By Larry Madowo, former BBC Africa Business editor
A year after its much heralded debut on the New York Stock Exchange, e-commerce start-up Jumia has shut down in three African states, struggled to turn a profit and got dumped by its original owners.
The two CEOs of Jumia announced earlier this month that they were taking a 25% pay cut to support the online retailer manage costs during the coronavirus pandemic.
In 2019, the duo and the company’s chief financial officer collectively earned $5.3m (£4.27m) in base salaries and one-time bonuses. But Jumia’s losses rose 34% to $246m, the eighth straight year without profits.
A silver lining arrived with lockdowns that shut down much economic activity but led to a surge in online shopping. Before the rush, the African online retailer had ended last year with 6.1 million active consumers on its websites, up from 4 million previously.
As the virus spread, Jumia expanded grocery and sanitary offerings, introduced contactless delivery options and promoted cashless payments. It also started selling essential items in South Africa using its fashion retail subsidiary Zando’s infrastructure.
The two Frenchmen who run Jumia as co-CEOs, Jeremy Hodara and Sacha Poignonnec, reduced their salaries just days before the first anniversary of its initial public offering (IPO) on the New York Stock Exchange (NYSE).
When it listed last April, Juliet Anammah walked up to the security check-in tent outside the world’s most famous stock trading venue.
Another woman standing nearby snapped a photo of a large banner draped over the front of the iconic building emblazoned with the Jumia logo reading: “The 1st African tech start-up to be listed on the NYSE.”
“I’ve worked on Wall Street for 25 years and I’ve never seen an African banner there,” she told Ms Annamah, then the firm’s country CEO in Nigeria.
Jumia is a three-headed online giant: a marketplace with one billion annual visits largely dominated by third-party sellers, a logistics arm that handles shipments and deliveries, and a payments platform.
Ms Anammah led her colleagues in ringing the bell above the trading floor of the stock exchange at exactly 09:30 on 12 April 2019.
“There was no champagne later to celebrate. We’re still a start-up,” she remembered recently at her office Lagos.
Jumia listed at $14.50 a share, valuing the company at $1.1bn. Just four days later, its stock hit $49.77, raising its value to an African startup record of $3.8bn.
It would not last. Within a few weeks, Jumia’s stock suffered a spectacular decline, weighed down by allegations of fraud and concealed losses, a scathing report by a notorious short-seller, embarrassing fraud lawsuits in New York courts and a public relations disaster over its identity.
The share price sunk to an all-time low of $2.15 last August and has not budged.
The company exited three of its 14 country markets – Rwanda, Tanzania and Cameroon – in quick succession and tried to chart a path to profitability.
A week before its first birthday on the stock market, its original owner, German technology investor Rocket Internet, dumped its entire 11% stake, further knocking the wind out of Jumia’s sails.
“Jumia’s first year on the NYSE is a proper reflection of the value of the company,” says Rebecca Enonchong, a Cameroonian tech entrepreneur and a critic of the firm.
“The hubris of the IPO has led way to the reality of a bad business model. The stock price, hovering under $3, is a reflection of that.”
Jumia’s IPO was billed as a coming of age story for the continent’s nascent start-ups, but it arrived on Wall Street just as the market’s patience for unprofitable unicorns started wearing out.
The American e-commerce giant Amazon, to which it is often compared, took six years to become profitable, but eight years after its launch, Jumia is still struggling.
‘Impossible to work’
That bad news capped a tumultuous year for the company, praised and derided as “the Amazon of Africa”.
“Their business is still fundamentally broken, they have no way out,” says Olumide Olusanya, an early competitor of Jumia’s in Lagos.
The entrepreneur, who went into business after quitting his job as a doctor, thinks it is burning too much cash too fast in a low-margin market.
“It is practically impossible to work. I don’t envy the guy running the business.”
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