Francis Dufay, a seasoned e-commerce executive, faces a formidable challenge in his role as CEO of Jumia Group, Africa’s foremost e-commerce brand. Jumia finds itself at a critical crossroads, grappling with persistent financial losses and a struggle for profitability.
In the most recent earnings report, Jumia posted staggering losses, with a deficit of $167 for every $100 in revenue generated. Although the company recorded revenue of $94.8 million in the first half of 2023, it incurred a loss of $63.7 million, underscoring the urgency of the situation. The once-proud title of “Amazon of Africa” now seems distant as Jumia faces the challenge of staying relevant in its core markets.
Dufay acknowledged the need for a significant shift in Jumia’s strategy, stating, “Our economics was not sustainable as they may have been. The priorities needed to change.”
Having climbed the ranks at Jumia over the past decade, Dufay assumed the role of CEO in November 2022, succeeding former co-CEOs Jeremy Hodara and Sacha Poignonnec. Both former executives stepped down with generous severance packages, each amounting to $850,000 according to Jumia’s financial reports.
In his new role, Dufay inherited a company that is no longer experiencing growth, putting it at risk of running out of funds in a little over a year.
The primary challenge facing Jumia is the urgent need to reduce costs. With a liquidity position of $166.3 million in its Q2 2023 report, Jumia’s runway is far from endless. Over the past year, the platform has seen nearly a third of its customers depart, necessitating drastic measures to ensure survival.
Since taking charge, Dufay has overseen painful cost-cutting measures, including the reduction of its workforce by 20%, which translates to 900 employees. Additionally, he has curbed excesses within the company, compelling 60% of the top management team to work from African locations rather than from the United Arab Emirates, a move aimed at cost savings and a closer connection to the markets they serve. These changes have also impacted executive compensation, with Dufay’s base compensation noticeably lower than that of his predecessors.
In 2021, former co-CEOs Hodara and Poignonnec received annual base salaries of nearly $480,000, along with stock option incentives worth $4 million each. In contrast, Dufay’s base compensation is approximately $350,000 as of December 2022. Notably, some of Jumia’s non-executive board members have forgone all or part of their compensation packages in the past two years to aid the company in preserving its finances. Despite staggering losses, the company’s board members collectively earned $1.5 million in cash and stock compensation last year.
Dufay emphasizes the importance of getting the company back on a growth trajectory, asserting, “What matters to me is that we get back on track on growth.”
As Jumia navigates a pivotal juncture in its journey, Dufay’s strategic cost-cutting measures and a renewed focus on growth will determine the company’s fate in the fiercely competitive world of African e-commerce.