Jumia: Amazon of Africa?

The Rise of African Ecommerce

This piece was originally published in my weekly newsletter Emergent.

Overview

2020 was an explosive year for ecommerce globally, with ecommerce businesses seeing their revenues soar, profits increase and valuations climb. One of the biggest beneficiaries of this trend was Jumia, which saw its valuation soar from lows of ~$2.50 in March of 2020 to highs of $65 recently.

Jumia is Africa’s leading ecommerce company connecting merchants and buyers together in 11 countries. Modeled after Amazon, customers of Jumia can buy a broad range of products on the site, everything from electronics to makeup. In addition, Jumia helps facilitate these transactions with a range of payment and fulfillment tools for its users and merchants. Today, Jumia is in the lead to become the “Amazon of Africa.” Will it squander its lead, or embrace it?

Jumia was founded by German technology holding company Rocket Internet with the goal of being the Amazon of Africa. To this day Jumia remains headquartered in Berlin, despite operating its business only in African markets. This has opened Jumia up to criticisms that it is a “neo-colonial” startup, built in Europe to take advantage of the growth of the African market.

Founded in 2012, Jumia has grown to tremendous scale in just 8 years:

• 110,000 sellers on the platform
• 6.8 million annual active customers
• Generating around $1 billion in gross merchandise value annually
• Market cap of ~$4 Billion

Jumia’s rapid growth has come despite how early ecommerce still is in Africa. Over time however, as ecommerce adoption rises in Africa, Jumia’s growth rate is likely to accelerate dramatically.

It’s no secret that Africa is the next frontier for the global economy:

• Africa’s population will nearly double from 1.3 billion today to 2.4 billion by 2050
• The continent has over 500m users with access to mobile internet coverage
• Its economy is set to grow 3–5% consistently over the next decades