The IPO for Pan-African e-commerce startup, Jumia Technologies AG
Specifically for Africans, Jumia is an inspiration. The CEO of the company’s largest operation, Juliet Anammah, is Nigerian and it founders, Tunde Kehinde and Raphael Afeador, are both African (both have departed to form other startups, but Golden State Warriors player, Andre Iguadola, serves on the board to keep internal company interests African). But, most importantly, the company employs more than 5,000 people across Africa.
As an overview, Jumia operates multiple online verticals in 14 African countries. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data.
63% Growth from 2017 to 2018
Already, the stock has gained some traction as it opened at $14.50 and now sits around $25.00 at the time of writing. Market-wise, one reason for optimism in Jumia is soaring consumer spending in Africa. In 2015, consumers spent $1 trillion across the country’s 30 largest economies, thanks to a report from McKinsey, and estimates show the African population will top $2 trillion in spending by 2025. This growth is predicated on 65% of African households reaching the “discretionary spending” income bracket, and, if trends hold, e-commerce would own 10% of that number.
To rewind a little, Jumia was founded in Lagos, Nigeria in 2012 with backing from Rocket Internet and recently the company saw revenues grow 63%. In 2017, Jumia earned €93.8 million in revenue, while in 2018 the company returned €828 million and reached 4 million active consumers. These numbers would suggest that Jumia is line to be a primary beneficiary of a very connected country with 400 million internet-users, the second largest internet population on the planet.
A Resource for Africa’s Entrepreneurs
The company fills a need by giving Africans a more efficient way to buy goods and services. Often called “The Amazon of Africa,” Jumia has broken barriers in African by expanding consumer choice outside of the main metropolitan areas of Lagos, Cairo and Nairobi and into the small villages and cities.
The company has done this by partnering with last-mile local knowledge experts to create on-the-ground logistics – using a squadron of trucks and motorbikes – where it was not possible before. This fragmented door-to-door approach is creating a fabric of connection across the continent and small business owners are growing because of it. Jumia boasts more than 80,000 active sellers on the platform using the company’s payment, delivery and data-analytics services.
Now, the company is in the public eye, but they have firm backing from Goldman Sachs, AXA, and Mastercard, all of which will be hoping the company can start to turn more profit from its non-delivered services -like JumiaOne as the company’s shipping and freight costs (especially in areas where it is essentially creating infrastructure) have hurt margins in years passed.