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Jumia’s 2024 Aggressive Cost-Cutting Narrows Losses to $65 Million
Jumia, Africa’s largest e-commerce platform, has made significant efforts to reduce its losses in 2024 through aggressive cost-cutting measures. Despite these efforts, the company reported a loss of $64.7 million for the year. This marks an improvement compared to previous years, as Jumia’s cost-cutting narrows losses, but the company still faces challenges in achieving profitability.
The year was tough for Jumia due to economic difficulties in its biggest markets, Nigeria and Egypt. Currency devaluations in these countries significantly impacted the company’s revenue. While Jumia’s gross merchandise value (GMV), which represents the total value of goods ordered on its platform, dropped by 4% to $720 million in reported currency, it showed a 28% increase when adjusted for currency changes. Similarly, revenue fell by 10% to $167.5 million but grew by 17% in constant currency. These figures highlight how external economic factors continue to weigh on Jumia’s performance.
Jumia’s cost-cutting strategy included reducing advertising and sales expenses by 24%, which helped improve efficiency. However, rising fulfillment costs, up by 11% due to an increase in orders, put additional pressure on margins. The company also faced challenges with its marketplace revenue from third-party sellers, which fell by 31%, and first-party sales, which declined by 14%. Gross margins contracted by 12%, reflecting weaker unit economics.
To adapt to changing market conditions, Jumia expanded into smaller urban centers across its core markets. These areas now account for 56% of total orders. However, this shift brought a higher volume of low-value transactions, contributing to a decline in GMV. Additionally, a drop in high-margin corporate sales in Egypt further impacted the company’s financial performance.
Jumia also made tough decisions to exit South Africa and Tunisia, reducing its operational footprint but incurring $10 million in one-time expenses as a result. These exits contributed to a decline in total customer numbers, with the active customer base falling from 10 million in 2023 to 8.3 million in 2024.
However, there were some positive signs: quarterly active users rose slightly from 2.3 million to 2.4 million by December 2024, and the customer repurchase rate improved to 40%, indicating stronger loyalty among remaining users.
The company ended the year with $133.9 million in cash, providing some financial stability despite ongoing losses and currency volatility. However, operating cash burn remains a concern due to factors like $13.5 million in supplier prepayments. If losses continue at this pace, Jumia may need to raise additional capital or further accelerate its efficiency measures.
One bright spot for Jumia was the growth of JumiaPay, its digital payment platform. Transactions increased by 11% year-over-year, reaching $3.3 million by December 2024. JumiaPay has seen growing adoption for food and product deliveries and is considered a key part of the company’s future strategy.
CEO Francis Dufay emphasized the importance of cashless transactions and sees JumiaPay as a pillar of long-term growth. However, competition from fintech giants like Flutterwave, Opay, and MTN’s MoMo remains strong in Jumia’s key markets.
Looking ahead to 2025, Jumia plans to continue focusing on cost-cutting while improving its unit economics in core markets. Analysts believe that achieving profitability will require either significantly increasing customer spending or reducing fulfilment costs further. CEO Francis Dufay remains optimistic about the company’s future prospects: “The business is stronger and more efficient than it was just two years ago,” he said.
Jumia’s cost-cutting narrows losses and positions the company for potential growth opportunities in the coming years. However, with market exits, shifting customer trends, and persistent challenges in maintaining profitability, the road ahead will not be easy. The company’s ability to preserve cash while refining its business model will be critical as it works toward sustainable success in Africa’s competitive e-commerce landscape.
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