Red alert in Africas ecommerce powerhub - Jumia allegedly nearing collapse

This has raised concerns as to whether the end is near for the online retailer and what this could mean for the regional ecommerce business, venturesafrica.com reports. The major investor in Jumia, Rocket internet, has a reputation for downsizing. In a similar event, Rocket Internet closed some of its offices in Turkey in 2012, firing 400 workers in the process.

Moreover, Kaymu retailer (another Rocket Internet portfolio company) closed its Zambia office. Citing “macroeconomic reasons,” the online shopping platform shut down its operations in Zambia at the beginning of October, 2015. Despite a USD 200 million funding round and a 900% sales growth in its Kenyan unit it 2014, Jumia is yet to turn profit since it began operations in Nigeria in 2012.

With a presence in 13 countries and 3000 employees across Africa, Jumia was favored as it shook the ecommerce industry in Sub-Saharan Africa by offering variety and favorable pricing. An attempt to adapt to the customers preferred shopping practices and payment platforms helped project the Jumia brmade aand in the right light and eventually increased its value in countries like Kenya. In 2013, Jumia expanded in the Kenyan market for immediate penetration.

However, reports indicate that physical retailers tend to be more efficient, especially in relation to customers in emerging countries. A customer who chose to speak under the condition of anonymity, revealed that Jumia delivered fake iPhone headphones, stating that he would would have been able to spot the difference if he made this purchase at a physical store, the source cites.

As opposed to waiting for day(s) to receive your order, ‘brick and mortar’ shops are more convenient. And, in many ways customer react better if they see the faces with an opportunity to scan through products physically with help of an effective offline presence.

Although ecommerce is at the rudimentary stage in Nigeria, it has had an overwhelming impact on business transactions in the country. The fast growing ecommerce industry, with an estimated 25% annual growth, could stimulate the growth of a non-oil economy adding to diversification in the medium to long term, analysts have said, the source cites. This will come to play because small and medium enterprises (SMEs) are using the ICT driven industry to promote “made in Africa” products and marketable ideas.