Spalazzi: We Want Jumia to Remain at Forefront Serving Customer Needs Online
Since its launch in 2012, Jumia has dominated the e-commerce space in Nigeria. The Chief Executive Officer of Jumia Nigeria, Massimiliano Spalazzi, speaks on how Jumia has shaped the industry, its use of technology as a backbone for growth and for experience, and how its platforms have been evolving by the day in the last ten years. Eromosele Abiodun presents the excerpts
How will you describe e-commerce growth in Nigeria and Africa since the launch of Jumia in Nigeria in 2012?
I will describe Jumia’s growth as exponential. Since we launched in 2012, we’ve been seeing the growth of e-commerce and digitalization both in Nigeria and in other countries we operate in, continuing to grow. This growth has happened across many segments and many categories of many services that Jumia has been working in and that e-commerce covers. At the beginning, it was about educating the market and getting people to be aware that e-commerce is a thing in the country and there were reliable players ready to build trust in the customers, for vendors to use the platform and deliver to customers in effective ways for everyone. Since 2012, we grew in volume, in the services we offered, and introduced on demand i.e. Jumia Food, then JumiaPay, Advertising, and Logistics services for clients. This is what made the company we are today. In 2012, we launched and less than 10 years later, we were listed on the New York Stock Exchange as the first African Internet Company (Unicorn) to be listed there.
Jumia directly employs more than 1,000 people and many more through the sellers and logistics partners. Through its activities, Jumia allows local sellers to gain exposure to their markets and thus encourages them to hire more staff to support their production and distribution activities.
Broadband penetration in Nigeria is picking up gradually at 43 per cent, which, is a key factor in your kind of business. How has the penetration affected patronage of Jumia’s ecommerce business in Nigeria?
The broadband penetration is playing an important role, which has shown Nigeria growing very fast compared to the early years when we started the company. I believe broadband penetration is speeding up the digitalization of the population in the country. Today we know that about 50 per cent of the population of Nigerians use the internet. These numbers are growing every month and the internet is no longer a mystery to people, it’s getting part of day-to-day activities. This part is something that helped us a lot to grow. I think e-commerce can bring value to certain areas of the country that are less served by retail. Typically, if you think about the rural areas where people can’t access goods as if they were in the big cities and have it delivered at convenient shipping prices all the way to where they live. For other areas where you have a lack of offer, e-commerce can bring that offer into place. Broadband combined with digitalization and opportunity from a retail standpoint is proving a significant opportunity for growth in the e-commerce space.
Since the launch of Jumia in Nigeria in 2012, what have been your greatest challenges doing e-commerce business in Nigeria, and what are the possible solutions?
The key problem that we saw in the beginning was building trust and the adoption of e-commerce. The trust was to be built between customers and the vendors, the logistics players, and all the stakeholders that were working with us. We had to explain to the vendors that when an order was placed, they had to release their goods without getting paid at the beginning because payment would have been done as cash on delivery by the customer and the customer also had to trust the platform to place the order, to see the product and then pay. There was a lot of trust to be built together with the logistics company that had to be involved in this new way of doing business which is a big opportunity. After that, logistics became a problem because the more we were growing and delivering across the cities, the more we needed a backbone of infrastructural logistics that was strong enough to deliver all the packages to all the many customers we had across the country. Another challenge was internet penetration and payments. We had given the opportunity initially to use cash on delivery for people to make their purchases comfortably and then to offer an easy way to pay digitally through JumiaPay, which is another service we launched not long after we launched our first company in 2012. On the Logistics part, what is important to say is, that the scale is also what mattered. The growth of e-commerce, led by Jumia and some other smaller players and other segments of the economy online, brought the need of having many more types of transportation including vans, trucks, bikes, etc. There was a need for entrepreneurs to invest, to see the opportunity to grow with e-commerce. Overall, it built more than a company, it built an ecosystem and it brought part of the economy online.
Jumia recently celebrated ten years of operation in Nigeria. What were your biggest gains and what are your plans for the Nigerian market in the next ten years?
The fact that we have been operating for ten years, in a market like Nigeria, is something that we are very happy and proud of, and we thank Nigerians who helped to make Jumia possible. Over the years we have reached many milestones. We opened the marketplace and introduced JumiaPay, Jumia Food, and all the other businesses. We further expanded our operations in many countries across Africa and then, we launched the Jumia logistics for external clients. Also, we introduced Jumia Advertising, which was another business that we launched to satisfy the needs of all the brands who wanted to be associated with the Jumia brand and advertise their goods online. Recently, we launched the Jumia Food Mart to help customers buy their groceries and essentials and get them delivered in under 20 minutes. Finally, one of our biggest gains was during the COVID period when we were enabled and allowed to play an important role in the economy to support those people who were going through lockdowns and curfews and difficult times to access goods at the best price possible. Our next plan is to continue to grow the business of Jumia by serving as many customers as we can because we believe that we are still at the start despite being here for ten years. We believe there are many more customers that we can serve at our best and with more services which we aim to do in a smart, efficient, speedy, and time-effective way to make Jumia become the number one destination for online shopping for all Nigerians. We launched free delivery in Lagos, Abuja and Ibadan to enable consumers to shop more for their daily essentials while also pushing our quick commerce platform dubbed Jumia Food Mart to enable consumers to receive their online grocery orders in a record time of under 20 minutes.
As Jumia continues to grow, we are conscious of the environmental impact of our operations and continuously seek ways to minimise our impact. In 2021, we sold 8,472 refurbished phones through our Marketplace thereby promoting responsible consumption and encouraging our customers to select more sustainable alternatives. By identifying practices that are better for the environment, we are also finding opportunities that are better for our business.
In ten years of operation, what is the current market share of Jumia in Nigeria, and what is the position of the Nigerian market in Jumia’s business across your African operations?
Jumia Nigeria is the largest e-commerce player in the country and Nigeria is our biggest market where we operate across Africa. Nigeria has the largest population of over 200 million compared to the other countries where we operate. Internet penetration is over 50 per cent with more than half the population using a smartphone. This shows the size of the market and the enormous potential for e-commerce.
As technology evolves, consumers’ tastes and demands are also evolving by the day. How has Jumia addressed consumers’ needs in the last ten years?
We use technology as a backbone for growth and for experience, and in the last ten years, our platforms have been evolving by the day. We have roadmaps that have deadlines as close to one week to constantly update the user, the front-facing, the back-facing, the systems, and the infrastructure in order to always satisfy the needs of our customers at best. The customer needs have changed, particularly in the past two years. Since COVID and the current situation of the economy with a decreasing purchasing power due to the rising inflation, rising cost and prices, and devaluation of the naira, what we are seeing is consumers are shifting more to wanting to find on Jumia daily essentials and get the best prices, the largest varieties and assortment easily delivered to their homes. I think this is going to stay for a while, as consumers constantly come online and shop for their groceries and other essentials at convenience. All we can do at Jumia is offer that variety of goods that they want at the best price.
Jumia must have had some specific targets at the beginning of its e-commerce business in Nigeria. Ten years down the line, will you say your target has been achieved?
Targets are ambitions that you give yourself. At Jumia, we are happy and proud to be where we are today. We’re very humble but at the same time we are very conscious of what we’ve built and happy to know that as we stand today, we are serving millions of customers and hundreds of thousands of vendors across Africa to do better business. On this, we are very proud, and we are equally proud to have given the opportunity to logistics companies to grow with us and to serve the needs of customers and vendors in the best way. We think these targets have to always be raised to the next level, we never sit, and we always keep looking at the future thinking of ways to satisfy the needs of our customers, and vendors at best to keep on growing in the e-commerce space which is growing very fast in this market.
What has been the impact of e-commerce on small businesses like SMEs and MSMEs in the Nigerian economy?
I think in general, Small and Medium-sized enterprises in Nigeria play a very important role. Nigeria is a land of entrepreneurs, where you meet the most tech-savvy entrepreneurs that are very solid people knowing how to do business and trade. The number says that there are 37 million micro, small and medium scale enterprises, and more than 80% of the total jobs in the country are dependent or reliant on micro, small and medium enterprises. Thus, the importance of SMEs is very strong.
E-commerce is playing a very important role to enable small businesses, and micro-businesses to grow in Nigeria, particularly thanks to the fact that e-commerce can offer any business good reach to their customer base. With a platform that is composed of the marketplace, logistics solutions, and advertising, small businesses will be able to strive, grow and showcase their products to a market they couldn’t reach if not online. This will help them focus on their core assortment, variety, and quality while we do the deliveries and reach for them.
Moreover, for the SMEs, we also provide financial support with lending through the JumiaPay app, and we engage in a lot of initiatives to grow their base. We do think that SMEs are fundamental. On a side note, SMEs also need logistics beyond e-commerce, and we saw this, particularly in the last years, which is why for a year and a half we opened logistics to external clients. So, if you are a small, medium enterprise that needs to deliver agricultural goods or products to your customer, which was not made on Jumia, you can still use Jumia logistics to deliver those goods because we believe we have the largest and most effective network of logistics providers that can deliver business-to-consumer goods efficiently and effectively.
How has Jumia leveraged emerging technologies in providing services that enhance customers’ experience?
The services we offer today to all the sectors of stakeholders we serve, the customers, the vendors, the logistics companies, and the advertising companies, are all based on the technology. For example, today we have three Jumia apps, the Jumia E-commerce app, JumiaPay, and the Jumia Food app. We have different back ends such as a seller center that allows sellers to sell their products on Jumia, and so on. All these are technology enabled which then enables the Jumia ecosystem.
Logistics is key in the e-commerce business. How has Jumia managed the logistics aspect of its business in meeting up with real-time delivery?
We have a platform called Jumia Food. On this platform, you find restaurants, pharmacies, shops, supermarkets, and more and we deliver real-time. When you place an order in a restaurant, you get it in the next 25-30 minutes. When you do your groceries on the Jumia Food Mart, you get it in 20 minutes. We think there’s a big trend towards that business. People want to have their goods and products as fast as they can and on that, we have been focusing a lot, especially in the last six months.
How will you describe the effect of government policies on your business and what do you suggest the government should do to enhance the business environment in Nigeria
I think that the government has been supportive in doing the best for what companies like us are doing. In general, we would want to see the government and regulators being on the same side as the private sector and interestingly, e-commerce attracts a good interest from those kinds of parties. For example, in Nigeria, we have an e-commerce group under the Lagos Chamber of Commerce where our Chief Sustainability Officer, Juliet Annamah, who was previously the CEO of Jumia Nigeria is the first Chairwoman of the council. There are initiatives that are working, which makes us feel that there is the right level of conversation between the government and the private players in the e-commerce sector. We have seen some efforts by the government, for example, the National Economy Digital Policy and Strategy for Digital Nigeria developed by the Ministry of Communication, which has eight pillars covering all aspects of solid and soft infrastructure as well as regulations. I think more can be done especially on ensuring that there is an effort to make this side of the economy grow faster. It is important to consider the enablers and the key initiatives that can help growth happen faster than what is happening today, because eventually, it is beneficial for everyone. Digitalization brings opportunities, employment, growth, and most of it is passing through e-commerce. So, e-commerce is key to the rebirth and the growth of the economy.
What would you like to say to your customers and where do you hope to see Jumia in the next ten years?
We would like to see Jumia still at the forefront serving most of the needs that customers might have online. Simplifying the business, making it faster, and more effective. Increase the quality, trust, and variety that customers get when shopping, and create more opportunities and more reach for vendors to engage with the platform and also to help make more efficient infrastructural logistics in the country. We want to be sure that Jumia will keep being one of the most beloved brands in the country, the No 1 employer by choice, and we are very proud to keep on being that. We are working very hard to be a platform for the new talents that Nigeria has and will need to foster and grow. We want these talents to be a part of Jumia to raise a new digital landscape of the country.
The payment industry is becoming wide, do you have plans to explore that area?
The payment part is very exciting and the interesting part of it is that the Jumia ecosystem has among its pillars, JumiaPay. We have customers, vendors, and a payment platform that puts together both where unlimited transactions, and general business can grow exponentially. We are currently expanding our services and offerings under different sides, mainly on the business side. For example, vendors are using JumiaPay as a payment gateway. This is one of the big parts of the business that you will hear more in the coming weeks.