As we think of e-commerce firms or platforms, we may think Amazon and Alibaba are the most influential companies in the world. In U.S, Amazon is the most dominant company in terms of e-commerce platforms, operating 1p (first party) and 3p (third party) which compete each other. In China, Alibaba dominates the online retail market providing best service to the consumers regarding delivery, price, and its identical entertainment-based marketing. However, there are valuable companies other than the two I mentioned above. One of example of prospering e-commerce company, Mercado Libre, is based in Argentina which dominates South American retail market. Other example is the e-commerce platform called Jumia Technologies which is operated in African market. I personally found this company very attractive as online shopping market in Africa has great potential to grow more than what we think.
What is Jumia
Jumia is considered as “Amazon of Africa”, founded in 2012 by Jeremy Hodara and Sacha Poignonnec, previous McKinsey consultants. It is the largest African e-commerce platform which has wide variety of products and categories such as electronics and fashions. Jumia also provides logistics and payment services which make user-friendly environment to African consumers. They have about 50,000 local partners, 81,000 sellers, 6.8 million active users (previous year was 4.8 million), and more than 5,000 employees all over Africa (which is mostly furloughed or fired recently).
Rise and fall
Moreover, Jumia is the first African tech companies listed in New York Stock Exchange in April 12th 2019. The IPO of the company was a great hope for African firms enough to have a dream to be traded in America. The share rose about 75% on its first day of listings and reached the market capital of 3.9 billion dollars. However, in May of 2019, Jumia had suffered from the short-seller Andrew Left of Citron Research who claimed Jumia as “securities fraud”. The share price plunged half in a week after the report of high possibility of fraud. In April 2020, Rocket Internet, German investment firm, which owned 28% of Jumia, announced to sell the shares.
Opportunity
As a rise of COVID-19, more demand through online has increased. The worldwide e-commerce platform was in boom as consumers started to stay at home. Africa was not exceptional. Africa is the continent where online retail market is growing. They have 52 different countries which consist of potential 1.3 billion consumers and 17 million SMEs/merchants for online shopping business. Mobile market in Africa is expected to half-double in leading countries over the next five years which means over 300 million smartphones will be added to the market.
“There is enormous opportunity. In absolute numbers, Africa may be smaller right now than other regions, but online commerce will grow about 30% every year. And even with wider global declines, online shoppers are growing twice as fast. Stripe thinks on a longer time horizon than others because we are an infrastructure company. We are thinking of what the world will look like in 2040-2050.” - Patrick Collison
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