African e-commerce firm seeks to expand with French tools

BLOOMBERG

Jumia Technologies AG made a deal to sell French retailer Leroy Merlin’s products in West Africa, part of a plan to expand its reach and cut losses in half by the end of 2023.
The Africa-focussed e-commerce giant will sell the French company’s tools and do-it-your-self products in Ivory Coast and Senegal, focussing on high-growth rural areas and smaller cities, Chief Executive Officer Francis Dufay said.
More than half of Africa’s 1.4 billion-strong population lives outside big cities or in rural areas where the economies are driven by agriculture, Dufay said. This means there’s strong demand for the kinds of products Leroy Merlin offers in areas that are not well-served by retailers.
“Jumia is pushing into these areas, we have the right suppliers and assortment of products, and a light logistics model to address those smaller pool of consumers,” he said.
“This would be much harder to do for bigger supermarkets and shops for instance.”
It’s part of Dufay’s strategy to reduce Jumia’s losses by 50% by the end of the year, through a combination of cutting costs and targeting high-growth rural markets. The company can expand into smaller cities at a fraction of the capital spend needed for larger ones due to the lack of competition, Dufay said.
The deal allows Leroy Merlin to serve African customers without initially putting shops on the ground, Dufay said.
Jumia was founded in 2012 by French entrepreneurs Sacha Poignonnec and Jeremy Hodara.