Jumia's Dark Secret

Jumia has been losing money for so long that no one really cares anymore

Aug 13, 2021

Welcome to the 40 people who joined us this week!

Did I mention we hit our target of 1,000 subscribers? Two subscribers - the 1st and 1000th got our free merch. If you still want one of those beauties, all you need to do is tell your friends about us with your personal referral link that we have now jazzed up. The top three referrers will get shirts delivered to them, completely free!

If this email was forwarded to you or you haven’t already subscribed, c’mon now, do it for Sparta!

I saw some great conversations this week on one of my favorite topics: working at startups. Like I’ve said before, I have enjoyed working at startups, but I don’t think they should be exempt from scrutiny and the difficult questions we ask bigger companies. That happened this week, as startup founders and software developers got into a squabble. This was the question at the heart of the ruckus….

To disclose or not to disclose?

“This trend of Nigerians in technology leveraging remote work friendly policies to work multiple jobs especially without disclosure is very sad. It is killing our reputation and stunting the growth of talent. You get what you put into your work.” - Iyin Aboyeji

Iyin Aboyeji’s tweet on Wednesday set off a polarising conversation between software developers/designers and the founders/CEOs who employ them. On one side of the argument are the founders who say that when they hire you, they expect you to disclose if you take on other jobs. But let’s face it, which of us really tells our employers all of the side hustles we take to supplement our small salaries? Don’t squeeze your face yet, side jobs/gigs/hustles are not the bone of contention.

The core of the matter: Several experienced developers say they work anywhere between 2-4 jobs.

The patron Saint of Nigerian devs

One senior developer told me, “you see really good developers holding 3 steady jobs, and they can do it because they already know what the companies want. But even at that, things will suffer, especially relationships.” Another senior developer shared the same sentiments. “I currently have two jobs and at some point I also had side gigs; it was hell. There are a lot of sleepless nights.”

It sounds like the recipe for burnout, delivering shoddy work and not living up to the demands of the job. Developers I spoke to say they have seen this happen; yet, they continue to put their bodies and brains on the line because it comes down to money for them.

How salaries are driving decisions: According to one dev, “In Nigeria, senior developers earn anywhere from 400,000 to 1 million Naira and here, many companies don’t give you stock options, so everybody is looking for remote jobs with foreign companies that pay between $3,000 - $8,000.

Without stock options or openness about a company’s financial position, devs who earn “competitive salaries” may assume that fundraises should mean pay bumps.

The common theme that emerged as I spoke to more developers was the feeling that they were underpaid relative to their skill level, and taking multiple jobs is the only way to get the money to add up. But a couple of company Nigerian CEO’s are speaking up because they say employers are taking advantage of remote work to hold full-time jobs at multiple companies — developers have a different view. “If employers want us to come to work in the office, they are the ones who will suffer. You will have employees that stay for one month then leave because a remote gig that pays $2k is better than the 400k Nigerian companies who want you to work in-office pay.”

The retort from startup founders and CEOs is that they want employees who share their passion and single-minded dedication to the company. But the employees say they’re not paid enough to give their lives for these startups — it’s a conversation where right or wrong depends on who’s doing the telling.

Beyond all of this, this was hands down the weirdest take from all these conversations: “I have maintained remote sucks for a lot in these parts because Nigerians generally don't have great work ethics any way. Then you throw in the independence they can't handle and now, they are superhuman that can keep multiple jobs.” - Sola Akindolu, CEO, Brass.

That’s enough talk about startups for one day, let’s talk about the “Amazon of Africa”…

Jumia’s dark stores

The e-commerce company, Jumia, has been losing money for so long that no one really cares anymore. Gone are the days when you could get some easy 30k website pageviews with the headline, "Jumia loses x and y millions in 2018" — those were the days.

There have been threads, op-eds and analyses predicting Jumia's death, but like it or not, the e-commerce company will be around for a long time. That’s mostly because it has more than $500 million in cash, so it can survive another ten years without making profits.

For the second quarter of 2021, Jumia’s numbers show $40.2 million in revenues and losses of $51.6 million. I'm not going to dwell on those figures because TechCrunch, Techpoint and TechCabal have pretty much covered the money side of things. But some of the more exciting stuff about Jumia's reports are not really in the numbers, so let’s dive right in.

A change of focus: In Jumia's early years, they were big on advertising phones, laptops and other tech stuff. They were especially focused on selling smartphones and even got into a price war over said phones with their rivals, Konga. In the end, that rivalry had only one winner, Transsion — you know them as the people who make Tecno, Infinix and itel. Seeing as the “let us sell Trassion phones at massive discounts” strategy didn’t translate into the market dominance Jumia was hoping for, it was time for a change.

The new strategy is a focus on selling everyday items — groceries, household items...the cheap(er) stuff. That’s why, for the last two years, the total value of goods it sells (finance people call it GMV) has reduced.

“I would like to remind you how much the business has changed over the last years... First, our marketplace has never been more diverse and relevant for our consumers. The share of GMV from everyday product categories is now 63%. It was 41% two years ago.” - Sacha Poignonnec, Co-CEO, Jumia

Interestingly, Jumia is getting millions of people to buy groceries and other things you can buy from the supermarket in your area, online. Jumia wants to give your local supermarket — which likely doesn't deliver if you live in Lagos — a run for their money by making grocery deliveries quicker.

“We are also piloting the use of dark stores or micro fulfilment centres located in high population density areas to fulfil grocery orders. This is a strategic category for us because it drives user engagement and stickiness.” - Jeremy Hodara, Co-CEO, Jumia (Yep, they’ve got two CEOs).

Dark stores are like your regular supermarkets, but only for online deliveries — customers don't come in. Basically like Spar or Ebeno, but in a super-cheap, warehouse-ish location where delivery people just go in, pick up your orders and deliver them to you. Dark stores are often in areas where e-commerce companies already have strong demand, so it makes deliveries cheaper and faster.

Think about how often people complain about Jumia Food's delivery time. One way dark stores can solve that is if Jumia’s restaurant partners (Chicken republic, The Place, etc) all have spaces in the dark store. Those restaurants would make food only for online deliveries and the delivery people don’t have to contend with the crowds that regular physical outlets have. If those dark stores only served specific areas, Victoria Island, for instance, it could see delivery times cut down drastically. Wouldn’t you order groceries online if you knew it would be delivered in 30 minutes or less?

TL;DR: It’s too early to call, but if Jumia pulls it off with its dark stores, it could be a game-changer.

It would also mean that I don’t have to worry about market runs on weekends, and this is especially important as the Premier League returns today. Before I get carried away, here’s some of the stuff I read this week, they’re all pretty dope.

What I’m reading

This fascinating article on bitcoin mining, its insane power requirements and why China’s crypto cowboys are fleeing to Texas.

While barely a third of African internet users have access to 4G networks, there is already a US vs China fight over 5G in Africa.

Few things are better than a Collaborative Fund blogpost; this one is about three times history hung by a thread.

Here’s Ben Thompson on something that has generated a lot of headlines in the past week: Apple’s Mistake

SHARE NOTADEEPDIVE

Enjoying the newsletter? Share it with your network to win some super cool merch.

Click to Share

Don’t go! You know I can’t send you on your way without talking about what I’m doing this Friday. I had enough overpriced beer to last a lifetime last weekend, so I’m taking it slow this weekend, and sticking with those around the area bars where you don’t have to ask before your super cold Tiger beer lands in front of you. Lord bless these conscientious waiters.

Don’t forget to let me know what you think of today’s newsletter: what worked, what didn’t, and what came across as a little meh? Can you also guess how many words made up today’s newsletter? Try not to copy and paste to find the answer with a word counter - I’ll randomly give one person whose guess comes close a t-shirt.

Notadeepdive

Discussion about this post