Jumia's Potential and Investors Review

Jumia is an e-commerce company with a wide range of different products. The sales market, on which the focus is currently, is the African continent. 

However I do firmly believe that in the future all big e-commerce player (like Amazon, Alibaba and MercadoLibre) will be present on almost all continents. While in the beginning there are pioneers, later they cross invest to safe their share in the global market.

We will rather speak of an American-based, an African-based, an Asian-based and an Latinamerica-based e-commerce company which operates on a global market. So let’s do a quick analysis of the potential of the e-commerce in the US, the European Union (EU-27), Asia and the African continent (without MYT, REU, ESH, SSD, LBY, ERI, SOM due to lack of data).

It is important to line out that e-commerce is a business idea that is already confirmed to work sucessfully in a wide range of countries over a variety of product categories. The cost advantages of e-commerce are and continue to be a fact.

Table of Contents

Environmental Analysis

Data are taking mostly from World Bank (2023) but also from the Penn World Tables (2023).

GDP Projection

Internet Usage Projection​

Ecommerce Potential Projection

Population Projection

Assumptions about Jumia

Jumia growth (real) 25% per year with a coefficient of variation of 15% adjusted to the current inflation. The growth is limited to the maximal e-commerce potential of Africa. Particularly it is assumed that Jumia gets max 20% of the possible e-commerce share of the continent.

The total costs are a multiple of the revenue and surpass them first (1.8, 1.6, 1.4 , 1.2, 1.0) while later there is a positive margin of 5% before taxes (0.95, 0.095…).

The tax rate is assumped to by 30%.

Loss carryforward has to be eliminated before any profit can be distributed. However losses (deferred tax assets) don’t lower taxes. That’s because each African country has different rules about how long they affect taxation and I’m conservative here.

In my calculation the cash position can go negative, but in real life they will have to raise capital. But it’s good to see how much we should await.

Task and Competitive Environment

An analysis of stakeholders can be done in the form of a table:


Stakeholder Goverment society Costumer Seller Employee
goals technology -> GDP growth -> welfare efficient supply efficient distribution system
power subsidies & infrastructure by buying power by supply
legitimacy yes yes yes
urgency yes ? ?
risk lower market efficiency -> less GDP growth higher prices less products losing market share and margin

For an industry structure analyses one can remember Porter’s (1997) five forces (threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes, competitive rivalry).

The thread of new entrants can be an advancement of another gobal e-commerce player into the African market like Amazon or Alibaba. If we look at Egypt for example we see that Amazon got into the market by acquiering Souq, an former Middle Eastern e-commerce company. For this reason one can use Google Trends for checking the market power, which favors Amazon. However I do firmly believe that in e-commerce there will not be an monopoly because the market entry barriers are relativly low.

The bargaining power of buyers is assumed to be low, for the company faces a mass market. The same is true for the bargaining power of suppliers. Jumia operates on a mass-market. However it does depend on the sellers on it’s platform and cannot rise fees too high.

E-commerce itself can be seen as substitute for traditional offline retailer and is in fact a threat of substitutes to other.

Competitive rivalry with other e-commerce companies is on the way. However the African market is not yet exhausted and the fine tuning for gaining market shares from the concurrence does not seem to be the biggest issue for now. Here on should rather think of cross investing into other markets like the US or Europe.


Conducting an industry-internal analysis in the undeveloped African market is too early. Normally one would do an earning power difference analysis and an analysis of the potential of strategic groups. 

Nevertheless one can profit from analysing the potential of strategic groups, which can easily be done by looking into Amazons MercadoLibres and Alibabas annual reports. Important product groups for the beginning are electronics, fashion and homewares, while groceries and furniture are a lot more difficult to sell online. The cloud business and apps for payment are in my opinion to be excluded for analysing an e-commerce business. It’s more a conglomerate.

For an earning power difference analysis one can research the race between Flipkart and Amazon in India. Again it’s worth looking into the annual reports.

Lets do a short competitive analysis in form of a table:


Competitor Amazon Alibaba
goals Amazon aims to be present on all the "earth". Alibaba aims to be present "everywhere".
present strategy Secure market share in developed countries first and then going to less developed countries (sprinkler strategy). Strong focus on revolutionising traditional shopping by using technology. Being strong in the home market in e-commerce and various digital services. However according to it's 2023 report they focus now also on Southeast Asia and Europe.
presumptions (oneself, industry) Amazon has a "the winner takes it all" attitude and sees the potential that e-commerce and cloud computing still has. (Here I only focus on e-commerce.) Alibaba sees the potential of the industry and
competences (strengths, weaknesses) Wildly diversifed market with a huge market share. However they may face regulations which can hinder it's growth. Strong and diversified in the home market. Facing some prejudices in the international market because of politics.
reaction profile Amazon systematically trickels down to less developed markets and might enter also more African markets. Alibaba will focus on developed markets for the years to come and is not really a threat to Jumia. However maybe they will overtake them.

Business Analysis

We will do a short analysis according to the vrio approach of (Barney, 1991).

Functional Approach

For this vrio (value, rarity, imitability, organization) and the five kind of resources (financial, physicial, human, organizational and technological) are put into a tables.

Resource Financial Physicial Human Technological Organizatinal
value access to financial markets Panafrican distribution infrastructure high concentration of human capital software adapted to different legal systems in-depth knowledge about the African market (tax, legal, culture...)
rarity partly yes partly yes partly less partly yes yes
imitability yes yes yes yes yes

The most striking is that Jumia manages a huge complexity in terms of different legal systems across the African continent. This also counts for their distribution system and technology. Once you read their annual report in detail and analysed it you understand what kind of complexity this young companies manges.

Value-Added Approach

Supporting Activities

Resource Business Infrastructure Recruitment Technology Development Procurement

Primary Activities

Resource Inbound Logistics Operations Marketing and Sales Outbound Logistics Service


Al-Laham (1997) hat in seinem Buch vier Kriterien für die Evaluierung einer Strategie genannt:

  • Durchführbarkeit
  • Stimmigkeit
  • Robustheit
  • Flexibilität