Jumia Stock Analysis

Although Jumia is commonly known as the Amazon of Africa, it has more in common with Alibaba rather than with Amazon as Amazon operates as a retailer while Alibaba, mainly as a marketplace. The business of Jumia is more suited for the African continent as they offer services which are suitable for the locals. Internet penetration in Africa is low and not many people are familiar with shopping online. Therefore, Jumia enables its customers to pay by cash and now, through Jumia Pay. Jumia Pay also enables customers to pay for bills and other things. Jumia is even launching a prepaid card in Egypt. Jumia Pay TPV (Total Payment Volume) is up 74% for the nine month of 2020 compared to the same period for 2019. Total transactions are up 34%.

Jumia Logistics already has over 110k sellers on its platform and it delivered over 20 million packages in 2019. Jumia Logistics also provides food delivery in capital cities with 25% of deliveries in rural areas.

The main business of Jumia, however, is the Jumia marketplace. In Q3 of 2019, 56% of GMV (Gross Merchandise Volume) came from Phones and Electronics while in Q3 2020, only 43% of sales came from this section with the rest coming from Fashion, Beauty, Food delivery and others. Jumia Average Order Value went from EUR 37.3 to EUR 28.1. The pandemic has accelerated this transition to cheaper items. By sacrificing GMV (and possibly revenues) in the short term, Jumia is, however, improving the bottomline as the Jumia Marketplace registered its first quarterly positive gross profit after fulfillment/order.

Cancelation/Return rate is still quite high at 14.2% of orders and 22.7% of GMV, but a considerable fall from last year. The main challenge that Jumia faces today is the uncertainty in the African market. Jumia is really the first mover in Africa and bigger competitors might take their market share if they do the right thing. The market in Africa is still young and Jumia is only the first mover.

Jumia annual active customers is currently 6.7 million, up by 23% YoY but orders are down 5% for the same quarter in 2019. GMV is down 28% as we mentioned because of the selling of cheaper items.