Online shopping platform Jumia has recorded an operating loss of $51.6 million (Ksh5.1 billion) in Q2 2021, a 24.7 percent increase from the Q2 od 2020.
The loss has been attributed to the movement of marketers and shoppers to social media networks to sell and buy their products.
Jumia spent $17.1 million (Ksh1.7 billioin) on sales and advertising but only managed to grow 100,000 new users.
At the end of June 30, 2021, we had $637.7 million of cash on our balance sheet. Cash used in operating and investing activities was $27.4 million,” noted Jumia in its financial report.
According to a recent report, only 13 percent of Kenyans actually transact on ecommerce platforms such as Jumia and Kilimall.
A Kenya Digital Report by Global Advisory Firm, Dalberg shows that more shoppers and sellers prefer to use social media platforms where they can market and interact more closely, and pay for goods on delivery.
Online transactions in Kenya have further been slowed down by steep delivery prices and a poor address system in the urban area, putting a strain on the delivery process.
A report by the Communications Authority of Kenya also cited high delivery costs, importation fees and charges, and poor addressing system as a hindrance to faster adoption of ecommerce.
As a result, more shoppers prefer buying items from social media sites such as Facebook, Instagram and TikTok. The popularity of the sites, coupled with a high rate of mobile adoption in the country have threatened the ecommerce sites, some on the brink of closure.
The report by dalberg also showed that 44 percent of self employed people and business owners had adopted the use of advanced digital services to boost their trade. 86 percent of these are able to use the services to communicate with customers and vendors.