Jumia declares an KES 11 billion loss in the last one year

Jumia declares an KES 11 billion loss in the last one year Photo courtesy

Jumia, an e-commerce platform, made a cumulative loss of $87.8 million (Sh11.8 billion) in Kenya by the end of 2021, nearly nine years after opening shop in the country in May 2013.

This was an increase of $9 million (Sh1.2 billion) from the $78.8 million (Sh10.6 billion) recorded in 2020, which was an increase from the $72.7 million (Sh9.7 billion) recorded in 2019.

According to regulatory filings, the online marketplace had accumulated a total of $738.9 million (Sh99 billion) in gross losses as of the end of 2021 from all of the markets in which it operates worldwide.
 

Jumia Kenya, which is banking on future growth to break even, intends to use its accumulated losses to offset future tax obligations once it achieves profitability.

It is an example of a tech-enabled startup that has established a presence in the country and relies on institutional funding to scale with an eye toward eventual profitability.

The platform, which primarily sells household food, appliances, electronics, and furniture, does not maintain its own inventory and instead sells merchandise from third-party retailers and wholesalers.

Sugar, maize flour, cooking oil, and make-up products were the most ordered items in 2021, according to the firm's e-Commerce Index, with general beauty products accounting for 57 percent of all goods sold on the platform by value, up from 44 percent the previous year.

Electronics and phone orders fell to 43 percent during the year, from a high of 56 percent the previous year, as the Covid-19 pandemic prevented consumers from purchasing basic necessities.

The adoption of online marketplaces in Kenya is still low, owing to high delivery costs, highly fragmented markets, and a lack of clearly named streets and buildings, which creates supply chain barriers.



E-commerce penetration in Africa is around 1%, compared to 12% in the United States and 20% in China.

Jumia is banking on increasing online shopping adoption, which is linked to the growth of the digital economy and the number of people who use the internet, to expand its footprint and reach profitability.

As of 2021, the company had over 11,000 sellers and over 1,000 pick-up stations across the country.

Jumia Kenya named Charles Ballard as its new CEO on Wednesday, tasked with leading business development and transformation in the country.

Jumia's apparent struggle to break even is part of a continuing trend in Kenya, where promising tech companies have consistently suffered, with at least seven of them closing down in the last year.

The majority of them have cited difficult market conditions as well as a lack of funding, with venture capitalists from developed economies appearing hesitant to make investments due to fears of recession and interest rate hikes.