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Jumia Posts Strong Growth in Q3 as Gross Profit After Fulfillment, Sales and Ads Turned Positive

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Jumia posted strong third quarter results following a series of adjustments and improvements made to the core units of the e-retail giant.

In the latest third quarter results, the largest e-commerce company in Nigeria grew gross profit by 22 percent to €23.2 million year-on-year.

Gross profit after fulfillment expenses rose to €6.6 million in the third quarter, up from €1.7 million filed in the same quarter of 2019.

Jumia reduced sales and advertising expense by 55 percent to €6.2 million year-on-year, the lowest quarterly amount since 2017.

The e-commerce company continued to deepen marketing efficiency as Sales & Advertsing expense per Order declined by 53 percent to €0.9 in the third quarter, down from €2 recorded in the corresponding quarter of 2019.

Jumia reduced operating loss by 49 percent to a three-year low of €28.0 million while JumiaPay TPV rose by 50 percent to €48 million. More than doubling on-platform TPV penetration from 12.2 percent of GMV in the third quarter of 2019 to 25.6 percent of GMV in the third quarter of 2020.

However, the company’s Gross Merchandise Volume (GMV) declined by 28 percent year-on-year to €187.3 million in the third quarter of 2020. Largely due to the series of adjustments made to the core units last year.

Speaking on the company’s performance, Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers, Jumia, “We are making significant progress on our path to profitability with Adjusted EBITDA loss in the third quarter of 2020 decreasing by 50% year-over-year.”

“Having established Jumia as the leading pan-African e-commerce platform, we have focused over the past 12 months on firmly advancing towards breakeven. The significant progress achieved was mostly attributable to the thorough work we have done on the fundamentals of our business, with limited support from external factors such as COVID-19. The business mix rebalancing initiated late last year has increased our exposure to everyday product categories and, combined with enhanced promotional discipline, supported unit economics.

“In addition, we made multiple enhancements across our logistics and marketing operations that led to a decrease in fulfillment and marketing expenses for the third quarter of 2020 by 20% and 55% respectively, on a year-over-year basis. The portfolio optimization completed last year, along with overhead rationalization, contributed to a decrease in G&A costs excluding share-based compensation of 24% year-over-year in the third quarter of 2020.

“Lastly, we continued to drive robust growth of JumiaPay by more than doubling the penetration of JumiaPay TPV to over 25% of GMV in the third quarter of 2020, a clear sign of our ability to drive pre-payment adoption on our platform efficiently. We believe the fundamentals of our business have never been stronger, setting a robust foundation for the long term, profitable growth of Jumia.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Social Media

Facebook Halts ‘Instagram Kids’ Project Following Criticism

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Facebook, which faced sharp criticism from lawmakers and users for its plan to develop an Instagram for kids, announced Monday it’s pausing work on the project.

“While we believe building ‘Instagram Kids’ is the right thing to do, Instagram, and its parent company Facebook, will re-evaluate the project at a later date. In the interim Instagram will continue to focus on teen safety and expanding parental supervision features for teens,” the company said in a statement.

Instagram head Adam Mosseri said the app was meant for children ages 10 to 12.

The pause comes after an explosive Wall Street Journal report showed Facebook repeatedly found its Instagram app is harmful to many teenagers. The Journal cited Facebook studies over the past three years that examined how Instagram affects its young user base, with teenage girls being most notably harmed.

One internal Facebook presentation said that among teens who reported suicidal thoughts, 13% of British users and 6% of American users traced the issue to Instagram.

The report led lawmakers to readdress their concerns over the social media app. Just after the news broke, representatives on both sides of the aisle demanded answers from Facebook. Rep. Lori Trahan, D-Mass., also called on Facebook to abandon its Instagram for kids efforts.

Antigone Davis, Facebook’s global head of safety, will testify before the Senate Commerce subcommittee on consumer protection on Thursday.

Facebook has repeatedly defended its efforts to draw more kids to the app. Mosseri argued in a blog post early Monday that children are already online.

“Critics of ‘Instagram Kids’ will see this as an acknowledgment that the project is a bad idea. That’s not the case. The reality is that kids are already online, and we believe that developing age-appropriate experiences designed specifically for them is far better for parents than where we are today,” he said. Instagram will pause its work to address concerns with parents, experts, policymakers and regulators.

Instagram will also work on expanding its parental controls to teen accounts.

“These new features, which parents and teens can opt into, will give parents the tools to meaningfully shape their teen’s experience,” Mosseri said.

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Telecommunications

Mobile Operators Experienced 16,000 Outages in Seven Months, Says Minister

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The Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami has disclosed that there were about 16,000 reported outages by mobile network operators in the country from January 2021 to July 2021.

The outages, according to him, were due to fibre cuts, access denial and theft, leading to service disruption in the affected areas.

The Minister who disclosed this in Maiduguri, during a recent town hall meeting, where he addressed the vandalism of power and telecommunications infrastructure, noted that the protection of the critical infrastructural facility was key to the nation’s security, economic vitality, public health and safety.

The event, which was organised by the Ministry of Information and Culture, was attended by Governor Babagana Zulum of Borno State, his Deputy, Mr. Usman Kadafur, and other stakeholders. The Minister of Information and Culture, Alhaji Lai Mohammed, led some other ministers who were panellists at the town hall meeting.

Pantami, who was represented by the Commissioner for Technical Services, Nigerian Communications Commission (NCC), Mr. Ubale Maska, decried the situation where telecoms installations that were destroyed in the attacks by terrorists had not been replaced as a result of the lingering insecurity and tensions in parts of the North-east.

As a way forward, the minister recommended continuous stakeholders buying-in and synergy among security forces.
He also urged the National Assembly to expedite the passage of the Critical Infrastructure Protection Bill for onward submission to the President for assent.

Pantami, also said the Fifth Generation (5G) network, that was recently approved by the Federal Executive Council, would be deployed in Nigeria in January 2022. He said when deployed, it would aid the surveillance of public assets against vandalism.

He said while the technology would boost surveillance against criminal elements vandalising public infrastructure across the country, other measures should be put in place to arrest them and bring them to book.

The minister disclosed that there were over 50,000 telecommunication sites across the country, which made it difficult to manage manually except through the deployment of modern technology.

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Fund Raising

Nigerian Energy Startup Secures $2M Investment From Shell-Owned Fund

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Nigerian startup Infibranches Technologies, which helps solar energy providers manage their operations and receive payments, has secured US$2 million funding from All On, an impact investment company backed by oil major Shell.

Founded in 2019, the Lagos-based Infibranches has developed two flagship products – OmniBranches and Green Energy Plug – that help companies with large distribution networks, particularly solar home system distributors and mini-grid developers, manage their operations.

OmniBranches is a management platform with features that include agent hierarchy management, commission tracking, transaction records, transaction analytics, and profile management, while Green Energy Plug is a single point of integration for payments and other financial services for service providers in the Nigerian renewable energy sector.

So far the company has served over one million customers and processed over US$120 million in transactions, and the US$2 million All On investment will be used to support the next stage of its growth by financing inventory, agent acquisition, and product and technology development, as well as providing working capital for Infibranches’ plans to distribute solar home systems for households and commercial users across Nigeria, with a special focus in the Niger Delta.

“Through this investment, Infibranches plans to speed up customer acquisition in its current markets. This will also improve existing products like Omnibranches, which has served over a million customers and introduce new products and services to address energy distribution issues,” said chief executive officer (CEO) Olusola Owoyemi.

Dr Wiebe Boer, chief executive of All On, commended Infibrances for its innovative business model that solves payments and collections problems solar system distributors and mini-grid developers face across Nigeria.

“This partnership merges fintech and renewables in a way we haven’t seen in Nigeria before and will enable tens of thousands of new electricity connections,” he said.

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