Jumia is a company which operates a range of online marketplaces. The company was founded by Jeremy Hodara and Sacha Poignonnec in 2012 and initially started out as the Rocket Internet Company. With a strong and established presence in Africa, it is often called « Africa’s Amazon ». But Jumia is far from simply being Amazon’s copycat.
Being a Jumia seller
There are several ways to sell on Jumia.The first is through dropshipping. « Drop shipping » is, for Jumia, selling a product that the site does not have in stock. The seller, who manages his showcase online via the dedicated platform, prepares the package himself as soon as the order is placed. He then takes it to one of Jumia’s delivery hubs. Jumia takes over to ensure delivery via its own fleet, AIG Express, or via Al Amana. 40% of Jumia’s business is based on this practice. 20% are based on the “cross docking” method: the seller sends the ordered product “naked” (unlabeled, unpackaged) to Jumia, which takes care of the preparation of the package and delivery. Finally, the remaining 40% of Jumia’s orders relate to products stored upstream of the sale.
The delivery is managed by Jumia employees or external partners.In addition to these channels, Jumia has a very special channel, the J Force. Jumia ambassadors, these sales consultants earn commission on the products they sell. Some therefore specialize, for example in hard-to-reach areas.
One big advantage sellers have in comparison to Amazon is that there is no entry ticket : no fee per month, they only pay if they sell (through commissioning) which is risk-free. This notion of risk-free is a strong element in all aspects of the platform (for customers as well, when they pay only after delivery).
Once they agree to sell on Jumia, the sellers are enrolled in a one-month tailored program, the « incubation » to help them become completely autonomous and optimize their sales. This program is organized by the Jumia University. Training sessions also take place in one of the 5 hubs. How does this one month look like?Jumia really takes care of its sellers and segment this incubation phase into several steps. This branching method takes into account the specificities of the seller and the results he manages to reach during this period of time.The day after the enrollment, each seller has a phone meeting with a Jumia university representative, to understand the basics of Jumia and the whole incubation process. A week after this first call, depending on if the seller managed to sell its first product or not, the pathways are different and more personalized. At the end, each seller is 100% ready and has the assets to thrive on the platform. Although there is a competition between sellers due to the nature of the platform, the community of vendors is strongly animated by the Moroccan team and they even share best practices and advice.
After this incubation phase, and a quiz to validate this step, an extensive coaching and support to drive seller businesses is provided.
Once the training is over, sellers are not managed by the head of incubation but by the head of commercial planning.A tiering is made depending on the revenue generated by the vendor and sellers usually go up in the tiering, from long tail, to mid tail and finally to key accounts.
Jumia offers a wide range of services to develop the online store and sell strategically:
– Seller Coach: free service that gives sellers personalized recommendations on stocks, prices, content … Each seller has their own « seller score » and a view of their KPIs, missed business, etc.
– Market Insights: weekly or monthly lists of the best-selling or most sought-after products by category
– Jumia Ads: the sponsorship service to make its products visible on the site
– Jumia Express: the possibility of storing the products in the Jumia Casablanca depot, where Jumia takes care of the packaging and delivery
Jumia’s current challenges on the seller side are as follows:- improve the notoriety of the company, paradoxically still poorly understood- improve credibility: create commitment with sellers with, for example, particular attention to the sales objective within 7 days.
Strategy and Future
It’s interesting to note that Jumia’s business evolved during the first year as it entered the African market. After one year of being a retailer in Morocco, the company started progressively to develop its platform business model.
Jumia went public on the NYSE a year ago. The first challenge (proving the existence of a market) was convincing, and the company has now moved on to the second challenge (e-commerce profitability in Africa).
The success of the company is based in particular on a deep knowledge and adaptation to the African market.
An important cultural element is the fact that most Moroccans only use their credit cart for cash withdrawal and pay by cash. Jumia took this into account and currently most of orders are paid through cash on delivery. How can this evolve? The company is already planning ahead, and alternative solutions, including some partnerships are already in the pipeline.
Another important element is to understand why customers go and buy online. In Morocco, for the main e-commerce platform, people are looking for the best deal. It is not the case for example for Jumia Food, where availability and rapidity of delivery is key. And this segment helps to generate a first test of the platform, with the aim of gaining loyalty and gaining margin elsewhere, in the other segments.
Jumia is certainly going fast, and it will be interesting to see how it pursues its development, alongside the global digitalization process happening in Morocco – and Africa more broadly.
This article is the fruit of my own analysis following a discussion with Mehdi El Amine and Zakaria ElMahfoudi from Jumia Morocco, whom I thank. I am ultimately accountable for this article’s content.