Jumia slashes marketing spend

Pan-African marketplace Jumia is refocusing its marketing efforts away from costly channels and cut its spending by 74% year-on-year in Q3.

Context

Previously the platform was investing a lot of money in stimulating demand. “We spent heavily on expensive online marketing channels, as well as customer incentives such as free shipping, vouchers and other customer discounts paid by Jumia,” CEO Francis Dufay told an earnings call. “These often generated unprofitable volumes.”

The change in strategy is aimed at building “healthier fundamentals”.

Takeaways 

• Jumia believes that improved assortment and price points will drive more free traffic from being a top-of-mind destination for consumers.
• Marketing teams are focusing attention on growing free channels, such as customer relationship management (the share of CRM in total visits increased by 25% in Q3 vs a year earlier) and search engine optimization (the share of SEO increased by 36% year-over-year).
• At the same time they are seeking to improve the efficiency of channels such as paid online marketing.
• By expanding its logistics reach and marketing actions outside of capital cities, Jumia aims to “penetrate markets historically underserved by both physical retail and e-commerce”.
• Jumia reports physical goods GMV growing year-over-year in five markets, despite significantly reduced marketing expenditures.

Key quote

“The reduction in sales and advertising expense reflects our strategy to build a stronger customer value proposition that emphasizes better supply of physical goods and geographical reach over costly marketing campaigns and promotions. We believe that this is the most relevant and viable approach to our African markets” – Antoine Maillet-Mezeray, EVP, Finance & Operations, Jumia.

Sourced from Seeking Alpha

[Image: Jumia]