Why Jumia Is Beating Amazon And Alibaba In Africa

It has been nicknamed the "Amazon of Africa." It is Africa's largest e-commerce operator, surpassing Amazon and China's Alibaba, and is the first African tech startup to list on the New York Stock Exchange. Investors had high hopes for Jumia when it went public on April 12, 2019. The stock soared at first, but then quickly plummeted following criticism. This is a fraud that is being carried out in the US market. People also began to question Jumia's Africans, due to the company's largely European leadership and shareholders. We are a completely African company. Now, Jumia is adjusting to its international status and figuring out what that status means for the African continent.

There is an African ecosystem that has developed from the creation of this thing. Jumia was founded in 2012 by Sacha Poignonnec and Jeremy Hodara, both former employees of American global management consulting firm McKinsey and Company. Jumia offers customers the ability to purchase products online such as phones and shoes, as well as groceries, flights, food delivery and offers bill payment and mobile data recharge. The company sought to create an online shopping experience, among other digital products, that could work well with Africa's sometimes inefficient infrastructure. If I said, "You know what, at 42nd Street and Third Avenue, I'll be on the corner waiting," you'd know exactly where we'd meet.

You can't do that in Africa. The streets are not so marked. You don't know geography, especially when you think outside of big cities. In other cases, Jamia cites users' lack of online shopping experience. When we ask people who have never used online shopping yet, the number one reason that comes up is, “I don't know how to shop online.” That's why it was so important to make sure Jamila spoke to its specific user base and wasn't just a cut-and-paste copy of Amazon or Alibaba. Alibaba served 4.2 million African customers through its AliExpress service since entering the continent. Jumia served 4.3 million users and 81,000 active sellers in the 14 countries it serves since its inception.

Let's take something that works in the West, throw it in Africa and see if it works. If it works, we will give you money. If it doesn't work, we'll kill him very quickly. To me, that strategy was fundamentally flawed anyway, because I believe that anything that emerges from an ecosystem should solve a problem that is consistent with it. Amazon is technically available in 11 countries on the African continent. But neither Amazon nor Alibaba have the benefit of starting and focusing entirely on African countries. Jumia, for example, offers unique features like cash on delivery, and that piqued the interest of American investors.

Everyone has been searching for an African unicorn. We've all been looking for, you know, I've been in this, in the angel business for about a decade, and we're all looking for that, you know, something that validates the African experience. When Jumia went public on the New York Stock Exchange, it was very promising. Its share prices rose 75.6 percent on its first day and maintained a market capitalization of $3.9 billion. And although at the time it was about $1 billion in losses, potential shareholders were forgiving. The United States was excited to have the opportunity to buy the first African tech startup on the New York Stock Exchange.

Suddenly someone comes and says, "Guess what, guys, we've conquered Africa. You know, we're making a lot of money. This is it." You know, everyone got excited because we all want Africa to win. Everyone wants Africa on the table. But the attention Juma was receiving in the United States exposed some of his problems. At Citron we have no doubt that this report we have issued and the supporting documentation will soon be used as evidence by the FTC in a case against Jumia. In May 2019, Jumia came under fire from Citron Research, a stock commentary website run by short-seller Andrew that left for what Citron claimed was securities fraud and discrepancies in its reported key financial metrics.

What we learned about Julia is best summed up in an email sent to us by a former executive. And what does he tell us? That Jumia clearly lies about every number reported. The report released by Citron caused Jumia shares to drop more than 40 percent in two days, and Citron is not the only entity that surprises Jumia. To be honest with you, there are quite a few, and I've met a few myself, of disgruntled Jumia employees floating around out there. You know, if you look at some of the reports, there is some credibility, but I think it's overrated.

That's just a personal opinion. But there is no smoke without fire. Jumia is guilty of some of those things. That's my personal opinion. Jumia Nigeria CEO Juliet Anammah responded on CNBC Africa to the allegations. These are facts taken, cherry-picked, biased, and in some cases, unverified with a clear, you know, possibly intent to harm the brand and profit from it. Citigroup, one of the leaders of the Jumia IPO, published a report debunking most of Citron's allegations, but noting that "Jumia could do more to disclose some aspects of its operations as a matter of transparency and best practices." But it wasn't just this scathing report that hurt Jumia.

Shortly after it was made public. The hashtag Jamia is not African gained popularity. Commenting on the company's largely European involvement. Jumia is a German company. Well? Therefore, it pays its taxes in Germany, where the founders and most of the shareholders are based, except for MTN. Their CEOs, which is irrelevant to the plot, are actually of French origin. Their development team, after all, is a technology company, their development team is actually in Portugal, which is in Europe. Its headquarters are in Dubai. But Jumia CEO Sacha Poignonnec says Jumia is one. completely African company. We operate exclusively in Africa.

We have more than 5,000 employees in Africa. And as you point out... But those are the warehouses, not the engineers. The reality is that in Africa there is not enough development and developers, for example, and we know it and we need to address it collectively, startups, venture capitalists and everyone, because everything should be in Africa. This is what we want and it shouldn't be like this one day. We need to work on that. It's not going to happen overnight, but it's something we definitely have to do. But Jumia's African character is not so critical for some. Despite the company's offshore management, Jumia has fueled a wave of new companies created by former Jumia employees.

It has grown Africans to the point that we are now creating companies thanks to that experience. And that can only be good. Now we have our Jumia mafia, just like you have the PayPal mafia. And that's what I look at, what he's created. Jumia has certainly made a splash on the New York Stock Exchange, but the biggest impact has been on the African continent. I think the focus and emphasis has been too much on Jumia as an IPO and all that. There is an African ecosystem that has developed from the creation of this thing.