While the company competes with the likes of Amazon’s Souq.com and Naspers in individual markets, Jumia has said it believes it’s the only pan-African e-commerce site.
Thursday 11, April 2019
Jumia is planning to sell 13.5 million American Depository Shares at $13 to $16, raising as much as $216 million and the listing is meant to give the company financial flexibility as well as increase awareness of the brand among investors.
Often tagged as Africa’s Amazon.com, Jumia has been able to grow in markets largely untapped by the US heavyweight, which is hampered by a lack of distribution infrastructure on the continent. To tackle the issue of vague addresses in many African cities, Jumia has built a network of leased warehouses, pick up and drop off locations and brought in a string of delivery partners to ensure reliable service.
In a bourse filing, Jumia said that less than one per cent of retail sales in Jumia’s African footprint are conducted online compared with nearly 24 per cent in China.
That makes the continent ripe for internet sellers as more Africans adopt smartphones and get access to mobile broadband. Jumia’s revenue jumped by almost 40 per cent last year to EUR 130.6 million ($147.3 million).
The company, which has headquarters in Berlin and got early funding from German start-up incubator Rocket internet, isn’t profitable. Jumia reported a loss for 2018 of about 170 million euros and has warned prospective IPO investors that it has accumulated losses of 862 million euros since its inception and relies on external financing to compensate for negative cash flow.
Still, investors tend to give e-commerce companies leeway because customer growth and market share are seen as more important, according to Seema Shah, a consumer analyst at Bloomberg Intelligence in New York.