68
CREATING A MARKET
EMB
T H E A FR I C A N A M A Z O N
AT A GLANCE
WITH JULIE T A N A MM A H
I
Juliet Anammah,
Chief Executive of
Jumia Nigeria.
n 2012, with the support of Germany’s Rocket
Internet, Nigerian e-commerce startup, Jumia,
was born. Like all Rocket Internet investments,
it didn’t claim to be a reinvention of the wheel;
Jumia’s founders—a team of Nigerian entrepreneurs
and Rocket backers—openly admit the site was
created in the image of online retail powerhouse,
Amazon. Designed as a secure and easy-to-use
one-stop shop for retail, Jumia was to be to the
African market, what Jeff Bezos’ American giant
had become to the global e-tail space.
The goal was lofty; at that time, African e-com-
merce was essentially non-existent. Yet, consumer
appetite was anything but. A year after Jumia’s launch,
McKinsey & Company identified a growth opportunity
in food and consumer goods in Nigeria alone to the
tune of US$40 billion between 2008 and 2020. It was
a tantalizing figure that quickly translated to sizeable
revenues for the start-up, with Jumia Nigeria
witnessing a 118 percent y-o-y increase in revenue
to almost US$142 million in 2015.
Now in its fifth year, Jumia counts as the largest
e-commerce company in Nigeria, with phones,
beauty and perfume, clothing and homeware counting
amongst its best-selling categories. Starting life with
a staff of three, the firm owned by Jumia Group
(formerly AIG), employs more than 3,000 people
today and operates 10 lines of services in 40 countries
on the African continent, from Egypt to Angola,
Côte d’Ivoire to Kenya.
Yet, with impressive statistics that also include
more than nine million visitors to Jumia Nigeria site
per month, it’s easy to gloss over the challenges that
the company has overcome to earn its market-leading
position. Let’s not forget that to dominate Africa’s
e-commerce landscape, the startup first had to create
one. And even then, as the world of business continues
to remind us, nothing can be taken for granted.
Restructuring of Rocket Internet business and Nigerian
currency devaluation contributed to a 56 percent
drop in revenue for Jumia in the first half of 2016.
It was against this developing backdrop of growth
and potential on the one hand and challenge and
turbulence on the other, that Juliet Anammah stepped
out of a 13-year career at Accenture and into the
CEO role at Jumia Nigeria in October 2015. Here, the
Nigerian national explains how Africa’s e-commerce
frontrunner is staying ahead, and what factors are both
helping and hindering the continent’s online ecosystem.
Emerging Markets Business (EMB): Jumia has
risen against a backdrop of rapidly growing
e-commerce in Africa. What is driving this growth?
Juliet Anammah (JA): Africa’s young and tech
savvy population has a lot to do with it, but the other
part of the equation is the fact that traditional retail
hasn’t grown as fast as it should. In the US, they have
one mall for every 389 people. In Africa you have one
mall per 60,000 inhabitants. So, there’s a gap in terms
of supply and demand, and a huge population that
is hungry for shopping opportunities. There are
a number of factors contributing to this gap.
For instance, access to land is a big issue, and even
then when you have access, ensuring that the land
has the building permits and all the available titles
to it is a challenge. This means it can take three to
five years, from the point where you identify the
location, to building the shopping mall.
These are the issues driving e-commerce in
Africa. Then you have places like Nigeria, where
you add one more factor, and that’s the smartphone
penetration rate. A couple of years ago, a smartphone
was going for roughly US$280. Today, a smartphone is
about US$100, which really makes them accessible
to a larger population of consumers.
EMERGING MARKETS BUSINESS
SUMMER 2017
ISSUE NO. 3
69
EMB: How would you describe Jumia’s business
model and what factors influence it?
JA: Our business model is shaped by the conditions
inside Nigeria. The country entered recession in recent
months. This has led to a continued spike in inflation
and thus a declining purchasing power for the entire
Nigerian population. The price of imported goods has
also tremendously increased. In response to this,
we have shifted from a retail to a marketplace model.
A pre-paid mindset doesn’t work in
countries like Nigeria, where people
don’t necessarily trust that their order
will be delivered.
While this move has decreased our net revenue
temporarily, it is a long term strategy for growth.
Specifically, it will allow us to eventually stir out
of the Nigerian recession unaffected for a number
of reasons. First, we are more lenient: we do not hold
stock as much, thus our needs in working capital have
lessened and we are less hit by depreciation. Second,
we rely on local sellers, which is the right model at
the moment to counter any FX crisis and devaluation
side effects. These factors mean we are positioned
for growth. When the time comes to scale drastically,
this business model will prove most successful as we
will be able to grow through our partners instead of
injecting a lot of investment in our working capital.
EMB: After a tough year, what else is shaping
Jumia Nigeria's growth strategy for 2017?
JA: Jumia has put in place two main initiatives to make
sure we provide long-term solutions to this problem.
The first is a Seller Center through which we focus on
working with local sellers. We now have more than
13,000 such sellers on Jumia Mall Nigeria. The second
initiative is Jumia Local, which we launched on
Independence Day in Nigeria, with the aim of promot-
ing products and brands that are assembled and
manufactured in Nigeria. Jumia Local represented
more than 40 percent of our sales during this last
In just
just five
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Here,
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Juliet
crucially,
Anammah,
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CEO
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Juliet
Anammah,
explains how CEO
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Jumia Nigeria,
is staying explains
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continent’s
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ecosystem.
the continent’s e-commerce ecosystem.
Black Friday (November 2016) confirming the appetite
of locally produced goods in Nigeria.
The reason that these initiatives help is that local
sellers are not as impacted by currency devaluation
or the FX scarcity, as all their costs are in Nairas.
This allows us to focus and develop the FMCG and
Fashion categories where you will find a majority of
local sellers. To give a few examples, Bonvita from
Cadbury, Nestle and Maggi all have factories in
Nigeria where they produce their products.
EMB: How do you stay competitive?
JA: In the end, it’s all about customer satisfaction.
There has to be a clear value proposition for the
consumer, because the fact is, it’s ultimately the
customer who decides whether to shop with Jumia
or at the open market. With that in mind, we focus our
efforts on making the buying experience as enjoyable
and as smooth as possible, while also raising aware-
ness of the benefits of shopping online. For us, that
means customer engagement, creative marketing
campaigns, promotions and events that draw in a lot
of traffic and create a buzz in the market. Take the
now-global festive discount shopping day, Black
Friday, for instance. By introducing great offers and
promotions, we broke three records across Africa
during the last Black Friday, with visits to the Jumia
site reaching 50 million, one million orders made
and 1.4 million products sold. Also, half a million
Jumia apps were downloaded in November.
Beyond promotions, the main point is this: we have
to demonstrate that Jumia provides convenience,
wider support and quality assurance. These are the
things that matter as far as brand survival and growth
are concerned, and focusing on these elements is how
we continue to lead the market.
EMB: It is well documented that Nigeria and Africa
more broadly face a number of infrastructural
challenges. Which are affecting your business
the most?
JA: One of the biggest issues for us is logistics.
When we started, not many international companies
were providing last mile logistics, even fewer were
reaching Nigeria’s remote areas and almost none
were configured to offer cash-on-delivery. »
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