Jumia Technologies AG yesterday announced results for the second quarter ended 30 June 2020. The company recorded an operating loss of €37.6 million, 44% down from €66.7 million at a similar period this year.
Total loss for 2020 H1 amount to €81.3 million, a 27.5% difference from €112.1 million mid last year.
According to Jumia Co-CEOs Sach Poignonnec and Jeremy Hodara, the progress towards profitability stems from high gross profit driven by the low sales and advertising expenses.
Jumia’s marketplace revenues grew by 38% YoY this quarter, driven by higher commission and advertising revenue. Advertising revenue grew €2 million from €1.3 in 2019 Q2 as more sellers shift to online advertisement due to the pandemic. Commissions grew by 68% to €9 for the quarter, driven by higher commission products in fashion and beauty, despite lower merchandise volumes. As a result, the company’s gross profit increased by 38% YoY to €23.3 million, from €16.8 million at the end of Q2 last year. Gross profit for the half-year grew by 29.8% to € 41.7 million, from €32.1 million last year.
Jumia cut sales and advertising expenses by 51.4% to €7.2 million for 2020 Q2, bringing their half-year advertising expenses to €16.1 million, down from €26.8 million in 2019. Similarly, order fulfilment expenses fell by 1.7% in 2020 Q2.
The company also cut order fulfilment costs by 1.7% YoY by introducing networks of warehouses closer to customers to deliver essential items.
Jumia Changes focus From Electronics.
The e-commerce company is shifting attention to everyday categories, moving away from phones and electronics in pursuit of profitability in response to the pandemic. Quartz reports that order value on the platform fell by €33.8, as people now focus on everyday products like essentials and beauty products. The shift has increased gross profit per order after fulfilment expenses to €0.90 up from €0.1 in 2020 Q1.
“Our strategy to increase the focus on what we call the everyday categories…while driving cost savings is yielding good results. We are shifting more business to beauty, fashion or fast-moving consumer goods which have higher commission rates and are less promotionally intensive like phones and electronics,” said CEO Sacha Poignonnec.
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