Will Vinod Goel lift Jumia out of the loss-making zone?

Vinod Goel 

What you need to know:

  • Jumia has with no doubt changed the online shopping landscape in Africa. However, its failure to return a profit in the last three years continues to be a bother for investors 

Jumia’s new boss Vinod Goel will face two hard tasks - operating the company at a time when the economy is facing sluggish consumer spending and winning back consumer confidence to lift up the e-commerce’s financial position.  

Vinod, Jumia has indicated: “Will focus on making the e-commerce platform sharper and faster to delight more customers with their needs.”  

He assumes the new role at a time when three of Jumia’s senior executives have left in succession.   

On July 7, Jumia announced new changes following the exit of Ron Kawamara from Uganda, Jeremy Hodara and Sacha Poignonnec, who were serving as co-chief executive officers at Jumia Group. The three had risen through the ranks to assume senior roles. 

The exits, however, in which ever way you look at them, could be overlays of the company’s bottom-line, which has faltered for close to three years now, becoming a burden on the operations of Jumia and forced large investors such as MTN to exit their shareholding. 

In October 2020, MTN Group announced it had successfully exited Jumia, disposing of its final 18.9 percent stake in the New York Stock Exchange listed company. 

MTN had earlier said its decision to exit had been informed by the low return on investment and the need to concentrate on its core business.  

It is difficult to know performance of individual business units. However, at Group level, the picture is well painted.   

In its third quarter results, Jumia reported a reduced operating loss of $43.2m compared to $67.7m posted during the second quarter. 

This is an overlay in itself even as the company remains hopeful for better results as soon as next year. 

However, an email, Jumia said recent exits have no link to performance. 

For instance, Abdesslam Benzitouni, the Jumia Group head of communication, told Monitor that Kawamara had left for new challenges after leading the company for nine years. 

“He just left … for a new challenge that presented itself. It’s just part of the life of any company,” he said. 

Jumia’s has since appointed Francis Dufay as Group acting chief executive officer and elevated Antoine Maillet-Mezeray as Group executive vice president finance and operations.   

Jumia’s works on digital-based model to enhance online shopping and e-commerce in 11 African countries. 

However, the company has suffered setbacks in the last two years even when there has been heightened digital adaptability due to Covid-19. 

It would have been thought that the company would leverage on this growth, but it has not been the case. 

During the third quarter, Jumia reported a 3.5 percent decline in user numbers, dropping from 3.4 million in June to 3.1 million in September.   

In Uganda, Jumia has had its fair share of challenges, notwithstanding, the fact that it has built a powerful brand in a short period of time. 

For instance, in an interview with Monitor last year, Kawamara conceded that the business had suffered from a chokehold due to government taxes on internet. 

This still goes on but has been exacerbated by the general apprehensions of online shopping across Africa. 

However, even with such challenges, Jumia still bosses the online shopping space, enjoying a 35 percent market share of upcountry online shopping and 65 percent in the Kampala Metropolitan Area. 

But what has been more disturbing is complaints of substandard products and price manipulations, which have drained public confidence.     

Kenneth Legesi, an investment advisor, notes that Jumia’s business model has been changing typical of startups that experiment to provide a profitable model. 

However, Jumia remains positive about the future with focus put on using consumer growth trends, fast moving goods, grocery and food deliveries to grow its user numbers. 

This has been made clear in its new appointments with priority put on reducing operating losses and setting the business on a clear path to profitability through strong cost discipline and targeted monetisation. 

“We want to bring more focus to the core e-commerce business as part of a more simplified and efficient organisation with stronger fundamentals and a clearer path to profitability,” Jonathan Klein, the Jumia supervisory board chairman, said.   

The company has also indicated “it will allocate capital to core areas and projects with attractive returns on investments”, such as logistics-as-a-service offering, retaining it in Nigeria, Morocco and Ivory Coast where the infrastructure supports it.   

Jumia will also reduce staff costs by relocating senior leaders and decision centers in Africa.   

Whereas Vinod is just days into the job, he told Monitor he will build on the expansion plan that has been implemented over the years to reach more consumers outside Kampala. 

Who is Vinod 
Vinod joined Jumia 18 months ago as head of fulfilment, overseeing operations across all Jumia markets. 

Prior to this, he had worked in strategy, finance and supply chain with Lafarge in Europe, Asia and Africa. 

He has also worked as a software engineer in India and holds a Bachelor of Science degree in engineering and a double Masters in Business Admin from MDI Gurgaon, India and ESCP Europe in London.

Mobilising capital 

Data from Digest Africa indicates that Jumia raised $885m (Shs3.3 trillion) across six funding rounds between January 2012 and April 2019 before it listed on the New York Stock Exchange. 

One of the standout funding rounds was a $400m (Shs1.4 trillion) in March 2016 from Rocket Internet, MTN Group, Orange, Goldman Sachs, CDC Group and AXA Group.