For a subset of Nigerians, shopping on Jumia offers convenience more than anything else. In populous cities like Lagos and Abuja, where traffic can be too heavy or going to the market to buy household items can be an all-day affair, the ability to order something on Monday and receive it by Wednesday is as good as magic.

But this magic hasn’t quite rubbed off on the company, once hailed as the “Amazon of Africa.” The Lagos-headquartered Jumia, which has a presence in 11 countries and was Africa’s first unicorn, has been the dominant e-commerce player on the continent for more than a decade. However, this dominance and popularity among users have not resulted in profits for the company, which has failed to impress shareholders and tech analysts.

In the third quarter of 2022, Jumia clocked 9.4 million orders worth $66.6 million. But during the same period, the company posted an operational loss of $43.2 million. Its total active users grew by 3.5% year on year in that quarter, while the number of orders increased by nearly 11%.

$43.2 million The operational loss posted by Jumia in the third quarter of 2022.

Olivier Marz, an independent analyst and author of the Emerging Value newsletter, told Rest of World that the jump in Jumia’s customer base was “minimal” given the company’s size. “They cover multiple countries with over 600 million people but only had 3.1 million active customers as of Q3 2022, up from 3 million a year ago,” Marz said. “This is not sufficient and can hardly be called traction.”

Before its IPO, Jumia had raised more than $760 million from marquee investors like Blakeney Management, Goldman Sachs, the MTN Group, and Rocket Internet. In April 2019, Jumia’s shares were listed on the New York Stock Exchange at an initial price of $14.50 apiece. The stock has lost nearly 70% of its value and trades at around $4 per stock.

“Jumia has been more about story than substance,” Emeka Ajene, an independent tech analyst, told Rest of World. “While the firm sold an ‘Amazon of Africa’ narrative that appealed to Western investors, the reality on the ground never backed that up.”

Recent months have been particularly tumultuous for Jumia.

In November 2022, the company announced a significant change in management as co-founders and long-term co-CEOs, Sacha Poignonnec and Jeremy Hodara, were ousted. Francis Dufay, the former executive vice president for Africa and the managing director for Jumia Côte d’Ivoire, was appointed acting CEO.

Jumia shut its Dubai office a month later and moved its senior management team to Morocco, Kenya, and Côte d’Ivoire. The move was reportedly part of a plan to cut costs. “As part of our new strategy, Jumia [has] decided to close the Dubai office and bring all our managers closer to the heart of our operations by relocating them to Africa,” Abdesslam Benzitouni, Jumia’s head of communications and public relations, told Rest of World. “This move will allow us to better serve our customers and vendors, delivering quality products and services that meet their needs and exceed their expectations.”

Around the same time, the company discontinued Jumia Prime — its subscription-based, Amazon Prime-like loyalty program that offered unlimited free delivery at around $7 per month. Launched in June 2019, Jumia Prime had expanded beyond Nigeria to Egypt, Kenya, Morocco, Côte d’Ivoire, Ghana, Uganda, Tunisia, and Senegal before it was discontinued in December. It was not “​​suitable to the current operating environment” and did not support the company’s “path to profitability,” Benzitouni told Rest of World.

“You cannot be profitable in mass market e-commerce with only 3 million customers across different countries.”

“You cannot be profitable in mass market e-commerce with only 3 million customers across different countries,” Marz said. “You need a mass of customers for scale effects, especially as you try to build a complex and sophisticated experience as Jumia does. With a population of more than 200 million people, they need 20 million customers in Nigeria alone, and then the effect of scale would provide massive profits. It’s like trying to have a profitable restaurant with three guests per day.”

Meanwhile, Amazon, which is attempting to streamline costs and recently announced massive layoffs, is still in the process of finalizing its expansion into South Africa and Nigeria, which had been slated for February and April 2023, respectively. Amazon did not respond to queries from Rest of World about reported delays. The company’s decision, however, raises concerns about the future of Jumia, experts said.

Marz and Ajene questioned whether Africa is ready for “Amazon-style” B2C e-commerce. Marz told Rest of World that platforms like Jumia should “let small businesses do the selling,” adding that “there is no need to have an obsession with Amazon Prime or [Chinese e-commerce platform] E-commerce did not start with Amazon Prime in the [U.S.]. It was people selling stuff from their garage to each other.”

“Jumia seems to have never mastered the underlying fundamentals of its core e-commerce business,” Ajene said. “One implication is that it’s worthwhile to rethink Western-style B2C e-commerce at this stage of the African tech ecosystem’s evolution. While Jumia’s story isn’t over, it should provide an impetus for investors and innovators to think more critically about current market characteristics and the models best suited to exploit them.”