E-commerce giant Jumia, still smarting from its ill-fated listing at the New York Stock Exchange, has again shocked Africa e-commerce watchers when it on Monday folded up its operations in Cameroon without prior information to the public and workers.
The development means Cameroon becomes the third African country in which Jumia has shut down operations. The earlier two being Gabon and Congo Republic.
Before the Cameroon closure, there had been market speculation that Jumia was going through a bad patch in its market expectations. The company which released recently its Q3 financial report saw its operational loss increase to $55 million from the $45 million recorded in the same quarter last year.
According to Jumia, the closure is necessary as its current model is not suited for the country. “We came to the conclusion that our transactional portal as it is run today is not suitable to the current context in Cameroon. We wanted to see how business evolved. We can come back, but for now we’re closing (to have) time to study the market.” It did not state when and how it will return to the Cameroon market.
However, recent developments surrounding the company suggests this move may be an attempt by Jumia to cut back on its operational cost, having been suffering losses since inception.
“Jumia shut down its Cameroon operations this morning, firing its entire staff, no public announcement, no special word from the group or its CEO. The brutality of the news to the staff echoes their management style and is, I believe, one of the reasons for its collapse, “, twitted Rebecca Enonchong, a tech entrepreneur and Founder CEO @AppsTech @iospaces.
“You cannot continue to treat your workers and a whole country with such disdain. Jumia has a history of not having regard for its workers. How can you shut down operations without the courtesy of telling your workers ahead of time so they can prepare their mind. Now you have thrown hundreds of people into the labour market and some of them have families,” fumes Mrs. Salome Njoya, a housewife who claims her family had been negatively impacted by the development.
Jumia became the first African tech stock to list on the New York Stock Exchange (NYSE) in April 2019. Its shares tumbled in the months that followed despite a high after listing due to exposure of fraudulent claims made by Jumia ahead of the listing.
Jumia Technologies AG is a German-based e-commerce outfit. It operates an online marketplace for African consumers to buy and sell goods. The company offers a number of products which includes dresses, leggings, skirts, polo shorts, belts, watches, sunglasses, health and beauty products, a range of kid products etc.
Its operations spans different regions of Africa. It operated in 14 countries as at April 2019 with Nigeria, Africa’s most populous nation, being its largest market, reports Africanews.com.
A Quartz Africa report said Jumia was recently immersed in some operational challenges in Nigeria.
“The company has disclosed it recently uncovered instances of improper orders placed and subsequently cancelled on its marketplace platform wrongly inflating its order volume.”
Some of the improper sales practices, the company admitted, were carried out by its own personnel in “Jumia Force (J-Force),” its network of commissioned agents. The alleged fraud, purportedly running into billions of naira, was also said to have attracted the attention of the Economic and Financial Crimes Commission (EFCC). Confidential sources reveal that some staff of Jumia may have been picked up for questioning by the anti-graft agency. This was after some of the agents involved began to petition the Commission.
Jumia’s affiliate marketing programme purportedly offers individuals a chance to earn money through commissions on sales of the company’s products. Furthermore, the Jumia website confirms the existence of the scheme.
It states: “Get on the JForce train today and earn money through commissions by selling items supplied by Jumia. You can also make money as you recruit new sales consultants. This is an opportunity to be your own boss and take orders from no one else but yourself as you have complete control over your activities.”