Jumia finds wrongdoing in Nigeria sales force amid loss

Bloomberg

Jumia Technologies has identified improper transactions at the Africa-focused online retailer’s Nigeria business that amounted to as much as 4 percent of first-quarter sales.
While the Berlin-based company says it’s taking measures to cut out instances of wrongdong, the findings backed up warnings made by short-sellers Citron in a report three months ago, which brought an abrupt end to a share-price rally following Jumia’s IPO in New York the previous month.
Jumia found cases where “improper orders were placed and subsequently cancelled,” the company said in a statement. These included deals made through a team of independent Nigerian sales consultants called J-Force.
The transactions in question amounted to 2 percent of 2018 gross merchandise volume — a term for sales used in online retailing — rising to 4 percent in the first quarter of 2019. J-Force allows the company to interact directly with customers but “requires constant improvement,” Jumia co-founder and CEO Sacha Poignonnec said.
The retailer — sometimes dubbed Africa’s Amazon — has operations in 14 countries and is seeking to take advantage of rising incomes and better technology on the continent.
In advertising for candidates to join J-Force, Jumia promises the opportunity
to “earn unlimited income” while having “complete freedom and control over your activities.” Nigeria is ranked 144th on a list of 180 countries on the Corruption Perceptions Index, compiled by Transparency International.
The report of dubious sales practices comes after Citron called Jumia “an obvious fraud,” wiping out early gains from the IPO.
Jumia said second-quarter operating losses widened by 60 percent to $74 million, mainly due to an increase in costs related to the vesting of share options following the IPO. The company’s target for profitability is late 2022,
and the cash raised through the listing should take Jumia “close” to that, Poignonnec said.