Profile of Jumia, Africa's biggest e-commerce platform, which has raised $700M, operates in 14 countries, and saw gross sales rise 42% YoY to $682.7M in 2017 (Matina Stevis-Gridneff/Wall Street …)

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Emmanuel Kwanga, Jumia delivery associate, arrives outside ‘Mama Hawi Shop,’ where he will pick up a package for delivery in Nairobi’s Kinyanjui neighborhood.


Photo:

Nichole Sobecki/VII for The Wall Street Journal

NAIROBI, Kenya—On safari for the rare African tech unicorn,

Goldman Sachs Group
Inc.

and other big-name investors think they have spotted a winner in Jumia, the continent’s aspiring Alibaba.

The online retailer launched in 2012 in Nigeria with the backing of German startup fund

Rocket Internet SE

and is Africa’s biggest e-commerce platform selling goods and services to millions of Africans. It has raised more than $700 million from investors, including global telecom operators and was valued at $1.2 billion during its last fundraising round in 2016.

Jumia has expanded from four to 14 countries. Gross sales last year reached €507 million ($597 million), up 42% from the year before. Its vendor network, from Cape Town, South Africa, to Casablanca, Morocco, includes up to 70,000 businesses offering their goods and services online.

Jumia employees organize and package goods in the company's warehouse in an industrial area of Nairobi.

Jumia employees organize and package goods in the company’s warehouse in an industrial area of Nairobi.


Photo:

Nichole Sobecki/VII for The Wall Street Journal

Jumia’s growth story has also outlined the scale of the challenge for African online retail. Faced with poor internet connections and tight bank lending for vendors and consumers, Jumia has had to build from scratch much of the economic infrastructure within which it can operate.

“Nowhere else in the world is it more difficult to shop than in Africa,” said

Sacha Poignonnec,

Jumia’s co-founder and chief executive.

Jumia executives have set up credit lines, offering loans to vetted vendors from the company’s balance sheet. They are holding training workshops on basic accounting and stock-keeping. To lure in suspicious customers who aren’t familiar with ordering their shopping online, it launched glitzy multinational marketing campaigns featuring some of the continent’s top pop stars and Black Friday events where buyers could win a live goat.

Jumia also accepts cash on delivery, an unusual move for Western online retailers but similar to India’s Flipkart Group, which

Walmart
Inc.

recently said it would take control of.

The company’s model is providing a lifeline to the thousands of small and midsize businesses that dominate African retail, but often struggle to survive because of poor credit and infrastructure, and few organized markets for their goods, said

Robin Miller,

a partner at Dalberg, an emerging-markets advisory firm.

Sheila Hafswa is a Jumia customer who runs a small kiosk called ‘Mama Hawi Shop.’ in Nairobi.

Sheila Hafswa is a Jumia customer who runs a small kiosk called ‘Mama Hawi Shop.’ in Nairobi.


Photo:

Nichole Sobecki/VII for The Wall Street Journal

Although just 0.5% of all retail on the continent takes place online, according to Boston Consulting Group research, compared with around 15% in China and 5% in India, companies like Jumia are changing the economic landscape for many African entrepreneurs.

When Harrison Karanja heard of the platform three years ago, he was working at a copy shop in Nairobi’s bustling business district, and had never read a spreadsheet in his life. Now, the 38-year-old Kenyan is running a bustling trade selling mobile-phone accessories and furniture imported from China.

No bank would help Mr. Karanja manage his cash flow, so he turned to Jumia and asked for payments to be cleared weekly, and for the company to offer affordable credit lines. It worked: Jumia started clearing payments weekly for vendors who reached sales of 250,000 Kenyan shillings, or about $2,500.

“That gave more people the courage to do the same as me and become Jumia vendors,” said Mr. Karanja, who sells 75% of his stock online. “Now I’m my own boss.”

Analysts say they expect e-commerce in Africa to boom eventually. “The advantage is that there’s no real retail industry to disrupt, no brick-and-mortar infrastructure to displace. It’s one of the leapfrog opportunities,” Mr. Miller said.

Mr. Kwanga makes a delivery to Kaka Risper, a regular Jumia customer, at her home in Nairobi's Wanyee neighborhood.

Mr. Kwanga makes a delivery to Kaka Risper, a regular Jumia customer, at her home in Nairobi’s Wanyee neighborhood.


Photo:

Nichole Sobecki/VII for The Wall Street Journal

“I use Jumia to buy diapers, things for my baby,” said 29-year-old Nairobi-based beauty technician

Christine Kariuki,

who has a nine-month old and went back to work soon after giving birth. “It’s cheaper and they bring it to my house, I don’t have to rush to the market after work,” she said.

Diapers are among Jumia’s top-selling goods across Africa, company data show, as growing incomes mean more African parents are swapping cloths for the more expensive, disposable alternative.

This year, still far from profitability, Jumia will ask investors to dig into their pockets again, Mr. Poignonnec said.

Jules Frebault,

executive director at Goldman Sachs, declined to confirm whether the bank would increase the size of its investment in the coming funding round. But he said Goldman likes opportunities where it can “participate in the success and scale of investments as the company grows, so we are always considering additional participation.”

Often touted as Africa’s answer to Alibaba, Jumia seeks to ride on changing trends in e-commerce, entertainment, urbanization, music, and more.

Often touted as Africa’s answer to Alibaba, Jumia seeks to ride on changing trends in e-commerce, entertainment, urbanization, music, and more.


Photo:

Nichole Sobecki for The Wall Street Journal

Jumia’s founding investor and major shareholder Rocket Internet has seen its share price tumble, partly because of investor concerns about its inability to turn profits at three of its other flagship investments by end-2017. The fund points to the ample cash it has at its disposal and said its top businesses are nearing profitability.

Jumia’s other top investors include major telecom firms France’s

Orange
SA,

South Africa’s

MTN Group

and Luxembourg-based

Millicom International Cellular
SA

. French insurer AXA SA and

JPMorgan Chase

& Co. have also funded the company.

Rival e-commerce companies have also been attracted by the prospect of a foothold in one of the world’s fastest-growing consumer markets with one billion people—more than the combined populations of the U.S. and Europe—according to the Boston Consulting Group.

Alibaba Group Holding
Ltd.

is examining the African market closely, two people familiar with the situation said. Safaricom, Vodacom’s Kenyan subsidiary, has just launched its own online retailer. Last year

Amazon.com
Inc.

acquired Souq.com, a Dubai-based e-retail with a presence in North Africa, where Jumia also works.

Write to Matina Stevis-Gridneff at [email protected]


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