Jumia’s Investment In Sales, Advertising Yield Massive Results
By Toyosi Olajide
Figures emanating from Jumia’s recently released 12th quarterly report-having gone public in April 2019- indicates that the African e-commerce company is enjoying the best of growth, as recent show that it has recorded the best since it went public some three years ago.
This may not be unrelated to the company’s investment in sales and advertising, rising from $37 million in 2020 to over $80 million last year, though Jumia said growth was also because it diversified its inventory and invested in tech to improve personalization, gamification, and user-friendliness, in a media report.
It may be recalled that in its early years a decade ago, Jumia’s focus was on selling directly to users from its warehouses, but the challenges of e-commerce in Africa led it to develop the necessary payments (Jumia Pay) and logistics solutions of its value chain internally. Soon enough, Jumia began offering these services to online sellers on its marketplace and other companies, in addition to selling advertising space.
And so for the first time last year, Jumia included revenue from advertising and logistics in its report. Each exceeded the money made from fulfillment. The new monetization streams coincide with Jumia’s shift in the products it chooses to sell more of, having de-emphasized electronics in favor of fashion, beauty, and consumer goods, a strategy the company now calls “Jumia Everyday.”
This shift reduced the value of the average Jumia order from $43 in 2019 to $29 last year. But as there are more companies and retailers involved in producing and selling more units of consumer goods, more advertising space can be offered than if the focus was on higher-value items like phones.
It is an enticing proposition for a company in 11 African countries with a combined population of 600 million people. After all, Amazon is now a fast-rising player in the advertising business, and is projected to earn, with Google and Meta, half of all online advertising dollars this year.
But to get more advertisers paying for clicks, Jumia needs to prove that it is increasing visibility to more Africans. And so it plans to spend up to $50 million on advertising in the first half of this year which, it says, would match spending in the second half of last year. In addition, Jumia will test free shipping in select cities for orders of a certain threshold.