Jumia, the pan African online retailer present in 14 countries, maybe put up for sale. The company’s owner, Rocket Internet, is reportedly seeking an IPO for the business with a listing of shares to the value of €200m ($246m).

Rocket Internet is reportedly seeking to release cash by exploring a stock market listing for Jumia, the online retailer it helped establish in 2012. Jumia has operations in 14 African countries, and currently has 500,000 merchants using the platform, and more than 5m SKUs. It also operates a hotel booking platform and an online food delivery service connecting consumers with local restaurants.

In the first nine months of 2017, Jumia saw its losses widen to €80.7m ($99.1m), while revenues were just €57.3m ($70.4m). To put this in context, Amazon launched in 1994, and first delivered a profit in Q4 2001, seven years later. It wouldn’t deliver a full year profit until 2004. Until 2016 it was still considered unusual that Amazon delivered four consecutive quarters of profit. Jumia’s group revenues mask the importance of one market: Lagos, Jumia’s first market and by far its single largest driver of revenues. The Nigerian market generally has seen sluggish growth since 2014, although it is picking up now, and slower growth in demand has been compounded by fragile market conditions in Algeria, South Africa, Kenya among others.

Emerging markets, but profitability will be a long time coming

Since 2014, Jumia has opened up a substantial number of new markets. In these market internet penetration is typically low, online payment usage by consumers is infrequent and rare, the logistics infrastructure is undeveloped and consumer spending is unpredictable and fragile. Many of its consumers are making a transition from purchasing in traditional channels to the internet. On that front, Jumia also faces a challenge from Facebook, which serves as a platform for informal trade.

Jumia is playing a long-term strategy of developing a large number of markets and attempting to take them to scale and profitability. It will continue to burn cash for at least a decade as it is effectively creating the internet retail landscape and infrastructure in its emerging markets. Unlike Amazon, which could attack the soft targets of established bookstores, record store and general merchandisers, Jumia is having to work much harder to drive topline business growth. Aside practical issues of limited consumer spend and low internet penetration, many consumers don’t trust online platforms.

As such, Jumia’s branch into takeaway food delivery actually operates as an effective marketing tool as well as a driver of growth. Target consumers are younger, wealthier and tech-savvy. Crucially the product is high demand (when consumers are hungry, they want to feed) but low-ish engagement and complexity (if there is an issue with the food it is a problem, but not nearly as much of a problem as a defective good that needs returning). A good way to break the barrier of trust.

Where next for Jumia?

The underlying question for investors is whether they trust Jumia’s long-term bet on dominating not just internet retail but modern general merchandise retailing in its 14 country markets. In early 2016, Jumia’s parent Africa Internet Group raised €225m ($276m) from investors, just weeks after French insurance company Axa purchased an 8% stake for €75m.

IPO investors will be purchasing less than 25% of Jumia’s shares, and have a limited say in the direction of the business. We believe that Jumia has opened up too many new markets although we note that it has a strong track record of execution. In particular, we question whether Jumia’s exposure in North African markets such as Algeria, Morocco, and Tunisia fits its wider focus on Sub-Saharan Africa. We also believe that Jumia may find trading in Uganda and Tanzania – both of which have been challenging markets for foreign supermarkets – too slow in the mid-term.

The IPO will further stress test Jumia’s market expansion programme. Does it matter if Jumia withdraws from or pauses in 4-5 of its expansion markets? Probably not, in reality. No other internet retailer is going to leap in and dominate trading, and bricks and mortar supermarkets are barely expanding.

It may end up being an acceptable compromise to allow investors to focus on developing core markets like Nigeria, Ghana, Egypt, Côte d’Ivoire and Kenya. We note, for example, that in 2016 Jumia’s CEO singled out the Democratic Republic of Congo for expansion, and to date, the company has not yet commenced operations. As strategic choices go, tactical pauses in smaller markets is a small price to pay.

SOURCE: https://brandspurng.com/jumias-major-investor-rocket-internet-seeks-exit-via-ipo/

FTC, meanwhile, I'm yet to see any alert o.

So the Sawmer brothers are the ones forcing this IPO to happen.

This IPO is just a disaster waiting to happen. Amazon was making money but was not profitable because Jeff Bezos was building out massive fulfilment centres and investing most of the money made back into the business unlike in the case of Jumia where I don't even know what is happening. Everything is shrouded in secrecy only tales of fantastic sales are released every now and then but investors no longer believe in such because of Konga.

Online retail business in this country still needs proper attention by all relevant stakeholders...

ok naa

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.

Hmmmn

I hope this isn't the beginning of the end....

hMMMMMMM....Regardless of how everything around you looks....JUST GET UP AND DO YOUR OWN THING

Let's see the Nigerian who will be buy majority of the shares

carry your money and run ba?

Jumia issa go!
Just like Konga issa go.

Nice

No wonder dey wanted to kill their vendors with charges...

Wwhhhhh

The bane of online and brick-and-mortar businesses is poor infrastructure and dysfunctional internal security. The myopic irresponsibility and ineptitude of leaders, both corporate and governmental, make it hard for small, medium, and large-sized businesses to remain viable, which is the ability to grow, expand, and develop.

Online marketplaces need to build trust in buyers over profit and over a long period. They have to ensure buyers get what they pay for or get their money back, not some silly vouchers. Also, they need to penalize sellers who consistently receive bad reviews.

Ebay has been successful because it is a buyers market. You cannot as a seller afford to sell substandard goods or ship defective products or take a month to send an item that should have been delivered in a week maximum. You must also describe what it is you are selling to the letter, stating all flaws and damages...basically, full disclosure is encouraged. Who go buy go still buy am like that.

Buyers need to feel safe transacting on any platform. The customer is king and should be treated as such. All existing marketplaces in Nigeria place too much power in the hands of sellers and this is why a new challenger is needed in this space. One that strikes a balance between maintaining profitability for the seller and keeping the buyer safe and happy. One modelled after Ebay, ensuring sellers stay compliant while building trust in buyers.

Guess who that new challenger is? Read beneath the lines.

Chai Buhari

This man has finished businesses in the country
All the supporting infrastructure for business growth is down

Facebook is a threat? That could be true, considering that the fact that Facebook wanted everything to happen on there platform, while not giving opportunity to publishers to effectively monetize their contents.

First, it was konga. Now Jumia? E-commerce industry in Africa needs strategic plan.

Dead company


Invest such money in real estate

We need to face the absolute reality that Jumia and many other online based 9ja companies aren't there yet hence, NOT sustainable. Their customer focus relative to the population break-down from an age perspective is very weak/low.

How can they penetrate a very illiterate portion of the 9ja population?

Why would I wanna purchase a product from Jumia online @ 20% mark-up when I can easily get it anywhere within a reasonable geographical proximity? How can their electronic sales beat the bustling 'Alaba market' and 'Computer village'?

The norm is that online products are supposedly cheaper and more convenient but, that's never the case with Jumia. They're not giving their customers a sufficient reason to patronize them over the competition.

I think Jumia should re-group, re-strategize and re-focus their resources (if any) / business model to accommodate the bulk illiterates. It's just a matter of time before they finally get there.

jeronimo:
Let's see the Nigerian who will be buy majority of the shares

Lol.

which of them did Yudala buy again? Jumia or Konga?

sample042:
No wonder dey wanted to kill their vendors with charges...

I pray they fucking fold up...............useless people always delivering substandard n fake goods

Wow.... As if I knew. My Ph.D research proposal is on Achieving sustainable E-commerce and retail business in Nigeria. (Problem and Prospect). Jumia, konga and dealdey all included in the research.

The honest truth is, the Nigeria climate is not conducive enough for online retail business. It is cheaper to move goods via railway system than roads and air but no good railway network in the country.
Again, there is low penetration of credit system in the country, we only used debit card. Lastly , these online companies like Jumia and co don't put their time to creat any innovative idea to deal with these setbacks. Rather they are only concern about making profits.

My research is gonna be interesting.

Hmmm

I predicted this!

That Jumia Self are bunch of Thieves,all the items I bought and was delivered were all faulty..
I really can't believe it��