Business Maverick: Jumia Sees Startup Rivals Competing for Africa Online Sales

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Jumia Technologies AG is facing fresh competition from startups in the African e-commerce and logistics market after the Covid-19 pandemic increased demand for online deliveries.

Jumia Technologies is seen as one of the pioneers of internet trading in sub-Saharan Africa, which trails the rest of the world due to challenges including weak internet connections and unreliable addresses. But lockdowns to contain the coronavirus have attracted more entrepreneurs to the sector, according to Jumia Co-Chief Executive Officer Sacha Poignonnec.

Jumia investors have experienced a rollercoaster ride since the stock debuted in New York last year. Persistent losses, allegations of corruption in the Nigerian sales force and a damning short-seller report contributed to an initial share-price slump, but the arrival of the coronavirus has helped fuel a doubling in market value in 2020. That was even higher before a 30% stock decline this week after second-quarter results.The shares fell 2% to $13.

Expanding into food has helped to increase sales and Jumia’s footprint in existing markets, which are led by Nigeria, according to the co-CEO. That’s involved adding grocery and pharmacy orders as well as restaurant takeaways, he said. Jumia’s logistics unit is also now open to third parties wishing to use the company’s network of drivers to deliver packages, adding another revenue stream.

The rapid growth of food delivery across emerging markets may make Jumia an acquisition target, Nirgunan Tiruchelvam, an analyst at Tellimer Markets, said in a July note to clients.

 

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