One of Kenya’s leading e-commerce site Jumia Group has reported a huge net loss of Sh.12.4 billion for the financial year 2016.
Jumia records a whopping Sh12.4 billion net loss
The online retailer has recorded one if its worst net losses in a while.
This comes in the wake of a drop in revenues and number of active customers across the region.
The online retailer, owned by German-based tech firm Rocket Internet, noted an improvement in its net loss from the previous year’s Sh20 billion, despite its sales in 2016 dropping 41.6 per cent to Sh9.4 billion.
Jumia, which runs platforms such as Jumia Market, Jumia Food, Jumia Travel, Jumia Deals, Jumia House, Jumia Jobs and Jumia Car, is ranked third in revenue in Africa right after Nigeria and Egypt.
Kenya is among the 23 African countries where the retailer runs its operations and it despite seeing an improvement in total transactions grow by 4.3 per cent, its active customers reduced by 100,000 to 1.5 million.
The shop refers to active customers as users who made at least one order within the past year, less actual and provisioned returns and rejections within its stipulated grace period.
“Revenue decreased impacted by the continuing shift from e-commerce towards a marketplace business model, by the slowdown of the Nigerian economy and currency devaluations in June 2016,”read part of a statement by Rocket Internet.
Online shopping has gained traction in the country due to high Internet penetration and has led to the entry of new players in the market such as Kilimall, Kaymu and P Promos (Rupu).
Jumia has collaborated with major brands in clothing, electronics, household goods as wells as hotels and restaurants in a bid to ease shopping for customers.
Timely delivery of goods and quality customer service are some of the advantages that e-commerce platforms seek against each other in order to woo more customers.
The main challenges include traffic congestion and poor transport infrastructure that have forced most of these online stores to transport most of their cargo by air hence increasing the cost to customers.
Despite the huge net loss, Jumia remains hopeful of a slight improvement in revenues for the financial year 2017.
“Jumia is expected to grow revenues by a low double-digit percentage during the financial year 2017.”
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