Jumia Streamlines Operations: Unifying 3 Warehouses into Massive 30,000sqm Hub in Lagos

E-commerce giant Jumia Technologies AG is embarking on a consolidation initiative in Nigeria by merging its three warehouses into a single depot spanning 30,000 square meters in Lagos.

CEO Francis Dufay revealed in an interview with Bloomberg that this move is a crucial step towards cost reduction, a key element in Jumia’s pursuit of profitability.

Despite challenges in Nigeria’s macroeconomic environment, including currency fluctuations and rising living costs, Jumia remains optimistic about the country’s prospects, viewing current challenges as temporary and anticipating a positive turnaround in the medium term. With Nigeria’s vast population exceeding 200 million, Jumia sees potential for profitability, aiming to capitalize on the country’s scale.

Dufay outlined plans to expand Jumia’s market presence in Nigeria by extending services to additional cities across the West African nation. However, the company’s financials indicate ongoing challenges to profitability. In the first quarter of the year, Jumia reported an operating loss of $8.33 million alongside a modest revenue increase of 5.7% to $48.9 million. This performance reflects a stark reality, with Jumia shares declining by approximately 90% from their peak during the pandemic-induced surge in e-commerce.

Dufay emphasized the importance of scaling operations to cater to price-sensitive consumers, acknowledging the need for competitive pricing across all aspects of service provision. Despite Nigeria’s economic downturn, Jumia remains committed, buoyed by expectations of economic recovery driven by governmental initiatives.

To enhance customer accessibility, Jumia has introduced a buy-now-pay-later financing option while remaining responsive in pricing strategies. As Jumia reaffirms its commitment to Nigeria amidst economic challenges, the company’s strategic decisions reflect a balance between risk and opportunity, underscoring its determination to achieve sustained profitability in Africa’s largest economy.