E-Commerce Giant Jumia Reveals Cost Cuts Reduced Fourth Quarter Losses
African e-commerce giant Jumia recently revealed its cost cuts helped reduced its fourth quarter (Q4) losses by 47%, compared to last year, as its revenue is showing signs of profitability.
Jumia recorded a revenue of $66.5 million in the fourth quarter (Q4) of 2022, up 7% on a year-over-year basis and 23% on a constant currency basis. This revenue increase was reportedly driven by strong growth in the marketplace revenue, which was up by 27% year-over-year or 45% on a constant currency basis.
As part of its streamlining efforts, Jumia reduced headcount among managerial roles by 60% in Dubai and undertook overall headcount reductions that resulted in more than 900 position terminations across its 11 markets, which affected 20% of its staff.
On the monetization front, despite an increasingly challenging macro backdrop, Jumia recorded massive gross profit growth, which was up 22% year-over-year. Marketplace revenue reached an all-time high of $41.2 million as a result of proactive measures taken to support commissions and advertising revenue, which both reached record highs during the quarter.
Jumia’s CEO Francis Dufay disclosed that the company implemented different strategies to accelerate growth and profitability, and they are already seeing encouraging signs of success.
In his words, “In the fourth quarter of 2022, we started implementing our strategy to accelerate our path to profitability and further strengthen our fundamentals. While the fourth quarter results only reflect a fraction of the actions we are taking, we are seeing early signs of success and remain focused on execution.
“We remain more than ever confident about the growth opportunity across our markets and are making fundamental improvements to our consumer value proposition which will help us drive sustainable long-term growth”.
Despite recording a revenue of $66 million for the fourth quarter (Q4), Jumia recorded a full-year loss of $207 million and a fourth-quarter loss of $49.2 million in the earnings report.
However, Investors King understands that the e-commerce giant is already delivering on its strategy to minimize losses and accelerate progress toward profitability, with a major focus on enhanced cost discipline as well as accelerating monetization.
Jumia Signs Deal With Leroy Merlin as It Focuses on High-Growth Rural Areas
Leading e-commerce platform in Africa Jumia has signed a partnership deal with French retailer Leroy Merlin as it focuses to sell its products in rural areas in a few West African countries to expand its reach.
The partnership deal between the two firms will see Leroy Merlin enter Francophone countries such as Cote d’Ivoire and Senegal via Jumia’s e-commerce portal.
According to Jumia CEO Francis Dufay, more than half of Africa’s 1.4 billion strong population lives outside big cities or in rural areas where the economies are driven by agriculture. This means there is strong demand for the kinds of products Leroy Merlin offers in areas that are not well served by retailers.
In his words,
“Jumia is pushing into these areas, we have the right suppliers and assortment of products, and a light logistics model to address those smaller pools of consumers. This would be much harder to do for bigger supermarkets and shops for instance.
“While we are facing big headwinds, we are building these new markets in smaller cities, and plan to drive margins with that. Jumai is considering taking the model to Kenya, Ghana, and Nigeria next.”
Investors King understands that Jumia is hoping to cut its losses by 50 percent by the end of the year. The e-commerce giant is reported to have hedged its bets on rural markets across the continent, of which the deal with French retailer Leroy Merlin plays a big part.
The e-commerce giant platform was built to help consumers access millions of goods and services conveniently and at the best prices while opening up a new way for sellers to reach consumers and grow their businesses.
Listed on the New York Stock Exchange (NYSE) in 2019, is currently operating in 11 African countries. The Jumia platform consists of a marketplace, which connects sellers with consumers, a logistics service, which enables the shipment and delivery of packages from sellers to consumers, and a payment service, JumiaPay, which offers a safe and easy solution to facilitate online payment transactions.
As of 2023, Jumia’s home market, Nigeria, accounted for the majority of the visits, around 31 percent of the total, followed by Morocco and Egypt with shares of 17 percent and 14 percent respectively.
Amazon to Layoff More Employees as It Navigates The Uncertain Economy
E-commerce giant Amazon has announced plans to lay off more of its workforce as it seeks to navigate the current uncertain economy.
The company’s Chief Executive Officer Andy Jassy disclosed this in a company memo seen by Investors King. According to the memo, the layoffs would occur in the coming weeks and will mostly affect Amazon Web Services (AWS), People Experience and Technology Solutions (PXT), Advertising, and Twitch live streaming service group.
The memo reads,
“As we have just concluded the second phase of our operating plan (”OP2”) this past week, I’m writing to share that we intend to eliminate about 9,000 more positions in the next few weeks mostly in AWS, PXT, Advertising, and Twitch. This was a difficult decision, but one that we think is best for the company in the long run. As part of our annual planning process, leaders across the company work with their teams to decide what investments they want to make for the future, prioritizing what matters most to customers and the long-term health of our businesses.
“For several years leading up to this one, most of our businesses added a significant amount of headcount. This made sense given what was happening in our businesses and the economy as a whole. However, given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount”.
Jassy further added that these role reductions were not announced with the ones that happened months ago, stating that some teams were not done with their analyses in the late fall, and rather than rush through assessments without the appropriate diligence, the company chose to share it latest decision with the team members to keep them updated on the recent happenings.
The recent job cuts at Amazon would mark the largest round of layoffs in the company’s history, adding to the 18,000 employees that were laid off in January.
Investors King understands that the e-commerce giant doubled its hiring during the covid-19 pandemic to meet demand from customers that were increasingly buying stuff from their online store following the lockdown restriction. But as the pandemic eased, there was a significant slowdown in demand which forced Amazon to pause its warehouse expansion.
Amazon’s latest second round of layoff follows a similar move by Facebook parent company Meta after the social media giant which is on a laying-off spree announced plans to cut extra 10,000 jobs this year and instituted a hiring freeze, having already announced 11,000 job cuts in November last year.
Following the incessant layoff of workers in the tech industry, reports disclose that tech firms laid off more than 150, 000 workers globally, with further 139,000 layoffs already announced in 2023.
B2B E-Commerce Startup Alerzo LayOff 15% of Its Workforce
This is the startup’s second round of layoff in seven months after it laid off hundreds of employees in August and September 2022
B2B e-commerce retail startup based in Ibadan, Nigeria, Alerzo has laid off 15% of its workforce.
This is the startup’s second round of layoff in seven months after it laid off hundreds of employees in August and September 2022. According to Alerzo, the first round of layoffs was performance-related which involved digitizing some roles, including developing an internal ERP.
The recent round of layoffs carried out was due to a profitability push, impacting 15% of its full-time employees across various departments, which saw at least 400 people impacted. Also, one of the reasons Alerzo gave for its recent layoffs was post-election uncertainty.
The company stated that while it was prepared for a slowdown in business due to the elections, currency scarcity presented a twofold blow.
The company said in a statement, “Given previous market dynamics, we hired very aggressively during the past couple of years to fuel quick growth and expansion across the country. This does not align now with the economic environment today, so we, unfortunately, had to make changes to our business to be more focused on pursuing strong unit economics.
“Despite these challenges, we remain committed to our mission and are confident that this restructuring will enable us to better serve our customers and pursue sustainable growth. We are grateful for the hard work and dedication of all of these employees.”
The startup further stated that it will pay out all contractual notice periods and provide additional severance, counseling services, and HMO coverage until the end of 2023 for affected employees. Currently, Alerzo says it wants to restructure and reduce payroll to increase profits.
As part of the new round of layoffs, the startup is reportedly reducing its business footprint and will now close 14 warehouses across the country. The startup believes it can accelerate its path to break even more quickly and reach profitability by the third quarter (Q3) this year, with the help of the payment licenses it has acquired, which will significantly aid the digitization of its merchant base, Investors King understands.
Alerzo is one of the innovative Business-to-Business e-commerce platforms deploying technology to reinvent the distribution value chain in the informal retail sector. In 2022, the company’s CEO Adewale Opaleye disclosed that the startup has improved the business fortune of over 80,000 informal retailers across the country.
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