had a lot of negative reviews from investors from 2020. During the pandemic, Jumia’s investors had great expectations concerning the revenues and profit but Jumia failed to live up to it.

In fact, not just the investors, even everyday people were suspecting and speculating that they were making great profits because many more people now make their purchases as a result of sit-at-home caused by the pandemic.

Unfortunately, after 2020 it was discovered that Jumia had even lower revenues compared to 2019.

In the first quarter of 2021, Jumia generated $33 million in revenue, and this was down 6.4% from the same period in 2020.  In keeping with its performance from previous quarters, Jumia’s losses are dropping, but so are its revenues. And other important metrics only show slight improvements.

Interestingly, Jumia seems to be generating more revenue. It generated $24m in the first quarter of 2021 compared to $23m in the first quarter of 2020.

It is important to know that Jumia also recorded lower losses of $34m in the third quarter of 2020 compared to the first quarter of 2021.

This is from third-party sales on its platform. But that came at the expense of its first-party revenue, which decreased by 35% from $12m in Q1 2020 to $8m in Q1 2021. First-party revenue is the money that comes in from the products Jumia sell directly.

Jumias-gross-profit-after-fulfilment-expense-was-weaker-in-Q1-2021-100.jpg

So what is your forecast on Jumia’s performance as a company?

Well, your predictions would be far too inaccurate if you don’t know this single fact.

Jumia has not made a single profit since its almost 10 years in business. What does this mean? It means that the company has been surviving on the investors’ capital and the revenues generated.

Many people looking at Jumias business model, say that Jumia is a gradually failing company with no clear strategy to turn the situation around.

This is just like when your business is failing but you don’t know what you can do to stop it. Personally, I would suggest they bring in established consultants and start working actively to restructure their business model in order to take advantage of the enormous demand for reliable e-commerce in Africa.

There is great demand for their service in Africa but they don’t have a business model that will effectively and efficiently handle that demand while making profits.

Conclusion:

Jumia is a great company. I’ve purchased products on the platform before and I got friendly service. But if I was to speculate based on its past performances and its current business model, I don’t think it will last much longer this way unless there’s a drastic change in the market demand and consumer behaviour.

They’ve lasted this long on investors and revenues but they need to figure out a working business model ASAP to avoid investors pulling out in the future.

What is your opinion on the future of Jumia? Please write it in the comment section below.

COPYRIGHT WARNING!

You may not republish, reproduce, or redistribute any content on this website either in whole or in part without due permission or acknowledgment.
.
Proper acknowledgment includes, but not limited to;

(a) LINK BACK TO THE ARTICLE in the case of re-publication on online media,

(b) Proper referencing in the case of usage in research, magazine, brochure, or academic purposes,.
.
All contents are protected by the Digital Millennium Copyright Act 1996 (DMCA).

The images, except where otherwise indicated, are taken directly from the web, if some images were inserted by mistake violating the copyright, please contact the administrator for immediate removal.

.
We publish all content with good intentions. If you own this content & believe your copyright was violated or infringed, please contact us at [info@cyber.ng] for immediate removal.

About Post Author

About the author

Avatar

Excellence Chukwunaedu

Leave a Comment