Francis Dufay has spent most of his career working in e-commerce. But as CEO of Jumia Group, Africa’s most recognized e-commerce brand, he is facing his most challenging task ever.
More than a decade after it set up shop, the online retailer Jumia is still hemorrhaging money with no timeline for profitability. In its most recent earnings report, Jumia lost $167 for every $100 it earned.
While its revenue from the first six months of 2023 stood at $94.8 million, it lost $63.7 million. Although its losses have reduced compared to previous years, it’s still too high for comfort.
Fastly Jumia is dropping from the old claims of being the “Amazon of Africa” as it no longer holds much value, while it struggles currently to stay relevant in its key online market niches.
“Our economics was not sustainable as they may have been,” Dufay told WorldSocio, referring to the current Jumia’s operating model when compared to the last ten years. “The priorities now needed to change.”
Dufay has risen through the ranks at Jumia over the last decade after joining the company from McKinsey, the global consulting firm. Before being named CEO in November 2022
He oversaw Jumia’s business in nine countries while reporting to former co-CEOs Jeremy Hodara and Sacha Poignonnec. Both executives resigned late last year 2022, walking away with severance packages worth $850,000 each, according to Jumia’s financial report.
“Today, I’m managing 11 countries [and] I get to deal with a few more topics now, but it [my promotion] was not groundbreaking [or] a major transformation of my role because I was already overseeing the majority of the business at Jumia,” Dufay said.
So that helped me to make a relatively smooth transition and quickly get into the role. And I was able to make the right decisions extremely fast.” As chief executive, Dufay inherited a struggling business that is no longer growing, putting it at risk of running out of money in a little over a year. When asked "Dufay declined to speak about his predecessors’ performance and management decisions"
While letting men of the press know that Jumia’s biggest challenge at the moment is cutting costs. With less than $62 million cash left in the bank account, per its Q2 2023 reports, Jumia may struggle to cover its costs. It has also lost nearly a third of shoppers on its platform over the last year as the business takes drastic changes to survive.
“In the past, the focus has been fully on growth, but in a very different context where funding across the world was abundant for growth companies, which enabled many companies not to worry too much about some of the aspects of the business,” Dufay shared.
Jumia benefitted from this old reality, raising over $700 million as a startup. On two occasions, it extended its runway by selling equity on the capital market as a publicly traded company.
These lifelines no longer exist because of rising interest rates in the US and an unfriendly stock market. Jumia has to adjust to this reality on its path to sustainability. “We are working hard to get the right cash utilization and cost structure so we do not need to go and beg the market for new capital,” Dufay explained.
Since his appointment, Dufay has implemented painful cuts across the company, including laying off 900 or 20% of employees.
He is also reining in some profligacy, including forcing 60% of its top management team to work from African countries instead of having an office in the United Arab Emirates, they should relocate to Africa to save costs.
The move to Africa will also remind executives of the operational realities in the markets they serve. The cuts have also hit executive compensation, and Dufay is likely to earn much less than his predecessors, according to the company’s annual report.
In 2021, former co-CEOs Hodara and Poignonnec each collected annual base salaries of nearly $480,000 and stock option incentives worth $4 million each. However, the new CEO’s base compensation is lower, hovering around $350,000 according to his annualized pay from December last year 2022.
At least two of Jumia’s non-executive board members have also waived all or part of their hefty compensation packages in the last two years to help the company conserve cash. Last year, the company’s board members collectively earned $1.5 million in cash and stock compensation despite the company’s staggering losses.
“Of course, I’m interested in my salary,” Dufay told WorldSocio about his compensation. “What matters to me is that we get back on track on growth.”
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