Jumia's losses increased and it withdrew from several markets

The Jumia e-commerce platform, which is one of Africa's emerging companies in the field of e-commerce, is declining amid rising costs and losses. It has withdrawn its food and drink delivery service from Rwanda as of yesterday, and the move comes after the closure of its e-commerce businesses in Tanzania and Cameroon last month. Like other e-commerce companies including Mercado Libre in Latin America, it is losing “a significant amount of money,” according to Cargo Facts Consulting.

In the first three quarters, the company spent €46 million on fulfillment, two-thirds of which was related to shipping operations. In fact, fulfillment spending rose 63% in the first nine months of 2019, versus a revenue increase of just 28%. In the third quarter, Jumia's fulfillment expenses rose 55%, “affected by a higher percentage of cross-border packages shipped from third-party sellers as well as a higher percentage of packages delivered outside major cities.”

“However, we continue to monitor fulfillment expense efficiencies as our order volumes grow,” it said in its financial report. Jumia isn't alone in finding shipping costs spiraling. Mercado Libre saw shipping spending during January-September 2019 increase by 50% year over year, and so far Amazon's shipping costs are up 35% while fulfillment is up 17% versus revenue up 20% in North America and 13% internationally. Jumia, which raised $1 billion in an IPO on the New York Stock Exchange in April, saw its stock price fall nearly 90%.

The company said the closures, which include its travel website, were aimed at helping it focus on profit and its JumiaPay platform. Overall losses rose by almost 35% in the third quarter year-on-year to €54.6 million, due to higher shipping costs and poor infrastructure in African countries.