Pan-African eCommerce giant Jumia is aggressively pursuing profitability by narrowing losses and growing monetization.
In a report detailing its fourth quarter and full year 2022 results released Thursday (Feb. 16), the firm said its strategy to reduce losses and accelerate progress towards profitability is paying off, with Q4 operation losses down 41% year over year (YoY) while gross profit increased 22% during the same period.
Commenting on the results, Jumia CEO Francis Dufay expressed optimism about “the early signs of success” recorded in the quarter, which he said “only reflect a fraction of the actions” taken by the firm as it remains focused on executing cost efficiency projects.
Among the cost-cutting measures undertaken during the period include the discontinuation of the Jumia Prime subscription service, which “in terms of consumer traction and stickiness fell short of our targets,” the company noted.
Learn more: Jumia Pins Hopes on Diversified Revenue Streams, Cost Savings to Reach Profitability
Jumia has also axed its food delivery operations in Egypt, Ghana and Senegal, where the activity was subscale and together accounted for less than 1% of group gross merchandise volume (GMV) in the first nine months of 2022.
Due to a similar subpar performance which resulted in a less than 1% contribution to its total group revenue between Q1 and Q3 2022, its logistics-as-a-service activity was also suspended in several geographies, excluding in Nigeria, Morocco and Ivory Coast, where logistics infrastructure is more developed.
Related: UPS Partners Africa’s Jumia on eCommerce Distribution Network
Another low-value project which the firm has scaled back in Algeria, Ghana, Senegal and Tunisia is its first party grocery offering, as part of efforts to improve unit economics and simplify its business operations in those markets.
JumiaPay transactions as a percentage of total orders on the platform have steadily declined since last year, dropping 26% YoY to reach 2.9 million in the Q4 2022. The total orders placed on the Jumia platform using the JumiaPay app also decreased to 29% compared to 35% in Q4 2021.
According to the firm, this decline was the result of deliberate efforts made to improve unit economics, including scale back on marketing investments and promotions on the platform.
Nonetheless, the Q4 report noted that JumiaPay remains a core priority for the Africa-focused eCommerce firm, “and we will work on making it an even more effective enabler of our eCommerce business, focusing on a more targeted number of critical products and ventures.”
Overall, annual active consumers rose 4% YoY, while quarterly active consumers in Q4 2022 dropped 15% YoY. Jumia partly attributed this to the challenging macro environment and supply chain issues across markets that are piling pressure on consumer spend and impacting sellers’ ability to secure products.
“It is also a result of deliberate action on our side to reduce promotional intensity behind categories with more challenging unit economics, including a number of digital services on the JumiaPay app,” the firm said, adding that “we remain disciplined around customer acquisition with [a] focus on profitability.”
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