Jumia's Path to Profitability
The case opens in September 2019 as Sacha Poignonnec and Jeremy Hodara, co-founders and co-CEOs of Jumia, the leading Pan-African e-commerce platform, are contemplating the company's path to profitability in the aftermath of a fragile investor sentiment, as the company announced two internal issues in August 2019. The case chronicles the founding and expansion of Jumia and the iterations of its business model and describes its competitive outlook. The case then provides a detailed overview of how Jumia built its three pillars-its marketplace, logistics, and payments arms-and how the co-founders decided on the company's strategic, customer, and product scopes over the seven years in which Jumia spread across 14 countries in Africa since its founding in 2012. The case also provides an overview of Jumia's vertical scope, its technology, marketing, and payments systems, and how the company's localization strategy brings complexities to its business model, as Jumia tries to adopt its approach, website, products, and services to each country to increase profitability. While there is for the most part no single competitor that serves the same geography as Jumia does, Jumia strives to educate the African market about shopping online and overcome various infrastructure problems in the continent to improve its margins and become profitable. While its second quarter 2019 financials show continued GMV and customer growth, the co-founders need to convince investors of the company's path to profitability and answer questions such as: Is Jumia's existing product-service mix and geographical coverage the best use of the company's financial and managerial resources, or does the company need to make some eliminations? Can Jumia's expansive approach be sustainable as the geography becomes more developed and the inevitable specialized players come in?
- 2021 HBS
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