Africa’s e-commerce group, Jumia, cut down its operating losses by 71% year over year to $8.3 million in the first quarter (Q1) of 2024 as against $28 million recorded in the same period of 2023.
The company revealed this in its Q1 2024 report released on Tuesday. Jumia said it was able to cut down its losses through significant cost reductions and improved gross margins as it continues to implement strategic plans toward profitability.
The company also posted a 19% revenue growth year-on-year in Q1 2024 to $49 million, despite a 5% decline in active customer base in the same quarter. Jumia’s gross merchandise value (GMV), that is, the total amount customers paid before deductions like fees, discounts, or returns, also surged by 5% year-on-year to $181 million.
The quarterly active customers of the e-commerce group declined from 2 million to 1.9 million due to cost-cutting measures such as reduced customer incentives and free shipping expenditures. However, this helped the company to retain a higher-quality customer base with increased repurchase rates.
Jumia Group’s CEO, Francis Dufay, believes the company is off to a great start this year as it continues to execute strategic priorities focused on strengthening Jumia’s core business and improving cash efficiency while establishing a leaner organization primed for growth.
Despite the tough economic conditions, Dufay said Jumia is seeing growth in two of its major markets, Nigeria and Ghana.
According to him, the company’s success is more notable when considered against the challenging macro environment in Africa.
Significant currency devaluations in some of its largest markets impacted both purchasing power and supply availability, making for a difficult operating environment. However, Dufay said Jumia’s ability to secure sufficient inventory and offer a diversified product assortment at competitive prices continues to keep consumers engaged on its platform.
As part of strategies to cut its perennial losses and move to profitability, Jumia in the fourth quarter (Q4) of 2022 slashed its workforce by 20% in an exercise that saw the exit of 900 people from the company. The company also discontinued its unprofitable food business.
With all these, Dufay said Jumia is now a much leaner, more agile, and more focused company to achieve its goals for 2024.
