A year after its much-heralded debut on the New York Stock Exchange, e-commerce start-up Jumia has shut down in three African states, struggled to turn a profit and got dumped by its original owners. The two CEOs of Jumia announced earlier this month that they were taking a 25% pay cut to support the online retailer manage costs during the coronavirus pandemic.
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In 2019, the duo and the company’s chief financial officer collectively earned $5.3m (£4.27m) in base salaries and one-time bonuses. But Jumia’s losses rose 34% to $246m, the eighth straight year without profits.
A silver lining arrived with lockdowns that shut down much economic activity but led to a surge in online shopping. Before the rush, the African online retailer had ended last year with 6.1 million active consumers on its websites, up from 4 million previously.
[SIZE=6]Africa pride?[/SIZE]
Jumia’s public claim to African-ness is tenuous because its headquarters are in Berlin, Germany, its Technology and Product Team in Porto, Portugal, and its senior leadership in Dubai in the United Arab Emirates (UAE).
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As the virus spread, Jumia expanded grocery and sanitary offerings, introduced contactless delivery options, and promoted cashless payments. It also started selling essential items in South Africa using its fashion retail subsidiary Zando’s infrastructure.
The two Frenchmen who run Jumia as co-CEOs, Jeremy Hodara, and Sacha Poignonnec, reduced their salaries just days before the first anniversary of its initial public offering (IPO) on the New York Stock Exchange (NYSE).
Jumia listed at $14.50 a share, valuing the company at $1.1bn. Just four days later, its stock hit $49.77, raising its value to an African startup record of $3.8bn.
It would not last. Within a few weeks, Jumia’s stock suffered a spectacular decline, weighed down by allegations of fraud and concealed losses, a scathing report by a notorious short-seller, embarrassing fraud lawsuits in New York courts and a public relations disaster over its identity. The share price sunk to an all-time low of $2.15 last August and has not budged.
The company exited three of its 14 country markets - Rwanda, Tanzania, and Cameroon - in quick succession, and tried to chart a path to profitability.
The American e-commerce giant Amazon, to which it is often compared, took six years to become profitable, but eight years after its launch, Jumia is still struggling.
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