Question

Why Jumia Nigeria losing money ?

Answer 1

Let us take a holistic approach to this question.

The major issue with Jumia is they have lost lots of ground to Konga. This is due to various reasons.

Firstly, Jumia stopped advertising or drastically reduced their marketing budget a few years ago, when they became very popular. At that same time, Konga got funding and started massive marketing, which they continued till today. That struck Konga as the default place to shop on the Internet for most Nigerians.

Secondly, Jumia relies on their own stock, and the stock of a few other pre-vetted big merchants. Konga, on the other, welcomes everyone to sell with them, big players, tiny players, everyone in between. This ensured Konga always has stock beyond what they can stock themselves. There is a huge diversity on Konga, such that most people give up searching for a product if they can’t find it on Konga. Jumia, on the other hand, lacked many essential products, and lots of niche products. When they have it, the choice is severely limited, as typically it’s available from one merchant.

Konga ships stuff by themselves. They have a whole logistics company dedicated to shipping stuff. This makes it very easy for merchants to sell on their site. Their processes are also very automated (at least in Nigerian standard). This makes merchants more willing to sell on Konga, and of course the customers will go where the merchants are.

Jumia’s merchant website, kaymu, has always received much less attention than Jumia itself, and has made it difficult for it to be recognized by most people. Some people use kaymu only as a last option, and merchants don’t like it that much. It feels more like OLX. Konga doesn’t segregate their marketplace from their own shop, which makes it more trustworthy and more Amazon-ish while kaymu is more eBay-ish.

Finally, Jumia is everywhere at the same time. They’re basically dividing their labour, there is little focus. Not to talk of that they’re in so many other countries. You can only imagine the overhead costs involved in managing that many companies.

Also it is said that company misread Nigeria’s oil boom of 2011-2014 for a reliable market.

Over 90% of what Jumia sell on their site are imported. This opens them to Forex risks. Many Nigerians were no longer able to afford two square meals, so from where will they get NGN100,000 to buy the latest Android phone.

It is said that starting with some blunders of its Black Friday bonanza which affected customer trust, many customers became even less receptive. Reports indicate that physical retailers tend to be more efficient, especially in relation to customers in emerging countries. A customer who chose to speak under the condition of anonymity, revealed that Jumia delivered fake iPhone headphones, stating that he would would have been able to spot the difference if he made this purchase at a physical store.

As opposed to waiting for day(s) to receive your order, ‘brick and mortar’ shops are more convenient. And, in many ways customer react better if they see the faces with an opportunity to scan through products physically with help of an effective offline presence.

Also, customers have complained about not receiving their package on the designated date or even at all for that matter.

Therefore all these events led to the downfall of Jumia.

I have tried to provide an overall view of this event. Hope your query is solved. All the best for examinations and please give this answer a thumbs up.