Jumia, the e-commerce and on-demand services provider, has released its third-quarter financials, which show that the company expects losses this year not to exceed $100 million. This marks an improvement from earlier expectations of an even higher loss.
Jumia, founded in 2012 in Nigeria, is the largest e-commerce provider in Africa. Since its inception, the company has found success in its African markets, expanding to 14 countries and having more than 6 million cumulative orders and over 4 million active customers across the continent.
However, the company experienced slower sales throughout the mid-part of 2019 as the pace of growth in the African markets began to plateau. This is combined with the company’s current infrastructure which operates on a high cost basis due to operating in various countries with different currencies, forcing the company to incur exchange rate deficits. As a result, Jumia posted a $281 million loss in the third quarter of 2019.
Signs of improvement may be on the horizon, however, as the company finally expects losses not to exceed $100 million this year. This upturn has been attributed to cost-cutting initiatives and a renewed focus on the company’s core markets. The company is also making efforts to reduce its currency headwinds by shifting its operations to regional companies rather than having individual country companies.
Despite the improvement, Jumia is still expecting a hefty loss this year. This is a surprising outcome from a company that is considered to be Africa’s dominant e-commerce provider. Furthermore, Jumia’s stock fell to historic lows following the release of the financials.
Nevertheless, in the long run, the company is still expected to see significant growth in its core markets. Jumia has a clear edge over other e-commerce companies in Africa, and many analysts are expecting the company to turn back around, assuming the right strategies are implemented.
Overall, the news that Jumia expects losses this year not to exceed $100 million is a welcome sign of improvement for the company. While the company is far from out of the woods yet, it’s positive to see the company making progress and taking strategy-led initiatives to bring down its losses.