In a strategic move to bolster profitability, Jumia, the leading e-commerce platform in Africa, has slashed its advertising budget by 73%, signaling a shift in its financial approach. The company’s Q3 report reveals a deliberate reduction in advertising and promotional spending, with a focus on optimizing financial efficiency.

Jumia’s advertising expenditure has been streamlined to $4.3 million, reflecting a substantial 73% decrease compared to Q3 2022. The company strategically chose to scale back on expensive advertising channels and consumer incentives, aligning with its broader cost-cutting initiatives. Simultaneously, the general and administrative spending was curtailed to $17 million as part of the comprehensive efforts to enhance overall financial discipline.

Despite facing challenges, including an 800,000 decline in active customers compared to the previous year, Jumia showcased operational resilience. Operating losses were trimmed to $19 million in the third quarter of 2023, marking a reduction of more than half. This achievement is attributed to heightened cost discipline and a series of strategic initiatives.

With a cash balance of $54 million and a liquidity position of $147 million, Jumia implemented substantial expenditure cuts. Strategic measures included the relocation of senior executives from Dubai to Africa, workforce downsizing, and a strategic shift away from low-ticket item deliveries.

Jumia’s recent performance aligns with its strategic plan to fortify foundational elements for growth in core categories. The intentional reduction in active customers and orders compared to the previous year is a direct outcome of the company’s streamlining initiatives initiated in Q4 2022.

Jumia recalibrated its product and service portfolio by suspending its first-party grocery offering, logistics-as-a-service, and food delivery operations in specific crucial markets where economic viability was deemed unsustainable.

Furthermore, the decrease in customer numbers and Gross Merchandise Value (GMV) can be attributed to various macroeconomic conditions. High inflation, averaging 13.5% across Jumia’s footprint, notably impacted customers’ purchasing power. Import restrictions further limited retailers’ ability to acquire products, with countries like Ghana, Egypt, and Nigeria experiencing record-high inflation and currency devaluations this year.

Jumia’s strategic financial maneuvers underscore its commitment to achieving sustainable profitability in the dynamic e-commerce landscape, navigating challenges with a focus on efficiency and market positioning.