Jumia Technologies AG (NYSE: JMIA) (“Jumia” or the Company)
today issued the following letter to shareholders.
The text of the letter follows:
April 17, 2020
Dear shareholders,
As the global COVID-19 pandemic continues to spread in Africa,
we wanted to update you on this topic as it relates to our
business. We are observing the first direct impact of this pandemic
on our ecosystem and wanted to share with you our thoughts on the
situation. This crisis has demonstrated we have a crucial role to
play in providing essential goods to our consumers which we believe
will help accelerate the long-term shift towards e-commerce.
This letter is not meant to provide quantitative impact
information. Instead, we aim to give an Africa-specific view of the
trends impacting, positively or negatively, e-commerce and our
broader ecosystem. In this letter, we would like to cover the
following:
- What we are doing to keep our teams, consumers and communities
safe
- The trends in our business so far
- Risk mitigation strategies we have implemented to enhance
business resilience
- Thoughts on outlook and financial strategy
What we are doing to keep our teams, consumers and
communities safe
The health and safety of our teams, consumers and communities is
our top priority and we took prompt action to adjust our operations
to these exceptional circumstances:
- With offices across Africa and a number of remote workers, we
have existing tools and processes to facilitate work from home
which we quickly extended to our office staff, such that they were
able to seamlessly transition to a work from home arrangement.
- We also took actions to operate our logistics infrastructure
in accordance with the highest standards of safety and hygiene and
to protect our employees who continue work outside of their homes.
Measures put in place include checking employees’ body
temperatures, sanitizing facilities and requiring our employees to
wear masks and gloves and to use sanitizers while handling and
delivering orders. All members of our warehouse staff and our
delivery partners have been trained on the best practices of
personal hygiene and social distancing per WHO guidelines.
- We are facilitating social distancing by implementing
“contactless safe delivery”. This has been in part enabled by
JumiaPay, which allows consumers to prepay for their orders online
and have them delivered without the need for cash exchange or
physical contact with the delivery agent.
We are incredibly grateful to our colleagues and delivery
partners working on the front lines, carrying out essential duties
in our warehouses and delivery hubs during the crisis. As such, we
have established a solidarity fund for our #JumiaHeroes funded by
voluntary and confidential staff contributions.
Commitment to community
Our mission of facilitating consumers’ access to goods and
services, helping sellers reach consumers in a seamless way while
making a positive impact on the African continent has never been
more relevant. In these difficult times, we have a crucial role to
play helping the consumers and communities we serve stay safe and,
as much as possible, functioning through the crisis. We have
undertaken a number of initiatives to that effect:
- Stay safe campaign: Increased access to affordable basic foods
and sanitary essentials through partnerships with several brands,
including Reckitt Benckiser in several countries. As part of this
partnership, Reckitt Benckiser is financing free shipping across
these countries for the relevant products, while Jumia is waiving
its commission on such products.
- Focus on fighting price gouging to maintain fair prices on our
platform. As part of this effort, we closely monitor pricing on a
number of essential products and remove unfairly priced listings
that we identify.
- Donations of half a million of CE certified face masks to
health ministries across Africa for use by health workers,
leveraging our cross-border platform from China.
- Free meal delivery to first responders & health workers in
Morocco and Tunisia through our Jumia Food platform.
- Enhanced visibility on our platforms of key health
instructions to help amplify the reach of much needed
information.
Business trends
At this stage, while we believe it is still early to draw
definitive conclusions on business impact, there are nonetheless a
number of trends worth highlighting. Most of these trends emerged
in the second half of March 2020 and hence will not be fully
reflected in our first quarter 2020 results. That said, we expect
them to continue playing out over at least the second quarter of
2020.
Supply chain challenges
- As indicated in our fourth quarter 2019 earnings release, the
early signs of the COVID-19 disruption were felt in our
cross-border operations as a result of manufacturing facility
shutdowns in China. Supply chain disruption in China also impacted
our local sellers, many of whom source their goods from China. We
have also encountered cross-border logistics challenges due to
country lockdowns impacting cargo operations.
Confinement measures in our
markets
- With the spread of the virus in Africa, many governments have
implemented some form of confinement measures which have been
affecting our operations to varying degrees. For example, our food
delivery business has been affected by the shutdown of kitchen
restaurants as well as the evening curfews. Confinement measures
have led to a brief closure of a few hours of our warehouse in
Lagos and are also weighing on our sellers’ ability to bring their
packages to our drop off stations. In South Africa, deliveries of
fashion items as part of our Zando platform have been suspended and
will resume at the end of the confinement.
- We took a number of actions to mitigate the impact of these
dynamics and ensure business continuity. In every country where we
are present, we have worked hand in hand with local authorities to
ensure we are able to continue operating in the context of
stay-at-home orders. In South Africa, we launched our Jumia
platform with an assortment of essential products that can be
delivered despite the lockdown, leveraging the Zando logistics
infrastructure. A number of Fast Moving Consumer Goods (“FMCG”)
brands have joined forces with Jumia as part of this initiative,
including Reckitt Benckiser and Procter & Gamble. Where our
Jumia Food operations have been impacted by restaurant closures, we
have ramped up our efforts to offer on-demand grocery services by
onboarding offline grocery stores on our platform.
Accelerated e-commerce and payment
adoption opportunity
- Notwithstanding supply challenges, we are seeing increased
demand from sellers to join the Jumia platform. As traditional
offline distribution channels are affected by confinement measures,
a number of sellers seek new routes to market and turn to Jumia to
reach consumers online.
- On the demand front, we are seeing encouraging consumption
shifts towards e-commerce. We have experienced over the past couple
of weeks a surge of usage and demand, notably in the FMCG category.
While this helps accelerate e-commerce adoption, it also validates
the business mix rebalancing initiated in 2019 in order to drive
growth of every-day product categories.
- Finally, JumiaPay is playing an instrumental role in
increasing the safety of our deliveries by suppressing the need for
the exchange of cash at delivery. We are driving both prepayment
penetration via JumiaPay as well as rolling out contactless payment
on delivery on JumiaPay.
- We view these dynamics as a unique opportunity to accelerate
the shift towards e-commerce and drive payment adoption in our
countries.
Outlook and financial strategy
The COVID-19 pandemic is taking a toll on economies across the
world and we believe that this toll will be severe on African
economies. We are bracing for challenging economic times ahead. The
Nigerian Naira already suffered a devaluation in March. Having
operated in Africa for over 8 years, we are used to navigating
periods of currency fluctuations. Our pan-African footprint
diversifies our FX exposure, while a large part of our costs being
denominated in local currency provides us with a natural partial
hedge.
We are making contingency plans and are more than ever focused
on cost discipline and expense reductions across our business,
while being mindful of not hurting the growth engine. As indicated
in previous communications, we remain committed to reducing our
Adjusted EBITDA loss in absolute terms in 2020 compared to 2019,
while driving consumer adoption and usage.
We had already initiated last year a number of cost saving
measures. We are now raising the bar even higher for Sales &
Advertising expense efficiency as well as focusing on further
G&A and staff cost reductions. In fact, both of us are taking a
25% pay cut for the extent of the crisis to further support cost
savings.
Historically, during challenging economic times, we have seen
consumers turn to Jumia, as we provide price transparency and drive
competition among sellers while fighting price gouging to offer
consumers the best possible prices. We believe that these factors,
combined with extended periods of confinement, position us very
strongly to meet consumers’ needs and drive consumer adoption and
usage.
We look forward to sharing more color with you on business
trends and outlook as part of our first quarter 2020 results
release, scheduled for May 13th, 2020.
We believe that great companies are shaped in times of duress.
Jumia has a crucial role to play to support and serve our
employees, consumers, sellers and communities. These are great
times of solidarity and decisive action at Jumia, guided by our
mission and values. We are working every day to ensure that Jumia
will emerge from this stronger, both as a team and as a company.
And we are walking the talk: as disclosed in our 20-F, each of us
has purchased 50,000 Jumia ADSs in March 2020 from our own
funds.
The road ahead of us is rocky but full of opportunities. We are
ready for this and, more than ever, believe in the relevance of
Jumia.
Jeremy and Sacha Co-Founders and co-CEOs
Forward Looking Statements
This letter includes forward-looking statements. All statements
other than statements of historical facts contained in this letter,
including statements regarding our future results of operations and
financial position, industry dynamics, business strategy and plans
and our objectives for future operations, are forward-looking
statements. These statements represent our opinions, expectations,
beliefs, intentions, estimates or strategies regarding the future,
which may not be realized. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,”
“targets,” “projects,” “believes,” “estimates”, “potential” or
“continue” or the negative of these terms or other similar
expressions that are intended to identify forward-looking
statements. Forward-looking statements are based largely on our
current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy, short term and
long-term business operations and objectives, and financial needs.
These forward-looking statements involve known and unknown risks,
uncertainties, changes in circumstances that are difficult to
predict and other important factors that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statement. Moreover, new risks
emerge from time to time. It is not possible for our management to
predict all risks, nor can we assess the impact of all factors on
our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements we may make. In light
of these risks, uncertainties and assumptions, the forward-looking
events and circumstances discussed in this letter may not occur and
actual results could differ materially and adversely from those
anticipated or implied in the forward-looking statements. We
caution you therefore against relying on these forward-looking
statements, and we qualify all of our forward-looking statements by
these cautionary statements. The forward-looking statements
included in this letter are made only as of the date hereof.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee that
the future results, levels of activity, performance or events and
circumstances reflected in the forward-looking statements will be
achieved or occur. Moreover, neither we nor our advisors nor any
other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. Neither we nor our
advisors undertake any obligation to update any forward-looking
statements for any reason after the date of this letter to conform
these statements to actual results or to changes in our
expectations, except as may be required by law. You should read
this letter with the understanding that our actual future results,
levels of activity, performance and events and circumstances may be
materially different from what we expect.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200417005249/en/
Safae Damir Head of Investor Relations
investor-relations@jumia.com https://investor.jumia.com/
Jumia Technologies (NYSE:JMIA)
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