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Home » Nigeria’s E-commerce Adoption and Growth: A Case Study of Jumia

Nigeria’s E-commerce Adoption and Growth: A Case Study of Jumia

Nigeria's E-commerce review

Article Written by: ​Osahon Kelvin Edogun

Introduction  .

My goal for this article is simple: By the time you finish reading this article, you should understand if investing in Nigeria’s e-commerce is right for you.

According to TechCabal , Nigeria is the 33rd largest market for e-commerce with a revenue of US$6.9 billion in 2021, placing it ahead of Denmark and Columbia . This may look like a big deal, but not for Nigeria .

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Ecommerce DB , a site that provides insights for e-commerce stores worldwide, reports that the biggest player in the Nigerian e-commerce market is Jumia .

Jumia , which had a revenue of US$22 million in 2021, is followed by Slot and Ajebo Market as the second and third largest stores with US$7 million and US$6 million in revenue, respectively. Altogether, these top three stores account for only 1% of Nigeria’s online revenue.

The gap as shown above is a bit worrisome; and the absence of Konga in the lineup is a lot more troubling.

Before Jumia and Konga , the only notable e-commerce platform that existed in Nigeria was Kasawo , founded by Raphael Aphaedor and Tunde Kehinde. Kasawo was later purchased and renamed Jumia , which launched in Lagos and later became Pan-African.

The concept of e-commerce became popular with the success of Amazon and Ebay . In fact, the first owners of Jumia, The Samwer Brothers , made their first entrepreneurial break by building a replica of Ebay for the European market, named Alando , and sold it to Ebay.

Background: The Rocket Internet Group

So, we know that Jumia was founded by four guys: Raphael Afaedor, Tunde Kehinde, Jermy Hodora, and Sacha Poignonnec . Let us explain how the Jumia Group worked until recently.

Jumia is a product of a large company known as the Rocket Internet Group , run by The Samwer Brothers in Berlin, Germany, with over 25 international offices in 50 countries and a total of over 20,000 staff.

Jumia was one of the products launched at the time The Samwer Brothers thought Nigeria was worth exploring in 2012, alongside Kaymu , Jovago , Easy Taxi , Lamudi , and Carmud . At this point, Nigeria’s first attempt at e-cab hailing died a natural death, while other businesses later merged with the Jumia brand.

For instance, Kaymu became Jumia Marketplace ; Jovago became Jumia Travels ; Lamudi became Jumia House ; and Carmudi became Jumia Cars ( Jumia Deals ). These other businesses have either been further expanded or shut down, leaving just Jumia Food and Jumia Marketplace alive today, with the recent addition of Jumia Pay .

Jumia as a product is a clone of Amazon . The Samwer Brothers’ strategy was quite simple: Clone a very successful online product in matured economies and replicate in developing countries with a functional financial system and access to telecommunication services.

This was a bet on the clone product’s fast growth and adoption, in order to build valuation of the company and trade a sale.

Key to their strategy was hiring top talents from MCkinsey and Co., and sending them to launch these products in Africa, Asia, and South America as Co-Founders. Hence, why Jumia has four co-founders and a CEO. Quite a complex structure.

Jumia and Konga have done one thing for their African market: opened up technology and online commerce. They showed us that it was possible to buy products online and this drove online retail in Africa to the heights it has achieved today. But this came at a high cost – the cost of consistent losses.

The most recent financial statement by the board has shown strong growth for Africa’s foremost e-commerce business. Orders increased by 35% year-over-year, GMV increased by 21% year-over-year, revenue increased by 42% year-over-year, but it also shows strong growth in cost and losses.

Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia comment,

“We remain focused on scaling the business towards profitability. In the second quarter of 2022, we have successfully delivered on each building block of our path to profitability: usage growth momentum, monetization acceleration and cost discipline. Despite a deteriorating macro environment, we maintained a strong pace of usage growth. Orders, Quarterly Active Consumers and GMV grew by 35%, 25% and 21% respectively, on a year-over-year basis. Leveraging robust usage growth, we further accelerated monetization. Gross Profit and Marketplace revenue were up 14% and 17% year-over-year respectively, the fastest growth rates of the past 5 quarters. In the context of rising inflation and input cost pressure, cost discipline remains a top priority for us. We drove usage growth and monetization acceleration with lower-than-expected marketing investments with Sales & Advertising expense of $41.0 million in the first half of 2022 compared to our guidance of $50-55 million.”

While this report is worth celebrating, let’s put this in layman’s terms: It cost Jumia US$22 million in ad money to make a revenue of US$57.2 million, asides other costs .

Long story short, Jumia lost US$10 million to operations in the last quarter after ten years of operations and an investment of over US$1 billion. This is worth discussing.

Let’s backtrack a little.

Remember we said Jumia was a clone of Amazon , the company which produced the wealthiest man in the world? A report on CNBC’s website however quotes,

“Despite Amazon’s dominance in e-commerce, online sales are not actually a main profit engine for the company. Instead, its cloud computing division, Amazon Web Services, has actually generated the majority of Amazon’s operating income since 2016. Profits from advertising and third-party sellers are also booming.”

So, does this mean Jumia should begin to set up data warehouses like Amazon?

Konga began the offline retail model, which has proven to be a highly profitable business model in the past decade, although Konga’s earnings have been hush-hush after its acquisition by the Zinox Group . There has been a recent publication that valued the omnichannel stat US$2 billion.

If this model has proven to be profitable, why so many losses?

Cost of Sale. 

One line explains why.

But, why is it so expensive to sell a product online?

Well, advertising costs seem to stand out amongst every other cost. Thereby begging other questions: Is omnichannel the future for African businesses? Should e-commerce companies like Jumia go omnichannel? Is cutting costs the way to go? And, what should we really do?

Challenges of E-commerce in Nigeria

In 2016, I joined Payporte Nigeria’s most preferred online store. Later that year, it signed a deal with Multichoice to become the official sponsor for Big Brother Naija; It’s first airing after ten years. This was a great move at positioning Payporte as a leading player in the e-commerce scene.

By 2018, I had resigned. I was owed salaries and so were all of my colleagues.

What is my point here?

General marketing approach to e-commerce is too expensive, and e-commerce companies cannot succeed without a never-ending cash flow. 

A lot of staff within the fast rising e-commerce company would tell me they knew exactly why the company failed. Some sighted management, some said procurement, others even blamed marketing. But from my findings, Payporte was just like every other e-commerce at the time. No company in the industry had it better than Payporte in terms of how they led their teams or what they sold. However, all the big players (i.e. Jumia and Konga) had spent at least ten times the resources Payporte had spent to achieve top-of-mind awareness.

In my opinion, Payporte only ran out of cash because, as earlier stated, e-commerce in Nigeria cannot survive without a ton of money . And, no. You cannot bootstrap your way to success in e-commerce.

1. The major challenge of e-commerce today is cost of sale

Let’s take Shoprite , for instance.

Shoprite’s cost of sale is less than Jumia’s. This is an interesting fact, knowing that one of the arguments for why everyone thought e-commerce was the future of business was its scalability. While e-commerce stores remain scalable, we must consider the cost of putting up products for sale online.

A product on the shelf at Shoprite goes through the same processes as products on the Jumia online store. However, the significant difference is, shelved products at Shoprite would require a series of promotional phases before arriving at the online point-of-sale at Jumia.

While these phases may vary from company to company, they include: photography, picture editing, creative designing, product upload online by content management team, and finally, digital marketing efforts.

2. Another point of challenge for e-commerce is the hassle of delivery

If you have run a small business in Nigeria before, you will understand how tough it is to manage two dispatch riders. Now, imagine having hundreds of them making simultaneous deliveries all over the city; a real headache!

Also, physical stores like Shoprite seem to possess an advantage over online stores like Jumia in Nigeria. A major reason is the slow reception to online shopping over in-store shopping by the majority of customers, even in 2023.

3. The rate of returns on purchased items is huge

In fact, herein lies the major issue.

Back in 2017, the CEO of Payporte, Eyo Bassey, announced that Payporte had canceled its payment-on-arrival policy. Why?

Let’s analyze.

Payporte resumes operations by 8am everyday. By 12 noon, there is an average of two hundred orders waiting to be dispatched. Total sales as at this time is N5 million.

By 4pm, total orders for the day have amounted to one thousand, with a total sales volume of N45 million.

By weekend, however, the sales department only reports a total sales amount of N3 million for the entire week!

Where did the outstanding balance go?

Returned products

I once ordered pizza on Uber Eats in Manchester, England. Before delivery, I realized that I had to leave where I was at the time and I changed my delivery location to where I would be. Somehow, the system did not catch my update and the driver arrived at my previous location. When he called and I informed him of my change in location, he told me he would leave the pizza on the road!

After a lot of back-and-forth, he agreed to take the pizza back to the store. I could not go to the pizza store to pick up by myself that night, as I was leaving Manchester to London and had a train to catch. Long story short, I was charged £44 for pizza that I did not receive.

If this had happened in Nigeria with the pay-on-delivery policy, the driver would have had to return the pizza. The store would then have also had to resell the pizza and pay out-of-pocket for the services of the Uber driver.

Cases like this happen in their thousands.

The cost of returned goods due to pay-on-delivery policies is a major concern, amongst other issues, which altogether sum up the total cost of getting the customer to order the product in the first place.

In my opinion, these are costs that can be managed and further reduced:

• Website placement costs.
• Marketing costs.
• Returned goods and/or canceled sales costs.

Conclusion: Lessons from the Fintech Industry

Despite its success in deploying mobile apps for the banked, there was a segment of the market that needed to explore payment beyond cash. E-commerce came into Nigeria when the tech-savvy really did not have any purchasing power.

Ten years later, things have changed. But the market for those who can really afford these products is still small, and logistics is still a mess. So, everyone spends marketing dollars scrambling for the few available e-commerce believers.

The African Model

Payments are successful in Nigeria because everyone needs to make payments, money needs to move, and this is the same for e-commerce. Everyone needs to purchase groceries, fashion items, and home equipment. In fact, these are huge markets on their own.

The big question is, why has payment thrived amidst unfavorable regulations, fraud, and stiff competition, but not in e-commerce?

Mature Banking System

The Central Bank of Nigeria (CBN), in conjunction with commercial banks, set up the NIgeria Interbank Settling System (NIBSS) as a single and automatic clearing house for banks in efforts to foster a fluid banking system and payment structure. This has spurred technological innovation and speed in the financial industry and everyone now feeds off the insatiable huge market that is Nigeria.

While fintechs have ridden on the back of products developed by NIBBS, Interswitch had done all the dirty work of developing working systems of payment for over a decade, before the likes of Paystack and Flutterwave emerged with simplified applications.

Financial Inclusion 

Financial inclusion really became a thing in Nigeria when the Interswitch Group set up the Interswitch Financial Inclusion Services division in 2016, of which I was a founding member.

Before then, Paga and Pocketmoni had the highest share in the market.

It was not one market everyone had eyes on and the success of financial inclusion opened a new way of thinking for me; a new way to see commerce.

An Untapped Market

Jumia and others may have to reconsider their approach to reducing costs, increasing sales, and having people do the heavy lifting while they provide the infrastructure for commerce.

The marketplace option is a step in the right direction, but it is barely a scratch on the surface. Just like the approach by financial institutions, an off-the-clouds sales approach that offers intermediaries a simpler delivery system can help reduce cost of marketing and rate of returned goods.

The market for e-commerce as it is today is still small, but the total addressable size for commerce is enormous. Players need to think outside the box.

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• Harvard Business School →
• Faculty & Research →
• October 2017 (Revised October 2022)
• HBS Case Collection

Jumia Nigeria: from Retail to Marketplace (A)

• Format: Print
• | Language: English
• | Pages: 24

About The Author

Ramon Casadesus-Masanell

Related work.

• October 2017 (Revised September 2018)
• Faculty Research

Jumia Nigeria: from Retail to Marketplace (B)

• January 2018 (Revised March 2019)

Jumia Nigeria: from Retail to Marketplace (A) and (B)

• January 2018

Jumia Nigeria PowerPoint Supplement

• Jumia Nigeria: from Retail to Marketplace (B)  By: Ramon Casadesus-Masanell and Namrata Arora
• Jumia Nigeria: from Retail to Marketplace (A) and (B)  By: Ramon Casadesus-Masanell and Karen Elterman
• Jumia Nigeria PowerPoint Supplement  By: Ramon Casadesus-Masanell
• Jumia Nigeria: from Retail to Marketplace (A)  By: Ramon Casadesus-Masanell and Namrata Arora

Jumia Nigeria from Retail to Marketplace Harvard Case Study Solution & Online Case Analysis

• Ivey Case Studies

Jumia Nigeria from Retail to Marketplace Problem Statement

The problem statement refer to the concise description of the issues that needs to be addressed. It identifies the issues or gap between the current and desired type of the organization, and thus requires to be stated in order for the management to look for change. The main idea of the problem statement is to answer the 5 w’s that include the answering who, what, where and why, to allow the organization resolve the problem, by stating it in clearly in 2 to 3 lines.

In recent period, the problems statement  are widely used by the firms to allow the management execute the improvement process or identify the loopholes that are effecting the overall performance or profitability of the company. Moreover, the problem statement allow the management to trim down the symptoms of the problem an organization is facing and look on to the real problem that is causing the damage to any specific aspect of the company.

Basically, developing a Jumia Nigeria from Retail to Marketplace problem statement is an extensive process and requires the proper brain storming of the teams in order to identify the underlying loopholes or inefficiencies within the organization. Also, it offers the specific insights to the management in understanding and looking at the factors that have been hidden from the management sight, effecting the performance slowly and gradually.

Apart from this, while developing the problem statement, it is important for the     Problem statement to be clear and concise. Such is due to the fact, that it allows the management, stakeholder to quickly understand the finding and also look on the main problem, rather getting entangled in the symptoms of the problem. The conciseness of the problem statement is the key, as it allows the reader to quickly understand the issue.

Moreover, clarity of the Jumia Nigeria from Retail to Marketplace problem statement is important to maintain, in order to avoid the misunderstanding between the shareholders and stakeholders. The clear problem statement is developed by stating the factors and the operations getting effected and its overall impact on the organization specific the areas, such as Profitability, sales or brand equity. Also, the purpose of the problem statement is to describe the external environment and its effect on the overall organization in short and long-term. Moreover it also delineates the impact of such changing factors on the users, and other stakeholders.

Many times, under the case analysis, the purpose of the problem statement is to improvise the current state of the organization through pursuing innovation or other changes. hence ins uh cases, the direct problem is no the ultimate organization factors but the process implementation that is needed to e in lace, in order to bring change , avoiding the upcoming risk and hence sustaining the competitive edge in the market (Spradlin, 2012).

Furthermore, the establishment of the problem statement, allows the organization and the management teams to work in a specified direction. Such is important in order to allow the organization move in a specified direction, reducing the chances of deviating From the actual path. Also, it offers the benchmark to match the desired condition of the organization, hence putting the efforts of the team in the right direction.

Yet, it is important to note that, the good problem statement does not delineates the solution or the symptoms of the problem, but it clearly states the gap that lies within the organization. Moreover, it is also determined, that a clear problem statement is half of the solution, hence it is important To state the problem correctly.

In addition, the problem statement is a group process, and hence requires a detail understanding of the issues the organization may be facing, by all members in the team. This will allow the team to develop a better solution plan addressing all the factors and considering all the risk associated with it.

Perhaps, stating the problem statement is not just writing the fact, it’s more about the factors that are effecting or may affect the organization in long term, therefore, while developing the problem statement, the factors such as human resource skills innovation, technology, change resistance are considered, that have a direct effect on the organization or is hidden cause of the problem. It is important to note, that the problem statement can cover tangible or intangible issue but it needs to have a clear relationship with the organization end goal.

In addition, while stating the problem statement, the aim of the management is to see the mission and vision of the company and then analyze the current state of the organization, such also allow the right identification of the problem and the lead to the development of concrete problem statement.

All in all, the problem statement gives a direction to the organization in understanding the right solution path and also development of the solution sets in order to overcome the current issues that are deteriorating the organizational performance or productivity. Perhaps, while writ the problem statement, it is important to consider the small factors that are often overlooked such as the intangible factors that effects the productivity of the organization in the long-term.

Jumia Nigeria from Retail to Marketplace SWOT analysis

The acronym Jumia Nigeria from Retail to Marketplace SWOT stands for strength, weakness, threats and opportunities. It is a useful tool that is widely used for strategic planning and management in many organizations. It is effectively used in building strategies for the organization to maintain its competitiveness in the market. It is simple yet powerful tool that help the organization in identifying its existing resources, capabilities, deficiencies, the existing opportunities and threats prevailing in the market.

It is a strategic planning framework that is commonly used to evaluate the organization, a plan, business or any other project. It helps in determine the organizational and environmental factors that could affect the decision to be made. It is carried out to analyze the position of an organization in in the market compare to its competitors and the major factors that are affecting the competitiveness before crafting any business strategy.

Jumia Nigeria from Retail to Marketplace SWOT analysis mainly have two dimensions internal and external dimensions. Internal dimension includes all the factors that could affect the organization which is the strength and the weakness while the external factor includes the environmental factors that is the opportunities and the threats.

Components of SWOT analysis

Jumia Nigeria from Retail to Marketplace SWOT analysis is a process that include four areas that are further divided into two dimensions i.e. internal and external factors. In SWOT analysis the strong and weak aspect of an organization is determined by evaluating the elements within the environment while the opportunities and threats of an organization are determined by examining the element outside the environment. In this way SWOT allows the comparison of organization’s resources and capabilities with the competitive environment in which it is operating.

Structure of Jumia Nigeria from Retail to Marketplace SWOT analysis

In order to carry out the analysis it is important to understand each element of SWOT i.e. strength, weakness, opportunities and threats.

Jumia Nigeria from Retail to Marketplace Strength

Strength is a characteristic that adds value to something by making it more special, unique and advantageous when compared. In this element of SWOT the abilities and the key properties of organization are discussed that gives an organization an advantage over other organizations by making it more competitive. It defines the characteristics and situations of an organization which makes it more effective and efficient when compare with its competitors.

It defines the areas in which the organization hold a command or is good at doing it and that provides the organization and important capability. It can be a skill, a resource, image, market leadership, relation with buyer or supplier or any other advantage relative to its competitors that fulfill the needs of the market by providing the organization with a comparative advantage.

Jumia Nigeria from Retail to Marketplace Weakness

Weakness refer to the situation in which the existing capabilities and the resources the company holds are weaker or not sufficient compared to others organizations in the market. In other words it means the aspects in which the organization is less efficient and needs to improve in order to align with the market trends. As these aspects negatively affect the overall performance of the organization by making it weaker compared to its competitors.

These are the factors that an organization lacks and does poorly in comparison to the organizations operating in the same market at the same level. It is a deficiency or limitation of resources, capabilities, skills that majorly affect the organizations effective performance. Management capabilities, Facilities, financial resources, marketing skills and the weak brand image can be the sources of weakness.

Jumia Nigeria from Retail to Marketplace Opportunities

Opportunity is an advantage and the driving force for an organization. It is the convenient time or situation that is present in the environment and will help the organization in achieving its goals. It is a factor that contribute positively towards the growth of the organization. It is a condition existing in the external environment that allow the organization to take an advantage of the organizational strengths, and help in overcoming the weaknesses and to neutralize the threats present in the environment.

Jumia Nigeria from Retail to Marketplace Threats

Jumia Nigeria from Retail to Marketplace Threats are the factors that prevent the organization from the actualization of an activity. It is an unfavorable situation that exist in the environment making it difficult for the organization to achieve its defined goals. It is a situation that arises as a result of the changes that took place in the immediate or distant environment, preventing the organization from maintaining its existence and superiority in the growing competition and are disadvantageous for the organization.

All the environmental factors are consider as a threat to an organization that could affect the efficiency and effectiveness of the organization.

Limitations of Jumia Nigeria from Retail to Marketplace SWOT analysis

However there are certain limitation attached with it. The Jumia Nigeria from Retail to Marketplace SWOT analysis is only a one stage of the business planning process and do not provide the organization with an in-depth analysis or research that could lead to a firm decisions. Apart from this it only cover the issues that are definite and doesn’t priorities them. In addition to this it does not provide any solution or alternatives decisions. As a framework, SWOT does processes a value but it doesn’t provide the organization with any specific direction on how the key aspects can be identified.  It significantly rely on the capabilities of the manager that how effectively it can prioritize and determine the most important element. Another limitation associated with SWOT analysis is that it provide equal weight to each factor regardless of their impact or relevancy.

Jumia Nigeria from Retail to Marketplace Porter’s Five Forces

Jumia Nigeria from Retail to Marketplace Porter five forces reflects the competitive environment of an industry. It is a strategic tool that is used to avoid or minimize the risk of losing the competitive edge that the organization has and to ensure the profitability of the products in the long run. The company holds its vision closely as it allows them to orientate its innovation in terms of choices regarding the investment and strategies. Within the industry the businesses profitability is dependent upon the following forces:

• Competitive rivalry
• Threats of new entrants
• Threats of substitute
• Bargaining power of suppliers
• Bargaining power of customers

Structure of porter’s five forces analysis

Jumia nigeria from retail to marketplace competitive rivalry.

The competition among the firms help in identifying the lucrativeness of an industry where companies are competing hard in order to maintain their power within the industry. The Jumia Nigeria from Retail to Marketplace competition is moreover on basis of diversity, the development within the sector and the barriers related to entrance in the market. The competitive rivalry is the analysis of the brands and the product, its strengths and weakness along with the strategies, competitors and the share in the market.

Threat of new entrants

It is in the favor of the companies that exist in the market to create barriers for the new entrants to prevent them from entering into the industry. The organizations could be the new companies or the companies that are planning to diversify itself in the market. The barriers can be both industrial and legal. Apart from this the size and the reputation of the companies that are already operating in the market also play an important. Furthermore the cost related to the entry, access to raw materials, barriers related to culture and technical standards also play a major role and can affect the decision of the new entrants in the market.

Threat of Jumia Nigeria from Retail to Marketplace substitute products

The Jumia Nigeria from Retail to Marketplace substitute products are an alternatives that are available in the market at comparatively better prices. Such products prevail due to the technological and innovative advancement. Due to which the products being produced by the companies that are already existing in the market and is using the same technology are than replaced by the other company’s products that are comparatively better in terms of price and quality and are being produced from sectors with significant profits. The substitute products are dangerous as the companies are under constant threat of being replaced.

High threat of substitute leads to low profitability as it limits the industry profits by placing a price ceiling due to the fear of being substituted by other product. Apart from this it also affect the growth potentials of the industry as a whole but reducing the profitability margins.  

Bargaining power of suppliers Jumia Nigeria from Retail to Marketplace

Powerful suppliers possess Jumia Nigeria from Retail to Marketplace more power to capture significant value for themselves by demanding high prices while limiting the quality and the quantity of the product or services or by transferring the cost on the participant of the industry. Many condition imposed by the suppliers generally include the increase in price while compromising the quality and quantity.

A bargaining power of a supplier in the market is strong if:

• It is more concentrated than the industry it is selling to.
• It is not heavily relying on the industry for its profits
• If the participants in the industry have to incur high cost for switching suppliers or the firms are located adjacent to the suppliers manufacturing facilities.
• The product being offered by the suppliers are highly differentiated.
• And when there is no close substitute available for the products being supplied by the suppliers.

Jumia Nigeria from Retail to Marketplace Bargaining power of customers

The buyers having strong bargaining power can highly influence the profitability of the suppliers operating in the market by imposing condition that are not much favorable for the suppliers in terms of price, quality or service. Therefore choosing clients often become crucial for the organizations as to avoid the situation of being highly depended on the buyers. The level of interest and concentration of buyers toward the product gives them more or less power.

Powerful buyers could flip the side of the powerful supplies by forcing the prices to move downwards and by demanding high quality and services by creating a competition between the participants in the industry on the basis of price and quantity. Customer are deemed strong if they contain negotiating leverage specifically if the industry is sensitive to price, the buyers can pressure suppliers for further price reductions.

The customer are assumed to have strong buying power in case:

• If the number of buyer are limited or each of the buyer purchases large quantity relative to the size of the suppliers.
• The products in the industry are standardized or are undifferentiated.
• The cost of switching is comparatively low.

Limitations of Jumia Nigeria from Retail to Marketplace Porter’s five forces

Though the model from a strategic point of view is an important tool but there are certain limitation associated with the application of the porter five forces model. The framework use a classic perfect market and relatively a static structure of market i.e. it only incorporates the aspects of the present day and only incorporate the events that took place within the short term period. Apart from the model only provide the overview of the environment and does not define the industry clearly.  As it can be difficult to group the companies having similar business lines and to call it an industry. Therefore Porter framework due to its limitation is too inert to be depending upon outside the short term to medium, term objectives.  It emphasizes more on external factors and ignore the specific factors that are more specially related with the firm. The model doesn’t incorporate new business model and the changing dynamics of the market and the impact of globalization. Moreover it does not consider non-market forces.

Jumia Nigeria from Retail to Marketplace PESTLE Analysis

Jumia Nigeria from Retail to Marketplace PESTLE analysis is one the significant and widely used tool or framework mostly by organizationswith the intent of considering the market environment before commencing the process of marketing. In fact, the analysis of the environment needs to feed all planning aspects as well as it should be continuous. The internal environment of an organization includes internal customers or staff, wages, office technology and finance etc. whereas the micro environment includesthe external customers of an organization, distributors or agents, competitors and suppliers. Additionally, the macro environment includes legal and political factors, sociocultural forces, economic forces and technological factors.

PESTLE Analysis

For the purpose of maximizing the benefits of such analysis, it is important that it should be used on regular basis so that an organization would be able to identify the trends. The effect of the particular external factors or forces might have extreme consequences for the specific department or divisions, also the analysis better helps companies in clarifying the needed or required changes, thus identifying the potential options (Norton, 2008).

The factors or forces are discussed below;

Political forces:

These are the forces that tends to be altered by the influence of government on the infrastructure of country. The political factors may involves environment regulations, employment laws, tariffs, tax policy, trade restrictions, political stability and reforms. It is noteworthy, that the charities needs to be included where a government are not willing services and goods to be provided.

Economic factors:

The Jumia Nigeria from Retail to Marketplace economic factors or forces involves interest rates, inflation, and growth of economy, cost of living, working hours, wage rate and exchange rates. Combining these factors, it last greater and inevitable impact on organization.

Social factors:

The culture or social influence on certain businesses vary from country to country. It is significant to consider these factors. The social factors includes safety and health consciousness, various demographics, population growth rates and cultural aspects.

Technological factors:

Notably, Jumia Nigeria from Retail to Marketplace technology is one of the most important way of being competitive in the highly competitive market arena. Not only this, it drives globalization, the factors includes environmental and ecological aspects, and available services as well as products. An organization should innovate and be compatible with the technologies.

Legal factors:

The Jumia Nigeria from Retail to Marketplace legal factors involves the certain laws and regulations which might effect on the business operations of an organization. It also includes impending and current legislation that tends to impact on the industry in areas including competition, employment, safety and health. An organization should consider the influence of the national and international laws where the organization would originate the business operations.

Environmental factors:

The Jumia Nigeria from Retail to Marketplace environmental factors include all those factor lasting impact or influence, the surrounding environment most likely determine environmental factors. The factors involves awareness of the seasonal or climate change or terrain variation. The analysis of the environment including internal and external elements is vital for organization since it impacts on the performance of an organization.

Limitations of Jumia Nigeria from Retail to Marketplace PESTLE:

The limitations are discussed below;

• The external factors are dynamic and can be change at a rapid pace. Overtime, the changes might be occur in less than one day, therefore the companies should make it tricky in order to predict how and why these forces might influence the future or present of the certain project.
• There are many occasions, in which the environmental changes have an adverse influence on the project that might not be noted in the initial stages of project, indicating that the uncertainty sis still there even after the pestle analysis have carried out. This in turn might defeating the prime reason of the pestle analysis.
• The usual or common procedure for pestle analysis is presenting a simple list of the environmental factors affecting the project. Until& unless, the organization critically examine the attributing factors, the analysis’s findings does not seem to be of greater value or consideration.
• The analysis is supposed to be insufficient for the strategic planning objective, since it likely scans the externa environmental, whereas avoiding the competitive scenarios and internal environment. Nonetheless, the analysis needs to be conjunction with other frameworks such as S-W-O-T analysis in order to get a more realistic picture.

Jumia Nigeria from Retail to Marketplace Conclusion

To conclude, PESTLE analysis is considered as an effective tool of planning and it offers viable and effective technique foranalyzing and scanning the operating environment of an organization. The effectiveness of the analysis highly depends on the accuracy of the collected data, updates to accommodation changes in timely manner and other tools trimming down the PESTLE limitation to some extent.

Jumia Nigeria from Retail to Marketplace VRIO Analysis

The Jumia Nigeria from Retail to Marketplace VRIO analysis is basically the extension of the Jumia Nigeria from Retail to Marketplace PESTEL analysis, which allows the oragnation to understand the resources, competitive edge, value proposition and its value in the market. The Basic idea of the Jumia Nigeria from Retail to Marketplace VRIO model is to analyze the factor that are valuable for the organization. Such may include the supply chain efficiency, value chain maintenance, technology or other factors, that offer value to the company and in return allows the organization to offers similar value to the customer.

In addition, it also analyze the factors that are Rare within the organization. Such analysis of the compatibilities or capacities is important, as it allows the organization to develop the sustainable competitive edge over it. The value factor analysis of the organization gives an eye opening view to the management and also offers the solution on where the organization may build the market utilizing the area value creation factors

Moreover, it also determines the Imitable factors. These are the factors that are easily imitable by the organization (other players) and thus needs to be considered. In addition, the imitable factor also outlines the factors that are inimitable by the other organization. These in-imitable factors allows the organization to developed the sustained competitive edge in the market and hence enhances the chances of sustainability ion the long-term.

Lastly, Organization factor includes the resources and functions that are offering certain value to the company. This determination of organization allow to the company to understand what additional things or function is required to be in place, or needs to be improvised in t=long term.

All in all, the advantage of using the VRIO analysis is to determine the sustained competitive edge in the market. Such determination is important for the organization to expand in the market and continue its operations with sound profitability. In addition, it offers clear view what are the factors that are valuable and inimitable o can be easily imitated in the long-term, thus preparing the organization to either use the valuable factor to delight the customer and develop a sustained competitive edge, or enhance its value and oragnation strengths to develop a strong competitive edge in the market, which is important to develop and maintain in order for the organization  to remain profitable and allow the maintenance of market share in the long-term (Hille, 2015).

Jumia Nigeria from Retail to Marketplace Financial Analysis

Jumia Nigeria from Retail to Marketplace Financial analysis is the assessment of the stability, viability as well as profitability of a sub-business, business or project. It is the process that is widely used for identifying the financial weaknesses and strengths of the corporations, this can be done by building the relationship between items of the profit & loss account and balance sheet. It can be used for examining the business operations from the variety of perspective for determining the ways that can be used to strengthen the business and understating the greater financial condition or situation. The process scan the financial statement to evaluate the relationship the disclosed items. In other words, the analysis keep focusing on the past performance evaluation in terms of profitability, liquidity, growth potentiality and operational efficiency. The analysis of the financial statement involves the methods use in interpreting and assessing the outcome of the current and past financial position or performance since they associate to particular interest factors in investment decisions. Thus, the analysis of the financial statement is important mode of assessing the past performance as well as planning and forecasting the future performance.

Elements Assessed By Financial Analysts:

The elements are listed below;

Profitability: the financial analyst generally assess profitability of an organization since it is the ability allow organization sustaining growth and earing income in both long term and short term. A degree of profitability of an organization highly depends on the income statement reporting on the operations results of company.

Solvency: it is the ability of an organization paying off its liabilities or obligations to third parties or creditors in long term. The solvency depends upon the balance sheet of company indicating the company’s financial condition at a given period of time.

Liquidity : it is the ability of an organization satisfying immediate obligations, maintaining positive cash flows and it most likely based on the balance sheet of company depicting the financial condition of organization.

Stability: the ability or an organization to remain in the business for the longerperiod of time without sustaining significant losses while conducting the business operations. By assessing the stability of the company needs use of balance sheet and income statement as well as non-financial and financial indicators.

Users of Jumia Nigeria from Retail to Marketplace Financial Statement Analysis

The users of the financial statement are listed below;

• Management: the controller of the company most likely prepares the ongoing analysis of the financial results of companyin relation to the unseen operational matrices by outside entities.
• Investors: both prospective and current investors tends to examine the financialstatements for leading the ability of company to continue generating cash flows, issuing dividends and growing at historical rate.
• Creditors :one who has landed funds to the organization likely show his interest in its ability paying back the debt, thus keep focusing on measures of cash flows.

Types of Jumia Nigeria from Retail to Marketplace Financial Analysis

            Financial ratios:

Significantly, creating the financial ratio add meanings to the accounting and financial data of the business. Therefore, being the use of the financial ratios would provide assistance thereby leading to the overloaded information. Theratios are sub-divided into the major groups that tend to cover the financial areas.

The sales amount of an organization depicts the business size. The sales implications for the selling and purchasing power, economies of scale and amount of market share. The % change in sales invocates that how rapidly or quickly the sales has been growing over the period of time, thus leading to answer the question regarding growth in relation in competitors and general economy.

Profitability:

It is significantlyimportant for companies measuring profit in context, for example; if it is stated that the company has generated 10% profit returns and did not ensure the provision of profitability-oriented information but in case if the company had make a 10% gross profit or return on equity, then the profit term would give meaning. The ration lay under profitability are discussed below;

Return on assets (ROA): it is one of the most commonly and widely used performance measure of an organization. The return on equity likely measures the profit amount that had generated by assets. It is used with the intent of analyzing that how well an organization have put their assets to work comparing to other competitors.

Return on equity (ROE): This performance measuring parameter measures the return that the company has earned in relation on the owner funds. The matric can be adjusted for thepurpose of reflecting the average equity amount being employed during the span of year, giving the more accurate and realisticpicture of how the organizationhas been performing throughout the year.

Gross profit margin (GPM): it is also referred to operating profit margin. It is most common use with the objective of assessing the business model and financial health of company through revealing the remaining portion of money from revenues after deducting cost of goods sold.

Operating return on total assets (ORTA): this matric most commonly provides better way of looking at the ability of the organization to generate profit returns from the principle or core activities since it does not involves other expenses including interest expenses not it includes marketable securities income, interest income or onetime extraordinary transaction.

Asset Management – Jumia Nigeria from Retail to Marketplace

The ratios under asset management includes current asset turnover, day’s receivable, days of inventory and inventory turnover.

            Asset turnover: this measure is widely used in order to measure the ability of the company in generating sales from the fixed assets. Not only this, it also indicates that an organization has a lot unproductive assets for instance inventory, receivables, equipment and plant for its current sales’ level.

Fixed assets turnover : it is supposed to be vulnerable to the asset valuation issue. It is most important ratio in companies which are capital intensive. It is comparatively low importance for the companies with minimum need for capitals such as leased retail operations and wholesale distribution. In case an organizationis decreasing fixed asset turnover so it means that the production has been running at lower than capacity.

Current asset turnover: it measures the current asset level that is require for supporting sales.

Day’s receivables: it is the measure of how long will it takes for an organization collecting bills owing to it. The collection time is measured by days receivables on credit sales.With increasing day’s receivable, the company would need more working capital. The credit policy of an organization last greater impact on the day’s receivables. It is important to note there that it also highlights the needs to beaware of keep emphasizing on the company’s specific concerns without appreciate secondary influence on other ratios.

Days of inventory: it is the indication of how the company efficiently managing inventory. The inventory amount can be monitored by analyzing day’s inventory ratio.

Jumia Nigeria from Retail to Marketplace Financial Structure

Financial leverage multiplier : it is the connection between return on equity and return on assets of an organization. It provides the way of looking at the relative equity and debt amount that has been using by company in order to finance the assets.

Current debt to equity ratio: it is the mix if the debt of an organization. In case of high current debt to equity ratio, it means that the company would be in problematic situation while paying its bills.

Equity turnover : in case of high debt to equity ratio, it might because of the too little equity or too much debt burden on an organization. In case of high equity turnover ratio, indicating that the shareholders have efficiently used equity.

DuPont’s Jumia Nigeria from Retail to Marketplace Profitability Model

It is considered as the best model as it does not reveal anything regarding the liquidity of an organization. Also it likely reveals about the organization’s expense. One of the unavoidable advantage of this model is thatit has begun establishing benchmarks – across companies and over the period of time which can be used for flagging the potential issues areas where more than one ratios are reflecting the key problem or issue.

Trend or Percentage Jumia Nigeria from Retail to Marketplace Analysis

The useful snap shot can be taken by analyzing the financial condition of an organization in a particular time period. Also, there are many questions that can be bets answered by comparing the figures in percentages. For instance; which are the areas of company getting stronger or weaker? Which areas are in need of immense attention? Etc. for the purpose of answering these type of question, it is important for organization recasting the financial statement in to the percentage terms. The major advantage is that it enables the significant comparison between time periods. There percentages are most likely providing analysts or managers with the fast or rapid way for finding key issues or problems. Additionally, the attention can be paid to certain weakness and strengths through seeing the appropriate changes over the period of time.

After considering the major top problems, the business analysts or managers would then be able maximizing the shareholder’s wealth.

Comparative Jumia Nigeria from Retail to Marketplace Analysis

The evaluation of the performance of company is often easier in case of having benchmark or standard performance for the comparison. The suitable benchmark can be found with some problems such as unique attributes problem and averages problem etc. it is not appropriate setting an average as an objective. An upper performance quantile can be the most appropriate performance standard (D’Aveni, 2007)

Operational Jumia Nigeria from Retail to Marketplace analysis

The assessment of the operational efficiency in the initial stage as a whole for business or any of the business sub-division is likely performed through a percentage analysis of income statement. Individual expenses or cost items are associating to gross sales revenue adjusted for all allowances and returns. The sales’ common base permitting a ready comparison between key expenses from time to time against industry databases and competitors in the market over longer stretches of time

Cost of goods sold and gross margin analysis: in operational analysis the most commonly used ratios involves the calculation of the cost of sales as a percentage of sales. The ratio depicts that the magnitude of the cost of services provided or cost of good manufactured or purchased in relation to gross profit or gross margin left over for operating profit and expenses. It is noteworthy that the gross margin reflect the relationship of volume, price and cost. A change in the gross margin might derived from the combination of the changes in the product’s selling price, manufacturing cost level for the product and the variation in the business’s product mix.

Contribution analysis : this analysis is mainly used for the internal organization’s management, even though it is increasingly applied in broader analysis of financials, it includes relating sales to the individual product group’sor total business contribution margin. Such type of calculation needs very selective estimate or analysis of the variables and fixed cost or expenses of the company while taking into consideration the operating leverage effect.

Jumia Nigeria from Retail to Marketplace Market Indicators

There are two equally important ratios used as indicators of the values of stock market.

the simple relationship between current stock market price and expected or current earnings per share is often quoted by both owners and management.  The earnings multiplier ratiois considered as a broad indicator of how the earnings performance and prospects of organization is judged by the stock market. The straightforward calculation related the common share current market price to the most recent available EPS on the yearly basis.

Relative movements in price: targeting for the purpose of creating the shareholder value depends on the relative performance of price. The movement in price are likely expressed in mentioned ratios and absolute dollar terms. While the typical investor shows their greater interest in absolute change in shares value, the insights from the stock performance to the appropriate average and to the market for some industries are supposed to be helpful to assess the company’s particular trend (Rappaport, 2010).

Value drivers : in recent time, the approach that has been significantly gaining the increased recognition is identifying the key elements standing out as vital in shareholders value creation of the specific organization. From the standpoint of owners, the key value drivers may be the growth potential company’s key services and products, key technology capabilities providing the competitive edge, superior process’s cost effectiveness as well as the strategic differentiated positioning. Combining all of these lasting inevitable impact on the expectations of market regarding the cash flow generation and future success of the company.

Value of firm: this is the most common concept recognizing the components of capital structure of an organization debt and equity are tends to be values separately in the market. The formula for calculating the value of firm is showing value of the shares of company is the function of the firm’s total value less debt value (Harms, 2015).

By having a closer look over the matrices used for financial analysis, it is to say that the financial statements holds notable importance because it evaluates the management performance, plans and corporate strategy for future.

In addition, the financial analysis helps companies in making the more informed decisions for the firm. The underlying objective of the financial analysis is organizing the financial statement as well as other accounting data of an organization enabling the comparisons with other companies, also enabling to accurately evaluate raw data. In short, it provides the basis to company’s executive, analysts and manager of making the company profitable in forthcoming years (Helfert, 2017).

Alternatives

The particular section deals with the different ways the problem can be resolved. In particular section, the management/teams develops different options through which the problem can be resolved. Many times these options are already in hand with the management or re-developed from the scratch through strong brain storming.

In typical situation, there are three options that are developed in by the organization to deal with the given problem. The options developed entails and includes the maximum factor that the organization should analyze or achieve, thus offering great value.

While developing The Alternative, the following factor are taken in account, in order to develop the best alternative that may resolve the problem effectively.

These factor includes the consideration of the following:

Reliability

Invulnerability, compatibility, reversibility, jumia nigeria from retail to marketplace cost:.

The cost includes if the option proposed is cost effective or can be afforded easily by the company without effecting the overall profitability and other operations of the company. The consideration of cost is important in the alternative generation in order to attain the maximum feasibility with overall business strategy and the budget allocated.

The reliability factor includes if the option developed is successful or has the successful track record in the past or with the pats companies. Such is important to analyze or else it would lead to failure.

The Invulnerability of the option is also analyzed, in order to understand the sustainability of the option if the one part factor is missing so to understand the suitability of the option.

The merit factor, outlines if the option really resolving the issue or aligned with the given situation.

The simplicity factor analyses if the option proposed is easy to implement. Because adopting or proposing an alternative that is difficult to implement or takes a lot of resources with no definite outcomes is vain.

In addition, the compatibility of the option is also analyzed, in order to understand if the given option is aligned and compatible with the procedures of the organization. Such factor analysis is important in order to avoid any resistance implementation and also save the resources and efforts.

Among the above factors, the reversibility factor carries high importance. It is due to the fact that the organization needs to analyze exact factor in terms of its reversibility to see, if the process can be reversed, if the option fails to offer the respective results.

The ability of the option is considered while the alternative generation process, so gauge if the option will remains table, if the given situation and markets changes. And will it make the organization sustained in the changing market situation.

The robustness of the option also needs to be analyzed. It is due to the fact that such analysis allow the organization to see, if the option will remain strong in future or not.

Apart from this while developing the option, it is important to consider the realistic nature of the option. The option has to be realistic and should have imperative results on the organization. The realistic and SMART nature of the option is important to be considered and developed, so it offer maximum value and also resolves the problem effectively.

Lastly, while developing the options/alternatives, it is important to consider the nonrealistic factors that may make the alternatives complicated, leading to poor implementation, time consumption and other related issues. Hence, it is suggested, that while developing the alternatives, it is important to consider the realistic and smart nature of options along with the avoidance of developing  such issues that are not offering the right solution or the suggesting such options that are of no use to the organization.

Jumia Nigeria from Retail to Marketplace Evaluation of Alternatives

Alternative are the different ways of achieving a same end goal through two or more different methods. It is not a close substitute of a first define choice or other alternatives or must provide the solution of the problem in a particular way. For instance, lower price, special offer, and money back guarantee etc. are all the different ways for achieving the same objective that increased sales. Alternatives are generally mutually exclusive in a way that if we combine two or more alternatives together it will eventually create a new alternative.

They are the technical and economically ways through which the project can be carried out feasibly. It is encouraged to be consider especially for a projects that are large and complex in nature

Under the evaluation of alternatives the pros and cons of the alternatives developed above are gauged based on the benefits they offer to the organization and also the strengths the carry that may help the oragnation in overcoming the problem. In addition to this, the disadvantages of the alternatives entails the costs that are associated with implanting the option, and thus required to  be considered before the implementation process, in order to avoid any mishap in future or during the implementation.

Under the Cost/benefit analysis of the alternatives, different factors such as cots, competitive edge, market share, financial feasibility and human resource required are considered to be the major factors of implementation. In addition to this, the careful and deep consideration is given to the political, economic, social and other porter 5 forces and pestel model so to understand the alignment of right alternative with maximum value and weightage in resolving the problem.

Moreover, under the particular section, the decision criteria is also developed. The particular decision criteria incorporates all the factors that the company aims to archives. Such factors may include sales, profitability competitive edge, market share and other. Once it is done, each alternate is compared against each other and with the decision criteria develop, and are given different weigtage. These weigtage are given based on most favorable to least favorable, and the option with most rating s ultimately selected.

Also, during the evaluation process, the financial feasibility of the organization is also considered and the drawbacks/weaknesses of the organization. This is important as it allows the organization in meeting the ultimate goals and addressing the problem effectively.

Lastly, while doing the evaluation of alternatives, it is important to quantify the options through different techniques. Though in many cases, it is difficult to analyze the feasibility of the options especially the intangible factor, however, quantifying the maximum option is important, in order to develop a clear image and understanding of option that will address the problem.

Also, while selecting a particular course of action/alternative, it is important to ask” whether the option will resolve the problem directly, or will an additional efforts will be required to address the problem. In Addition it is also needed to be considered, if the given option or the alternatives have the right alignment with the organization and re offering value.

Perhaps, it is important to involve other members to take the active feedback on the alternatives, in order to gauge the value of the alternatives and the value it may offer to the organization in the long-term. The open discussion and review from past enables to see more clear picture of the ultimate outcomes, leading to better implementation and selection of the right alternative.

Jumia Nigeria from Retail to Marketplace – Recommendation

Once the options are developed and evaluated, the recommendation is made, on the basis of the best suited option that offers the maximum value to the company and address the problem succinctly. The recommendation is mad in away, that not only offers the solution the problem, but also depicts the implementation process and the course of action that the organization needs to take in order to be successful.

A strong recommendation must cover the key areas as how the organization will implement the alternatives, what benefits will it receive if it implement the when alternatives and what could be the cost, that he organization will need to overcome or address, in order to effectively implement the alternatives.

In addition to this, once the alternative is selected, the recommendation needs to entail what change it will bring to the organization like the 20 % increase in the Jumia Nigeria from Retail to Marketplace sales or profits or the sustainability or increases in market share. These factors are important to be mentioned in the recommendation, in order to make itr strong and firm and allow the stakeholders/reader to connect the problem and solution, leading to better understanding.

Moreover, the recommendation also needs to entail the plan B, that if for instance the results are not generated as per the plan, the second set of recommendation must be incorporated in the plan, in order to allow the organization to quickly shift to the plan B, in order to avoid the losses and sustain the presence of the company in the market.

Lastly, under the recommendation, it is important to incorporate the finding from the past, so to make the given Solution more acceptable. A good Jumia Nigeria from Retail to Marketplace recommendation is that, incorporates the findings from the past. This is important, as it allows the reader and stakeholders to understand the proven facts, and the pasts results such recommendation has harvested, leading to more acceptability and also the determination of the plan that may be in need to be  adopted so to avoid the delays and resistance in the organization, while implementing the change.

Infact, the set of recommendation offered should also have a contingency plan, and the other course of action for plan A and B both. This makes recommendation more firma and acceptable. Furthermore it allows the stakeholders to see the other options if the given set of alternative does not work, thus saving the time, effort and the working from scratch, hence making it  cost effective in nature.

All in all, the recommendation include, what, why, how and whom factors. Thus is important as to allow the organization. Shareholders to clearly understand what is required to done, how it is required to do, who are the key player and how it will be implemented. In addition time required has to be mentioned. This allows the stakeholder to understand and determine the time and resources required to implement the plan effectively (Turner, 2012).

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Jumia Nigeria from Retail to Marketplace B Case Study solution

Introduction.

The current case solution is published by 247caseanalysis and focuses on Jumia Nigeria from Retail to Marketplace B. The case presents an overview of the strategic and managerial issues that the Jumia Nigeria from Retail to Marketplace B faces in the growth and development of the business. The case solution focuses on understanding the central issue(s) in the case. The case study solution then uses strategic tools and models to solve the case and makes strategic recommendations for the Jumia Nigeria from Retail to Marketplace B (Abratt & Bendixen, 2018; Iacobucci, 2021).

The case study and the case solution for the Jumia Nigeria from Retail to Marketplace B are intended to give a comprehensive and holistic perspective regarding real-world business situations and challenges to the reader. Like all HBS case studies, it is important for the reader to first read the case for the Jumia Nigeria from Retail to Marketplace B. The proposed case study solution for the Jumia Nigeria from Retail to Marketplace B has encompassed the needs of all stakeholders while addressing the central challenge effectively (Deepak & Jeyakumar, 2019).

External environment analysis

The Jumia Nigeria from Retail to Marketplace B cannot directly influence the external environment. The Jumia Nigeria from Retail to Marketplace B must ensure to assess and continually review the external environment to identify potential challenges and opportunities (Abratt & Bendixen, 2018). This is needed because:

The external environment is dynamic and keeps changing.

External environment factors and dynamics, directly and indirectly, influence Jumia Nigeria from Retail to Marketplace B operations (Anthony, 2021).

PESTEL Analysis

The Jumia Nigeria from Retail to Marketplace B needs political stability to maintain business development and growth globally.

The Jumia Nigeria from Retail to Marketplace B must also pay heed to local and global taxation implications for operations carried on site, as well as in other countries.

The Jumia Nigeria from Retail to Marketplace B is directly impacted by the policies and regulations devised by the governments in its host as well as home countries (Chernev, 2018).

Lower interest rates facilitate the Jumia Nigeria from Retail to Marketplace B as it leads to increased instances of borrowing.

Lower interest rates also lead to increased consumer power, and increased demand for products of Jumia Nigeria from Retail to Marketplace B (Deepak & Jeyakumar, 2019).

The operations and demand for Jumia Nigeria from Retail to Marketplace B are directly influenced by the GDP and economic growth in the countries where it operates and exports (Buchanan & Huczynski, 2019).

Increased focus on education and higher literacy rates have allowed the Jumia Nigeria from Retail to Marketplace B to benefit from a more skilled and talented labor pool.

The higher portion of the youth has also benefitted the Jumia Nigeria from Retail to Marketplace B in creating a high demand for its products and services (Iacobucci, 2021).

Assessment of the population and consumer trends have allowed the Jumia Nigeria from Retail to Marketplace B to refine its segmentation and targeting strategies – leading to improved positioning of its portfolio offering (De Mooij, 2019).

Technological

Jumia Nigeria from Retail to Marketplace B has high internal innovation capabilities.

Jumia Nigeria from Retail to Marketplace B invests in research and development for improved creativity and technological progress.

The Jumia Nigeria from Retail to Marketplace B makes use of innovative and advanced technology to make its internal processes more efficient and work towards achieving economies of scale.

Jumia Nigeria from Retail to Marketplace B also benefits from knowledge sharing through global operations and transfers technology internally (Baines, Fill, & Rosengren, 2017).

Environmental

The Jumia Nigeria from Retail to Marketplace B follows and abides by environmental regulations imposed in various countries.

Consumers for Jumia Nigeria from Retail to Marketplace B have rapidly adopted green lifestyles and green consumption.

Incorporating environmentalism into its strategic goals and direction has enabled the Jumia Nigeria from Retail to Marketplace B to become more efficient in this resource allocation (Stead & Stead, 2014).

The Jumia Nigeria from Retail to Marketplace B ensures to follow the equal employment and equal opportunity law.

Through the equal opportunity act and regulations, the Jumia Nigeria from Retail to Marketplace B ensures that it does not discriminate against different groups in its HUMAN RESOURCE MANAGEMENT practices.

The Jumia Nigeria from Retail to Marketplace B also ensures to abide by the health and safety regulations.

The Jumia Nigeria from Retail to Marketplace B makes sure to follow regulations regarding employment contracts and employer responsibilities to ensure fair policy-making and high performance (Lasserre, 2017).

Porter Five Forces

Industry rivalry.

There is high competitiveness and rivalry in the industry.

The market is highly fragmented, which leads to increased competition for Jumia Nigeria from Retail to Marketplace B.

The Jumia Nigeria from Retail to Marketplace B faces industry rivals of various sizes and operations.

The competition for Jumia Nigeria from Retail to Marketplace B is local as well as global in nature.

The increased rivalry in the industry ensures that all players, including Jumia Nigeria from Retail to Marketplace B, offer high-quality products and services to consumers at competitive prices (Varadarajan, 2015).

The threat of new entrants

The threat of new entrants is moderate.

There are entry barriers such as government regulations and financial capital needed for setting up operations.

This ensures that only powerful players with high financial muscle enter the market where Jumia Nigeria from Retail to Marketplace B is operating.

New entrants ensure that the Jumia Nigeria from Retail to Marketplace B maintains its focus on competitiveness and high quality (Wunder, 2019; Abratt & Bendixen, 2018).

Threat of substitutes

The threat of substitutes is moderate to high.

There is direct well as indirect substitutes available for Jumia Nigeria from Retail to Marketplace B offerings.

The high number of players and market fragmentation has led to the increased availability of substitutes for Jumia Nigeria from Retail to Marketplace B products.

There are low switching costs for consumers between substitutes (Sahaf, 2019; Kotabe & Helsen, 2020).

Bargaining power of buyers

Jumia Nigeria from Retail to Marketplace B operational a highly fragmented industry.

The bargaining power of the buyers is high.

Players, including Jumia Nigeria from Retail to Marketplace B, do not have a retail setup (Phillips & Moutinho, 2018; Chernev, 2018).

Bargaining power of sellers

The bargaining power of suppliers is high in the industry where Jumia Nigeria from Retail to Marketplace B operates.

There're numerous players in the industry, and suppliers have contracted with most of them.

The raw materials provided by suppliers are restricted, and limited owing to quality needs and benchmarks (Kotabe & Helsen, 2020; Joyce, 2022).

Internal environment analysis

The internal analysis allows an insight into the factors that Jumia Nigeria from Retail to Marketplace B can directly influence. These factors and capabilities are used by the Jumia Nigeria from Retail to Marketplace B to ensure that:

It is able to capitalize on the opportunities from the external environment.

It is able to mitigate risks and manage challenges and threats appropriately.

The Jumia Nigeria from Retail to Marketplace B is able to set the right strategic direction and use internal capacities towards its attainment (Stead & Stead, 2014; Deepak & Jeyakumar, 2019).

The Jumia Nigeria from Retail to Marketplace B has a strong brand image and a positive consumer perception in the market.

The Jumia Nigeria from Retail to Marketplace B invests in research and development, which helps the company focus its new product development as well as marketing capabilities (Phillips & Moutinho, 2018).

The company has a strong financial revenue earning ability and enjoys high profits.

The Jumia Nigeria from Retail to Marketplace B has a global distribution network, which is strong and has allowed it to enjoy high business growth.

International expansion has allowed the Jumia Nigeria from Retail to Marketplace B to understand diverse cultures and their knees – and engage in the localization of its product portfolio (DuBrin, 2013).

The Jumia Nigeria from Retail to Marketplace B is criticized for high prices for its product portfolio.

The company has suffered negative PR owing to the recall of some of its products which were faulty.

Despite engagement with advanced technology, Jumia Nigeria from Retail to Marketplace B continues to use manual systems internally, which leads to time ineffectiveness (Abratt & Bendixen, 2018).

The Jumia Nigeria from Retail to Marketplace B has an organizational culture that is resistant to change and, as a result, exhibits slow adaptation to new trends.

The product design for the Jumia Nigeria from Retail to Marketplace B’s offerings is imitative.

The Jumia Nigeria from Retail to Marketplace B has undifferentiated products in its portfolio with respect to the competition (Phillips & Moutinho, 2018; Baines, Fill, & Rosengren, 2017).

Opportunities

The Jumia Nigeria from Retail to Marketplace B has the opportunity to expand to developing and emerging economies.

The Jumia Nigeria from Retail to Marketplace B can develop outsourcing partnerships to further maintain cost-effectiveness.

The Jumia Nigeria from Retail to Marketplace B can also engage in green production and work towards environmental sustainability (Stead & Stead, 2014; Lasserre, 2017).

The Jumia Nigeria from Retail to Marketplace B can also develop strategic partnerships and alliances to facilitate business growth and development.

Target niche markets, and develop new products.

The Jumia Nigeria from Retail to Marketplace B can benefit from the evolving media trends for marketing purposes – including using social media content creation to target new consumer groups (Varadarajan, 2015; Wilson, 2018).

The Jumia Nigeria from Retail to Marketplace B is facing high competition.

The Jumia Nigeria from Retail to Marketplace B is also experiencing high imitation of its products.

The Jumia Nigeria from Retail to Marketplace B faces threats from the increased price volatility of raw materials as well.

The unstable government and government policies are also a threat to the operations of the Jumia Nigeria from Retail to Marketplace B- especially internationally.

Slow change adaptation may lead the Jumia Nigeria from Retail to Marketplace B to become an industry laggard (Anthony, 2021; Abratt & Bendixen, 2018).

Marketing mix

The product offerings by the Jumia Nigeria from Retail to Marketplace B maintain consistently high quality.

The Jumia Nigeria from Retail to Marketplace B engages in brand-building activities to ensure that its product and service offerings are well received by the target audience (Chernev, 2018).

Brand-building activities build positive associations for Jumia Nigeria from Retail to Marketplace B and lead to repeat purchases as well as high consumer loyalty.

Jumia Nigeria from Retail to Marketplace B ensures that its products are available in different SKU sizes to cater to the needs of different groups within its target audience.

The Jumia Nigeria from Retail to Marketplace B also offers a warranty for its products (Khan, 2014).

The Jumia Nigeria from Retail to Marketplace B ensures competitive pricing in the industry among the high number of market players.

For new products, the Jumia Nigeria from Retail to Marketplace B maintains an introductory pricing strategy to encourage trials and purchases (Kareh, 2018).

For its star products, the company maintains penetrative pricing strategies to allow maximum trial.

For mature products, the Jumia Nigeria from Retail to Marketplace B engages in aggressive and competitive pricing.

The Jumia Nigeria from Retail to Marketplace B offers regular discounts to appeal to consumers, clear stocks, as well as for increasing footfall (Išoraitė, 2016).

Jumia Nigeria from Retail to Marketplace B ensures that all its product offerings are highly accessible.

The Jumia Nigeria from Retail to Marketplace B places products in physical retail setups like supermarkets and hypermarkets.

The Jumia Nigeria from Retail to Marketplace B also places products with e-tailers such as amazon so consumers can easily access the products (Iacobucci, 2021).

The Jumia Nigeria from Retail to Marketplace B also has an online system on its website for managing orders placed directly with the company.

The Jumia Nigeria from Retail to Marketplace B has a strong distribution network, as well as competent and quick consumer service. (Kareh, 2018; Abratt & Bendixen, 2018).

The Jumia Nigeria from Retail to Marketplace B uses traditional promotional platforms of television to reach the masses with its product portfolio.

The Jumia Nigeria from Retail to Marketplace B also engages in radio and print promotional activities and advertisements (Deepak & Jeyakumar, 2019).

The Jumia Nigeria from Retail to Marketplace B also uses social media to reach out to its audiences and influence them.

The Jumia Nigeria from Retail to Marketplace B has developed expertise in interesting and relevant content creation, which attracts its primary as well as secondary target consumer groups (De Mooij, 2019).

The Jumia Nigeria from Retail to Marketplace B frequently uses influencers to create a positive buzz and hype regarding its products, as well as to ensure high reach.

All promotional content is integrated and uses emotional appeals to create a lasting relationship with the consumers (Chernev, 2018).

The Jumia Nigeria from Retail to Marketplace B has a strong global presence and strong business development capabilities.

The Jumia Nigeria from Retail to Marketplace B focuses on research and development internally to identify market gaps and demands.

The Jumia Nigeria from Retail to Marketplace B makes use of AI in its production operations and marketing functions to increase cost efficiency as well as affectivity (Dimitrieska, Stankovska, & Efremova, 2018).

The Jumia Nigeria from Retail to Marketplace B engages and invests in acquiring advanced and progressive technology for operational efficiency. (Joyce, 2022).

The Jumia Nigeria from Retail to Marketplace B has a strong retail setup and a strong distribution network across the globe (Gillespie & Swan, 2021; Chernev, 2018).

The Jumia Nigeria from Retail to Marketplace B has access to unique raw materials, which helps it maintain high quality as well as differentiation in its product offerings.

The Jumia Nigeria from Retail to Marketplace B holds special patents and licenses for manufacturing processes, as well as for being able to manufacture off-site in other countries (Grewal & Levy, 2021).

The Jumia Nigeria from Retail to Marketplace B undertakes and participates in sustainable and eco-friendly manufacturing processes.

The Jumia Nigeria from Retail to Marketplace B has also developed a green packaging solution for its product offerings and portfolio (Gillespie & Swan, 2021).

The leadership within the Jumia Nigeria from Retail to Marketplace B is visionary and charismatic.

The organizational culture within Jumia Nigeria from Retail to Marketplace B is robust, innovative and creative.

The organizational culture is based on the unique values, and implementation of the same – including transparency, honesty, and commitment (Groucutt & Hopkins, 2015).

The human resource management policies within the Jumia Nigeria from Retail to Marketplace B support employee development and engagement – leading to high employee satisfaction and high employee morale (Machado, 2019; Anthony, 2021).

The compensation framework within the Jumia Nigeria from Retail to Marketplace B is advanced and focuses on extrinsic as well as intrinsic drivers for employee performance.

The Jumia Nigeria from Retail to Marketplace B enjoys high brand equity based on consistently high deliverance of product quality (Hitt, Miller, Colella, & Triana, 2017; Grewal & Levy, 2021).

The technical infrastructure within the Jumia Nigeria from Retail to Marketplace B comprises new and advanced technology as well as network development to support its operations (Griffin, 2021)

The Jumia Nigeria from Retail to Marketplace B has access to advanced physical infrastructure as well which helps support its technical advancements, as well as its manufacturing and related operations (Valeri, 2021)

The international exposure that the Jumia Nigeria from Retail to Marketplace B has received owing to its expansions has allowed it to develop and apply innovation as well as new knowledge for improving existing processes and schedules within the company (Hitt, Miller, Colella, & Triana, 2017; Abratt & Bendixen, 2018; Valeri, 2021).

Value chain

The core capabilities and strengths of the Jumia Nigeria from Retail to Marketplace B have enabled it to overcome obstacles and challenges and achieve its strategic goals and targets.

The core strengths and competencies of Jumia Nigeria from Retail to Marketplace B form an important part of the company’s value chain (Chernev, 2018; Anthony, 2021).

Primary activities

Jumia Nigeria from Retail to Marketplace B works directly and owns part of its operations in the value chain.

The Jumia Nigeria from Retail to Marketplace B also works through different third parties as well as contracts with other parties for managing operations in other countries (Anthony, 2021).

For inbound logistics, the Jumia Nigeria from Retail to Marketplace B ensures that all raw materials are transferred to warehouses and manufacturing sites in a timely fashion using company-owned transportation.

The Jumia Nigeria from Retail to Marketplace B manages its operations directly as well as through third parties.

The operations of the Jumia Nigeria from Retail to Marketplace B are spanned in its hometown as well as conducted overseas at other locations (Deepak & Jeyakumar, 2019).

In offshore countries, the Jumia Nigeria from Retail to Marketplace B manages operations through partners and agents – who look after distribution and marketing activities for the Jumia Nigeria from Retail to Marketplace B.

The Jumia Nigeria from Retail to Marketplace B engages in invested marketing activities – based on consumer and market research (Dimitrieska, Stankovska, & Efremova, 2018; Chernev, 2018).

The Jumia Nigeria from Retail to Marketplace B also makes use of AI for its marketing and promotional activities.

The Jumia Nigeria from Retail to Marketplace B regularly trains its employees to develop skills regarding consumer service.

The Jumia Nigeria from Retail to Marketplace B has maintained strict policies regarding consumer service as well as ensuring high quality and increased customer satisfaction (Joyce, 2022).

Secondary activities

The Jumia Nigeria from Retail to Marketplace B has a strong human resource management department, regulated by modern policies and practices.

The human resource management department at the Jumia Nigeria from Retail to Marketplace B supports the organizational culture and the leadership through its various functions – such as hiring, training and compensation management (DuBrin, 2013).

The Jumia Nigeria from Retail to Marketplace B makes use of advanced technology to support its operations and achieve strategic goals and targets (DuBrin, 2013; Joyce, 2022).

The advanced technology is acquired internationally (Iacobucci, 2021).

The Jumia Nigeria from Retail to Marketplace B engages in regulated procurement with selected suppliers.

The Jumia Nigeria from Retail to Marketplace B ensures its contracted suppliers provide consistently high-quality raw materials to maintain high quality for end consumers (Gillespie & Swan, 2021).

The Jumia Nigeria from Retail to Marketplace B is used to resolve its managerial and strategic challenges using one of the following strategies.

The strategies recommended will allow the Jumia Nigeria from Retail to Marketplace B to expand and develop, as well as manage its risks and challenges effectively.

Using these strategies, the Jumia Nigeria from Retail to Marketplace B will also be able to remain competitive in the market.

Market development strategies

The Jumia Nigeria from Retail to Marketplace B can engage in informative and emotional marketing to appeal to the target audience in the market and increase brand awareness.

The Jumia Nigeria from Retail to Marketplace B can devise and run educational campaigns to help understand the importance of the product, and its need (Išoraitė, 2016).

The Jumia Nigeria from Retail to Marketplace B can work with influencers and celebrities to help spread the message through social media as well as conventional media.

The Jumia Nigeria from Retail to Marketplace B can use a team on the ground to interact with the target audience, brief them about the product and its benefits, and influence them positively towards purchase decisions. (Baines, Fill, & Rosengren, 2017).

Market penetration strategies

The Jumia Nigeria from Retail to Marketplace B can increase its marketing spending and use emotional appeals to influence the target audience.

The marketing strategies should be focused on maximizing the reach of the brand's message and promise (Iacobucci, 2021).

The Jumia Nigeria from Retail to Marketplace B is recommended to make its products accessible through an increased number of supermarkets and hypermarkets.

The Jumia Nigeria from Retail to Marketplace B can also open its own retail setups to increase footfall and reach across different regions (Sahaf, 2019).

Product development strategies

The Jumia Nigeria from Retail to Marketplace B is recommended to and can engage in market and consumer research for product development.

Encouraging innovation and discussion of new ideas within the Jumia Nigeria from Retail to Marketplace B can also lead to rapid new product development (Varadarajan, 2015).

The Jumia Nigeria from Retail to Marketplace B can also optimize the development of new products by making its manufacturing and testing processes more effective.

The Jumia Nigeria from Retail to Marketplace B can also create innovation labs and labs for new product development and testing (Sahaf, 2019; Abratt & Bendixen, 2018).

Diversification strategies

The Jumia Nigeria from Retail to Marketplace B can expand horizontally and add new product lines.

The Jumia Nigeria from Retail to Marketplace B can also expand vertically and add new products to the existing product line

The diversification will allow the Jumia Nigeria from Retail to Marketplace B to attract new consumer groups (De Mooij, 2019).

The diversification will also allow the Jumia Nigeria from Retail to Marketplace B to increase its penetration and reach amongst existing consumers.

The Jumia Nigeria from Retail to Marketplace B will be able to increase brand awareness through diversification as well (Iacobucci, 2021; Abratt & Bendixen, 2018).

The Jumia Nigeria from Retail to Marketplace B needs to strategically align its resources for optimization and to achieve its strategic goals and targets. The Jumia Nigeria from Retail to Marketplace B should continue to use its internal capabilities to realize new opportunities and for mitigating risks and weaknesses. In addition, the Jumia Nigeria from Retail to Marketplace B should also make use of other strategic models to understand the managerial challenges that the organization faces and devise suitable strategies and actions for overcoming them. The leadership of the Jumia Nigeria from Retail to Marketplace B will play a critical role in ensuring that the organization overcomes the challenges by focusing on the organizational culture and values, which will then impact the operations and performance at large.

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Buchanan, D., & Huczynski, A. (2019). Organizational behaviour. London: Pearson UK.

Chernev, A. (2018). Strategic marketing management. Berlin/Heidelberg, Germany: Cerebellum Press.

De Mooij, M. (2019). Consumer behavior and culture: Consequences for global marketing and advertising. Thousand Oaks, California: Sage.

Deepak, R., & Jeyakumar, S. (2019). Marketing management. New Delhi, India: Educreation Publishing.

Dimitrieska, S., Stankovska, A., & Efremova, T. (2018). Artificial intelligence and marketing. Entrepreneurship, 6(2), 298-304.

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Gillespie, K., & Swan, K. (2021). Global marketing. New York, United States: Routledge.

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Machado, C. (2019). Organizational Behaviour and Human Resource Management. Berlin: Springer.

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Valeri, M. (2021). Organizational studies: implications for the strategic management. Berlin, Germany: Springer Nature.

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A Conversation with Juliet Anammah, Jumia Nigeria

Find out how Africa’s largest e-commerce platform connects buyers and sellers across the continent.

December 07, 2021

How do you convince Africans — both buyers and sellers — to move from informal outdoor markets to e-commerce? Juliet Anammah of Jumia Group is up for the challenge. Listen to her interview for the Stanford Entrepreneurial Thought Leaders series to learn how Jumia is breaking down traditional barriers with technology.

Jumia operates in 11 countries. It’s the largest e-commerce platform on the African continent and the first African tech startup to be listed on the NYSE. But e-commerce still represents less than 5% of total retail, which means there is tremendous upside if the company can overcome all the obstacles. Jumia is seeking to do just that by creating a marketplace that connects buyers with sellers, integrates third-party providers, builds trust with buyers, provides training and data analytics to sellers, and engages with regulators. The ultimate goal: to improve lives on the continent using the power of the internet.

As former CEO and now chairwoman of Jumia Nigeria and chief sustainability officer of Jumia Group, Anammah has her hands in all of it.

Jumia’s strategy is to deploy existing third-party solutions to handle everything from logistics to delivery to payments, creating a full digital ecosystem. “It’s an asset-light model. You have people who have tricycles and vans and so on, but what was lacking was always the technology to integrate that together and to use the data to make quality decisions.” Anammah says, “The real value you bring to consumers is not limiting them to your own solution — it is actually giving them a platform through which they could use whatever payment method that they have.”

Jumia is breaking down not just trade barriers but gender ones as well. ​​“At least in Nigeria and Kenya, which are key markets, about 51% of our sellers are actually women. It’s a gender agnostic environment. You could be a fashion seller, you could be an electronic seller, and you know you don’t have a lot of physical markets where someone can make those kinds of gender-related decisions that could be forbidden.”

Anammah believes that the power of the platform extends far beyond commerce, driving development and creating jobs across the continent. “In the end, reducing inequality is so critical and is a big part of how we create value. And how we create sustainable improvement in quality of lives on the continent is by asking ourselves: What more can we do?”

Listen to Anammah’s entrepreneurial journey as a guide for your own.

Grit & Growth is a podcast produced by Stanford Seed , an institute at Stanford Graduate School of Business which partners with entrepreneurs in emerging markets to build thriving enterprises that transform lives.

Hear these entrepreneurs’ stories of trial and triumph, and gain insights and guidance from Stanford University faculty and global business experts on how to transform today’s challenges into tomorrow’s opportunities.

Full Transcript

Juliet Anammah: You have to be comfortable with complexity if you’re going to work in Africa.

Darius Teter: If you’re serious about changing things, you first have to understand why they are the way they are.

Juliet Anammah: We love complexity, and we enjoy taking complexity and making it simple.

Darius Teter: Think about how difficult it is to change your own habits. Now expand that to an entire continent. This is the challenge faced by African e-commerce company Jumia. How do you change hundreds of years of established precedent in how people buy and sell? In many ways, they’ve cracked the code, and they’ve done it differently than you might expect. But if you ask them, they’ve barely scratched the surface.

Welcome to Grit & Growth from Stanford Seed, the show where Africa and India’s intrepid entrepreneurs share their trials and triumphs, with insights from Stanford faculty and global experts on how to tackle challenges and grow your business. We’ve got a bit of a departure from our usual today. This is the edited version of a live event with accomplished businesswoman Juliet Anammah. Juliet is the chairwoman of Jumia Nigeria and chief sustainability officer of the Jumia Group. We spoke to her as part of the Stanford Entrepreneurial Thought Leader series, which, as you’ll hear, included real-time questions submitted by viewers. Together, we explored what Jumia has done to convince Africans to adopt e-commerce, how they’re revolutionizing informal markets, and how much more there still is to accomplish.

I wanted to start by getting to know Jumia and the problems it’s trying to solve.

Juliet Anammah: Jumia is an e-commerce platform, the largest e-commerce platform in Africa. We started in 2012, and we started with a mission, a very simple mission, that we could improve lives with the power of the internet on the continent. We are based in about 11 countries, and the 11 countries where we’re based actually cover 70% of Africa’s GDP and over 500 million internet users. So the question is, like you said, what’s the problem we’re trying to solve?

If you were a seller in Africa many years ago, you only had two options on how you’re going to retail your products to consumers. Either you had to pay very expensive High Street real estate prices for a modern retail shop, or you had no other alternative but to operate in the open market. Very informal open market is hot. It has no amenities or utilities, and it’s overcrowded. Those were the only options you had, especially if you were a small-medium enterprise just trying to get by.

So Jumia solves that problem for a host of millions of SMEs and sellers and merchants on the continent because you don’t have to register on the Jumia platform. You don’t have upfront capital expenditure in terms of putting up retail space. Literally minutes, once you’re registered and going through the training for selling online on Jumia, you can start your business. So that’s a huge part of the problem. The second part of the problem, of course, was a logistics problem. So the first one was a distribution problem. And even just staying on the distribution one, if you were a consumer, by the time you finally buy the product, chances are that the markups from the very long distribution chain from manufacturer to bulk broker to wholesaler, and finally to retailer and the neighborhood shop where you buy the item, you could be paying significantly more than you should as a consumer.

So one was a distribution problem from the consumer’s perspective and from a seller’s perspective. So we are bringing millions of consumers to interact and transact with sellers directly with no intermediaries or any other agents in between. The second part of it is the logistics part of it. We’re also solving a logistics problem by integrating multiple logistics partners into one single integrated logistics. It used to be called in my old Accenture days as a “four tier.” But what it is, is that you are using technology to integrate different asset owners and then using Jumia’s technology to also manage the data and how they operate.

Darius Teter: So Jumia doesn’t own the logistic supply chain, but it has a platform that allows you to get the right players in there when you need them, where you need them.

Juliet Anammah: Exactly. So it’s an asset-light model. We have people who have the assets, you have people who have tricycles and vans and so on, but what was lacking was always the technology to integrate that together and to use the data to make quality decisions of where do you deliver, what timeline is required, and so on and so forth.

Darius Teter: At what point does Jumia decide, “We should build this in-house versus we should partner”? Is that conversation ongoing? Or maybe that’s a trade secret, but I’m just curious to know.

Juliet Anammah: You have to be comfortable with complexity if you’re going to work in Africa. We love complexity, and we enjoy taking complexity and making it simple. Like I said earlier, the problem is not assets, the problem is not people who have warehouses and hubs. All of that exists. We have people who have warehouses. We have people who have hubs. We have people who have 10 trucks or some people who have five tricycles. We have all of those assets that exist. So replicating on the asset side is not creating value. The real asset that then drives e-commerce is the engine, which is really the technology.

So, how do you know which day of the week you can make certain deliveries? What is the speed of delivery? How should you do your routing so that you’re more fuel-efficient, you also reduce distance traveled? All of those are relevant information you cannot get through just owning the assets. You get that through owning the technology that puts it all together. And the value is the fact that all those players are utilizing your technology. So you have the delivery agents who have your delivery app on their mobile phone. You’ve got the third-party logistics players who are using your hub management system in their businesses.

Darius Teter: This philosophy to connect what already exists rather than start from scratch extends beyond logistics. Jumia works with third-party companies to facilitate payments. And since their apps are already familiar to the customer, adoption is relatively seamless.

And what about payments? I mean, I’m really curious because I love this transformation and I want to get back to the transformation for the informal sector that’s implied in everything you just said. But what about payments?

Juliet Anammah : Payments was another part of it because I still remember about 2015, just not too long ago, if a consumer made a purchase on Jumia and we relied on just payment through a debit card, a credit card, and had to clear on the back end with a bank, sometimes if there was a return, it could take two weeks because, of course, the banks at the time, e-commerce was not really something that they were really focused on. So we had to develop our own payment system, again, using the same principle of integrating different payment methods that a consumer could have into a seamless platform that will allow us to clear whether it was credit card or debit card or mobile money or bank transfer. Whatever payment method that a consumer had, we could also integrate it on that network. So that’s the third component, and that’s why those are the three parts of our ecosystem.

Darius Teter: I want to dig down a little bit more into the payments piece. I’m going straight into the weeds because that’s where I love to be, but are you using third-party payment providers? I mean, there’s so many startups now in this space, fintech space in Nigeria, there’s a lot of venture capital flowing in. I mean, I’ve lost track of how many of them there are. Are you doing your own thing, or are you working with all of these third-party providers?

Juliet Anammah : We are agnostic, so we’re working with all third parties. And especially given how large the market is, the real value you bring to consumers is not limiting them to your own solution, it’s actually giving them a platform through which they could use whatever payment methodology that they have.

Darius Teter: E-commerce is relatively new in Africa, and platforms like Jumia are transforming the informal market. One example? Access to information.

Juliet Anammah: It’s huge. I mean, because, look at the number of sellers in Africa who are small-medium enterprises in the informal market. And then when they get onto Jumia, look at the kinds of information that is available to them. Suddenly they know, for example, which ones of their items are fastest moving, at what price points, which particular color. If you are in fashion, if you’re a fashion seller on Jumia, you suddenly know whether it’s the blue shirt or the red shirt that actually sells better than the other SKUs [stock-keeping units] that you have. That’s very powerful information. They get information in terms of even the placement of the products, the product information which they put up on site, they get information on their seller score and all that. So really formalizing informal trade, it is a huge, huge benefit that an e-commerce platform like Jumia is bringing to the sellers in Africa. So that’s a huge part. That’s a really big transition from where they were before.

Darius Teter: I love that, that’s the data analytics piece, which is, for some of them, I think probably data they’ve never had or they had intuitively or they had it on paper and pen. Can you tell how many of your sellers are new sellers? I mean, in other words, that they would not be in a marketplace if it wasn’t online.

Juliet Anammah: Oh yes. We ran a survey recently, and we have between 30% to 40% of our sellers who say they started their businesses exclusively on Jumia. Some sellers start their businesses on Jumia. Some sellers came to Jumia to expand their businesses. But what I actually find extremely interesting is the number of women sellers that we have on Jumia. We have, at least in Nigeria and Kenya, which are key markets, about 51% of our sellers actually women. Why do women find it attractive? It’s a gender agnostic environment. You could be a fashion seller. You could be an electronic seller. It’s not a physical market where someone can make those kinds of gender-related decisions of whether I want to buy an electronic product from a woman or not.

So that has given them access to different categories that they could perform in. Two, it has also given women flexibility to be able to manage their homes and at the same time run a business of their own. Then, third component that women say they really appreciate selling on Jumia is the training, training on digital marketing, training on how to sell online, training on even how to read your account statements. Just those basic kinds of training, the importance for an SME just cannot be overemphasized.

Darius Teter: I love that point. We’re always trying to get more women CEOs into our program, and we did commission a study to look at what are some of the ba’at’s our area of attention for this first year. I mean, this is the first year that we’re actually putting together our practices, what we are doing, and we would have our first report next year. A very practical example is, how many sellers on Jumia are classified as SMEs? How many sellers on Jumia have been able to get access to working capital loans to grow their businesses? How many sellers on Jumia are women? How many of them have utilized the training facilities that we provide? How many of them have utilized the loans to be able to grow their businesses? Those are huge, huge areas of sustainability that we haven’t even scratched all of it. Let’s utilize what we have first and then there are other levers which we can also concentrate on. So those are some examples for you there.

Darius Teter: There’s a great question here, I’m going to jump in on this one because this is actually a direction I wanted to go. “How does Jumia evaluate markets for potential entry? Do you ever decide markets are no longer viable?” The person who’s asking this question mentions that Jumia pulled out of Cameroon. I want to tack on my own question to that. You mentioned you’re in 11 countries, 500 million people, and accounting for some enormous percentage of the total GDP on the continent. Can you go to this question and talk a little bit about the barriers to regional expansion and what you look for when you pick a new country to enter?

Juliet Anammah: The questioner was actually right. Yeah, we had to pull out of Cameroon. Remember, there was a time when Cameroon, the internet was shut down for almost a whole year. These are very important factors that we look at. We look at the state of the economy. Beyond GDP, beyond economic factors, we’re also looking at readiness for an internet-based business like ours. So those are very important nuances that we consider in terms of looking at expansion. For now, we’re deepening our footprints within the countries that we are in. Maybe in the future, but certainly for this year, we’re really concentrating on those 11 countries where we are currently in.

All said and done, we are the largest e-commerce platform on the continent, but also in a continent where e-commerce and, I would say, all of modern trade is probably still within the ranks of 2-5% of total retail. So you still have a huge upside, huge, huge upside. Before you start tinkering with all the kinds of categories and new verticals and so on, just even that alone is a significant area to focus on. And that’s what our focus is. I think the other thing we are focusing on as well is really the shift that consumers have made from using e-commerce, coming to Jumia to buy their electronics. They wanted to buy products of high value because they could get a good price on Jumia and they could get quality assurance and all of that, to their everyday products. So people want to buy food. People want to buy essential items, home cleaning agents, beauty and perfumes, consumables, basically. That’s a huge shift, and that’s where we are also deepening our presence.

Darius Teter: I want to go to the competitive landscape in a second, but I want to pause and talk about consumables. Because, I mean, one of the things that make consumables possible here in the United States is that you can get it tomorrow, right? You can get your vegetables, they’re still fresh. They are maybe even cold packed, right? You need a toilet roll, you need cleaning products, whatever it is. Is that a big deal? Is that important to your consumers that they get something really fast, or not yet?

Juliet Anammah: Yeah, there’s always a trade-off. Sometimes it’s the consumers’ living environment that flows into their expectations. So because in the States, right next to the corner there’s either a Kroger or there’s a Target or there’s a Wegmans or any other brand that you can pop into and buy, so that flows into consumer expectations of, “When do I want it? I want it in 10 minutes.” Of course, you can use Instacart as well and you get the product very quickly. In our environment, it’s slightly different. Consumers are making trade-offs, and for them, probably the pricing is more important.

Darius Teter: I got the perfect question here for you that just follows on this. “As part of your impact goals, does Jumia have any special role in supporting or facilitating local manufacturing in the countries where you operate?”

Juliet Anammah: We work very closely with brands. We have several brands that are listed on Jumia. We see an increasing interest from brands to be on Jumia for many reasons. One being, of course, that it gives an opportunity for them to go direct to the consumer through Jumia as a platform. Two, it gives them very useful consumer insight. A lot of that consumer insight is in terms of packaging, in terms of product specifications. All of that is useful for a manufacturer in product development and production. So the answer is yes, local manufacturers find being on Jumia extremely useful for their demand planning and production.

Darius Teter: Let’s pivot a little bit to the competitive landscape. Who are your competitors? Is it Konga or Takealot, other e-commerce companies that are in the continent, or is Amazon a threat from afar?

Juliet Anammah: I think when you look at it, at the end of the day, competition is more the informal market, right? Because all of that put together, you’ve just talked about whether it is Konga or Takealot or any other platform or modern brick-and-mortar retail and so on and so forth, all of that, like I said earlier, is just 2-5% max. The real competition is the informal market. We are every day working to bring more and more sellers to the platform and bring more brands to the platform, excite more consumers. We’re currently having our Black Friday campaign on. It usually is a very exciting period for consumers.

Darius Teter: I had no idea that existed on your platform.

Juliet Anammah: Oh, we were the first to launch it in Africa in 2014.

Darius Teter: Around here, that’s when I try to go for a hike in the woods because it’s too mad everywhere else. Let me ask a bit more about where does Jumia look for its vision. Do you look more to the east, Chinese e-commerce like Taobao or JD or Doyen, or do you look more to Western models as you think through your growth strategy?

Juliet Anammah: I would say we are much closer to the Asian Alibaba model because we are more of a marketplace. But then, there are structural differences between Africa and China. Some of the infrastructure developments, even things like having a national postal system and driving down the cost of postal services, some of those things which Taobao, for example, leapfrogged in developing in China, we don’t have those in Africa. So we look more at our consumers, I would say, in terms of what are the expectations, what are their needs, what’s evolving for them in the market, what’s critical?

Darius Teter: Brands have begun selling directly through social media, cutting out the middleman. I asked Juliet how social commerce factors into Jumia’s future plans.

Juliet Anammah: e view social commerce as complementary in some respects in the sense that there’s a lot of social commerce on WhatsApp and Instagram, but it’s also exposed some of the challenges of social commerce in terms of protection of consumers. Sometimes you order something and it doesn’t get delivered, and you don’t have a system whereby you can trust in the returns process, you can trust in quality assurance, and so on. Every time we poll our consumers, they tell us that one of the things they really, really love on Jumia is they don’t want to deal with a seller. They don’t care who the seller is, okay? I’m speaking figuratively. The person they have a relationship with is Jumia. So if something goes wrong, they want to know that it’s Jumia they’re dealing with. We always talk about the fact that when you are ordering online, that many things we provide, the item has probably been QC’d [quality controlled]. You can see the seller’s score so you can make decisions between multiple options, which seller to go with, payments, and all of that. So there’s a whole lot that’s riding on just completing a purchase online that consumers like the option of having someone, the intermediary, the platform that is taking some of those responsibilities for them.

Darius Teter: One of the biggest hurdles for any e-commerce company is building trust, that if I give you my money, you’ll send the product. This is especially true in markets where those online buying habits haven’t been well established. I asked Juliet, “What has Jumia done to create trust with buyers and sellers?”

Juliet Anammah: For any marketplace, of course, you would have issues sometimes with sellers and so on and so forth. But like you mentioned, we do have recourse mechanisms. We have penalties. We score sellers by many things. By speed of delivery, by the quality of the item, by the return rates of the items that they sell on the platform. So many things are built into it. And of course, we have seven items which must be QC’d. We have manufacturer warranties. We offer everything they can think of from a recourse perspective. And for some of our consumers also, depending on the type of item and the specific consumer’s behavior on our platform, sometimes the consumer wants to return something, and we refund immediately even before the item is retrieved. There are many things we’ve built into creating an environment that consumers can trust and feel comfortable to shop online.

Darius Teter: We’ve heard a lot about what Jumia has done to change the commerce paradigm in Africa. And as we wrapped up our conversation, I asked Juliet how much she thought e-commerce would actually drive development across the continent.

Juliet Anammah: I mean, it’s already contributing to development on the continent. There was a BCG [Boston Consulting Group] report that talked about the fact that, look, marketplaces like Jumia by 2025 could contribute almost three million jobs on the continent. So in terms of you’re talking about jobs, that’s one. Number two, you’re talking about formalizing informal retail, like you mentioned. You also recognized another … which is the cross-border trade within Africa itself. So those are many pathways and many areas in which e-commerce and companies like Jumia can make significant contributions to the continent.

Darius Teter: We tend to think of these shifts as inevitable, a byproduct of technological advances, but I think Jumia shows how much careful thought and effort have to go into solving a host of problems in traditional, largely informal markets. Their commitment to using existing assets and working with partners who are already on the ground has eased adoption. Trust was built with tools for buyer recourse and access to information for sellers, and collaborative work with regulators will help solidify their standing as they create their own paradigm for commerce on the continent.

But Jumia is not alone. Although the potential pan-African market is huge, there are many new and some established players competing aggressively for it. I do wish Jumia all the best as they seek to scale. Thanks to Juliet Anammah of the Jumia Group and to Luke Sykora in the Entrepreneurial Thought Leader series for organizing this conversation. If you’d like to check out the full talk, you can go to the Stanford eCorner YouTube page, or follow the link in our show notes.

Women in the workplace face unique challenges and opportunities. That’s why I’m excited to introduce two programs designed for women leaders like you, offered by Stanford GSB Executive Education and led by Maggie Neale and Deborah Gruenfeld. High-Potential Women Leaders is a live online program, and the Executive Program in Women’s Leadership is a one-week on-campus program. Both equip you with the tools and mindset to fundamentally change the way you lead. Visit stanfordgsbwomen.com to learn more. I’m also excited to share with you that season two of the Grit & Growth podcast will feature interviews with both Maggie Neale and Deborah Gruenfeld.

This has been Grit & Growth with Stanford Graduate School of Business, and I’m your host, Darius Teter. If you liked this episode, leave us a review on your podcast app. It really helps us to share the stories of these incredible entrepreneurs with as many people as possible. To learn how Stanford Graduate School of Business is partnering with entrepreneurs throughout Africa and South Asia, head over to the Stanford Seed website at seed.stanford.edu/podcast. Laurie Fuller researched and developed content for this episode, with additional research by Jeff Prickett. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Andrew Ganem, and sound design and mixing by Alex Bennett at Lower Street Media. Thanks for joining us. We’ll see you next time.

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Jumia Nigeria E-Commerce Company’s Analysis

Jumia’s pestel analysis.

Jumia Nigeria E-commerce Company benefits from the ever-improved market conditions. Improved Africa’s economic performance since the turn of the century lowered the poverty level and enabled the countries to gain when it comes to GDP per capita. The favorable marketplace motivates competitive business that aims at maintaining sustainable economic success. Unfortunately, specific threats exist to undermine the entrusted parties’ efforts to guarantee the company’s success (Ramon & Arora, 2017). Notably, the region’s macroeconomic conditions influence its success, with the stakeholders needed to make appropriate changes.

Political Factors

Many political factors can influence a company’s efficiency, such as rigorous guidelines for hazardous waste disposal, which raise a company’s chances and boost sales. According to the findings, the market has a good reputation for being free from fraud and corruption (Titiloye, 2019). For instance, because of the workers’ celebration after the 2011 elections, Jumia Nigeria’s reputation might be harmed if the party refuses to follow the protocols.

Economic Factors

The company has a certified workforce with an elevated level of conserving the environment and other limited resources. Consumer knowledge of bioplastics is one economic driver that affects operational productivity. The country’s taxation system favors the online market, thus attracting many players. Unfortunately, the emergence of China and India’s marketplaces threatens the efforts of Jumia Nigeria to realize sustainable profitability (Titiloye, 2019). Additionally, the firm’s operations require heavy machinery that increase their expenses.

Social Factors

Besides the high literacy rate and low infant mortality rate, Jumia’s analysis revealed that its marketplace has joint population development. The changing societal gender roles in the region are also influencing the success of the industry (Titiloye, 2019). For instance, many women in the area prefer disposable Jumia Nigeria. The scholars add that the women are always willing to pay extra for the Jumia Nigeria retail to the marketplace.

Technological Factors

The company has shown a keen interest in advancing technologically because of fierce market competition and a burning desire to increase its market share. Due to the tremendous technical pressures, the corporation has increased its R&D domain spending to make advanced technologies and innovation conceivable. As a result of environmental concerns, the firm is being forced to utilize more high-tech products, considered environmentally benign, since they use fewer non-biodegradable plastics (Titiloye, 2019). This investment in high-tech equipment helps the company manage its product diversity.

Environmental Factors

The market has come under fire from environmentalists for its use of non-biodegradable plastics. In the Jumia Nigeria marketplace case solution, the plastics used caused contamination and posed a health risk to customers. K-C and P&G have completed numerous recycling jobs to avoid market criticism and are making significant efforts to adapt to Japanese technologies to produce eco-friendly outputs (Titiloye, 2019). Thus, it is evident that e-commerce values the environmental conservation models.

Legal Factors

The country has a transparent legal system and suggests sophisticated monetary control. It is possible to make progress in the legal field. However, it is illegal for businesses in Nigeria to use non-biodegradable materials in their unique operations because of the 1976 disposal of trash laws, and this increases company expenses (Titiloye, 2019). While environmentalists push for eco-friendly techniques and equipment, they also set restrictions and require businesses to use them. If they do not, they risk harsh condemnation and many legal notifications.

Jumia’s Path to Profitability

Jumia has always prioritized expansion above profitability in its goal to become Africa’s largest e-commerce platform. However, to maximize profits, the corporation is currently prioritizing specific initiatives. With a total population of approximately one billion individuals, Africa does have one of the lowest rates of e-commerce penetration in the world (Ramon & Arora, 2017). However, with advancing technology, investors are enthused about Jumia’s potential, hence boosting the firm’s profitability.

Ramon, C, & Arora, N. (2017). Jumia Nigeria: From retail to marketplace (A). Harvard Business School Case, 401-718.

Titiloye, O. (2019). Nigerian e-commerce market research (Business to Consumer Market).

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Jumia Nigeria from Retail to Marketplace B Porter Five Forces Analysis

Posted by Zander Henry on Aug-22-2018

Porter Five (5) Forces Model

Porter Five (5) Forces Model was proposed by Michael E. Porter in 1979. The purpose was to assess and evaluate the competitive positioning and strengths of business organisations. The model has three horizontal competitive forces (Threat of Substitute Products or services, the threat of new entrants and rivalry among existing firms) and two vertical forces (Bargaining power of buyers and bargaining power of suppliers).

These forces shape the competition within any industry. The overall industry competitiveness declines when these forces reduce profitability. Porter found SWOT analysis lacking in rigour. Many new companies use the Porter Five (5) Forces Model to decide whether it is profitable to enter in a particular industry.

Here is the pictorial presentation of the Porter Five (5) Forces Model:

Jumia Nigeria from Retail to Marketplace B Porter Five (5) Forces Analysis

Application of this model can help Jumia Nigeria from Retail to Marketplace B to determine the industry attractiveness and understand its competitive positioning in the market. The analysis can also be used to make some strategically wise decisions that could improve the performance of Jumia Nigeria from Retail to Marketplace B and ensure long-term survival.

Threats of new entrants

Threat of new entrants reflects how new market players impose threats to the existing market players. If the industry will be profitable and barriers to enter the industry will be low, it will attract more players and hence, the threat of new entrants. will be high.

Here are some factors that reduce the threat of new entrants for Jumia Nigeria from Retail to Marketplace B:

• Entry in the industry requires substantial capital and resource investment. This force also loses the strength if product differentiation is high and customers place high importance to the unique experience.
• Jumia Nigeria from Retail to Marketplace B will face the low threat of new entrants if existing regulatory framework imposes certain challenges to the new firms interested to enter in the market. In this case, new players will be required to fulfil strict, time consuming regulatory requirements, which may discourage some players from entering the market.
• The threat will be low if psychological switching cost for consumers is high and existing brands have established a loyal customer base.
• New entrants will be discouraged if access to the distribution channels is restricted.

Jumia Nigeria from Retail to Marketplace B will be facing high new entrants threat if

• Existing regulations support the entry of new players.
• Consumers can easily switch the brands due to weak/no brand loyalty.
• Initial capital investment is high.
• Building a distribution network is easy for new players.
• Retaliation from the existing market players is not a discouraging factor.

How Jumia Nigeria from Retail to Marketplace B can tackle the Threat of New Entrants?

• Jumia Nigeria from Retail to Marketplace B can develop brand loyalty by working on customer relationship management. It will raise psychological switching costs.
• It can develop long-term contractual relationships with distributors to widen access to the target market.
• Jumia Nigeria from Retail to Marketplace B can also an investment in research and development activities, get valuable customer data and introduce innovative products/services to set strong differentiation basis.

Threat of Substitute Products or services

The availability of substitute products or services makes the competitive environment challenging for Jumia Nigeria from Retail to Marketplace B and other existing players. High substitute threat shows that customers can use alternative products/services from other industries to meet their needs. Various factors determine the intensity of this threat for Jumia Nigeria from Retail to Marketplace B

The Threat of Substitute Products or services increases when;

• A cheaper substitute product/service is available from another industry
• The psychological switching costs of moving from industry to substitute products are low.
• Substitute product offers the same or even superior quality and performance as offered by Jumia Nigeria from Retail to Marketplace B’s product.

However, this threat is substantially low for Jumia Nigeria from Retail to Marketplace B when;

• The switching cost of using the substitute product is high (due to high psychological costs or higher economic costs)
• Customers cannot derive the same utility (in terms of quality and performance) from substitute product as they derive from the Jumia Nigeria from Retail to Marketplace B’s product.

How Jumia Nigeria from Retail to Marketplace B can tackle the Threat of Substitute Products or services?

• Jumia Nigeria from Retail to Marketplace B can reduce the Threat of Substitute Products or services by clearly emphasising how its offered product/service is better than the available substitutes.
• It should provide convincing reasons to the customers by offering a better experience and high value for money.
• It can raise switching costs by working on loyalty.
• Lastly, it can improve the quality, maximise value for money and set strong differentiation basis to discourage customers from using the substitute product.

Rivalry among existing firms

The Rivalry among existing firms shows the number of competitors that give tough competition to the Jumia Nigeria from Retail to Marketplace B High rivalry shows Jumia Nigeria from Retail to Marketplace B can face strong pressure from the rival firms, which can limit each other’s growth potential. Profitability in such industries is low as firms adopt aggressive targeting and pricing strategies against each other.

The Rivalry among existing firms will be low for Jumia Nigeria from Retail to Marketplace B if;

• There are only a limited number of players in the market
• The industry is growing at a fast rate
• There is a clear market leader
• The products are highly differentiated, and each market player targets different sub-segments
• The economic/psychological switching costs for consumers are high.
• The exit barriers are low, which means firms can easily leave the industry without incurring huge losses.

Similarly, there are some factors that increase the Rivalry among existing firms for Jumia Nigeria from Retail to Marketplace B For example, the company will face intense Rivalry among existing firms if market players are strategically diverse and target the same market. The rivalry will also be intense if customers are not loyal with existing brands and it is easier to attract others’ customers due to low switching costs. Competitors with equal size and offering undifferentiated products with slow industry growth tend to adopt aggressive strategies against each other. These all factors make the Rivalry among existing firms a major strategic concern for Jumia Nigeria from Retail to Marketplace B

How Jumia Nigeria from Retail to Marketplace B can tackle the Rivalry among existing firms?

Jumia Nigeria from Retail to Marketplace B should focus on the implicit needs and expectations of its customers to strengthen the differentiation basis. It should raise switching costs by developing long-term customer relationships. The organisation should also invest in research and development activities to identify new customer segments. In some cases, collaborating with competitors can be mutually beneficial. The organisation can look for this option as well.

Bargaining Power of Suppliers

Bargaining power of suppliers in the Porter 5 force model reflects the pressure exerted by suppliers on business organisations by adopting different tactics like reducing the product availability, reducing the quality or increasing the prices. When suppliers have strong bargaining power, it costs the buyers- (business organisations). Moreover, high supplier bargaining power can increase the competition in the industry and lower the profit and growth potential for Jumia Nigeria from Retail to Marketplace B Similarly, weak supplier power can make the industry more attractive due to high profitability and growth potential.

Bargaining power of suppliers will be high for Jumia Nigeria from Retail to Marketplace B if:

• Suppliers have concentrated into a specific region, and their concentration is higher than their buyers.
• This force is particularly strong when the cost to switch from one supplier to other is high for buyers (for example, due to contractual relationships).
• When suppliers are few and demand for their offered product is high, it strengthens the suppliers’ position against Jumia Nigeria from Retail to Marketplace B
• Suppliers’ forward integration weakens the Jumia Nigeria from Retail to Marketplace B’s position as they also become the competitors in that area.
• If Jumia Nigeria from Retail to Marketplace B is not well educated, does not have adequate market knowledge and lacks the price sensitivity, it automatically strengthens the suppliers' position against the organisation.
• Other factors that increase the suppliers’ bargaining power include-high product differentiation offered by suppliers, Jumia Nigeria from Retail to Marketplace B making only a small proportion of suppliers’ overall sales and unavailability of the substitute products.

Contrarily, the bargaining power of suppliers will be low for Jumia Nigeria from Retail to Marketplace B if:

• Suppliers are not concentrated
• Switching costs are low
• Product lacks differentiation
• Substitute products are available
• Jumia Nigeria from Retail to Marketplace B is highly price sensitive and has adequate market knowledge
• There is no threat of forward integration by suppliers.

How Jumia Nigeria from Retail to Marketplace B can tackle the Bargaining Power of Suppliers?

Jumia Nigeria from Retail to Marketplace B can strengthen its position against suppliers by decreasing the dependency on one or a few suppliers. It will increase its price sensitivity. Developing the long-term contractual relationships with suppliers from different regions not only lowers their bargaining power but also allows Jumia Nigeria from Retail to Marketplace B to improve its supply chain efficiency. Finally, Jumia Nigeria from Retail to Marketplace B can find the alternate ways of producing the product if product demand is high enough and the firm has required competencies and expertise. However, it requires detailed cost-benefit analysis to determine its feasibility. Product redesign and diversification of the product lines can also help the organisation reduce the suppliers’ power in the market.

Bargaining Power of Buyers

Bargaining power of buyers indicates the pressure that customers exert on the business organisations to get high quality products at affordable prices with excellent customer service. This force directly influences the Jumia Nigeria from Retail to Marketplace B’s ability to accomplish the business objectives. Strong bargaining power lowers profitability and makes the industry more competitive. Whereas, when buyer power is weak, it makes the industry less competitive and increase the profitability and growth opportunities for Jumia Nigeria from Retail to Marketplace B

There are some factors that increase the bargaining power of buyers:

• A more concentrated customer base increases their bargaining power against Jumia Nigeria from Retail to Marketplace B
• Buyer power will also be high if there are few in number whereas a number of sellers (business organisations) are too many.
• Low switching costs (economic and psychological) also increase the buyers’ bargaining power.
• In case of corporate customers, their ability to do backward integration strengthen their position in the market. Backward integration shows the buyers' ability to produce the products themselves instead of purchasing them from Jumia Nigeria from Retail to Marketplace B
• Consumers’ price sensitivity, high market knowledge and purchasing standardised products in large volumes also increase the buyers' bargaining power.

Some factors that decrease the bargaining power of buyers include lower customer concentration (means the customer base is geographically dispersed), customers’ inability to integrate backwards, low price sensitivity, lower market knowledge, high switching costs and purchasing customised products in small volumes.

How Jumia Nigeria from Retail to Marketplace B can tackle the Bargaining Power of Buyers?

Jumia Nigeria from Retail to Marketplace B can manage the bargaining power of buyers by increasing and diversifying their customer base. It can be done by introducing new products, targeting new market segments and adopting the product diversification strategies. Marketing and promotional strategies can also be helpful in this regard. Building loyalty by embedding innovation and offering excellent customer experience can raise the switching costs, which will ultimately reduce their bargaining power. Jumia Nigeria from Retail to Marketplace B can adopt these strategies to strengthen its competitive positioning in the market.

Porter 5 force model implications

The application of Porter five (5) forces model in real-world context allows organisations to .make wise strategic decisions. Impact and importance of each of the five forces is context dependent. By using Five Force analysis, Jumia Nigeria from Retail to Marketplace B can determine the industry attractiveness, make effective entry/exit decisions and assess the influence of these forces on their own business and competitors. Moreover, the dynamic analysis of this model can reveal important information. For example, Jumia Nigeria from Retail to Marketplace B can combine the Porter 5 force model with PESTEL framework to determine the industry’s potential future attractiveness. In some cases, companies do not have the required information to analyse five forces. In such a scenario, the analysis can be conducted with the help of assumptions. Mostly, consultants consider this model as a starting point, and other frameworks (like PESTEL and Value Chain) are used in conjunction for a better understanding of the external environment.

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Bose, R. (2008). Competitive intelligence process and tools for intelligence analysis. Industrial management & data systems, 108(4), 510-528.

E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Grundy, T. (2006). Rethinking and reinventing Michael Porter's five forces model. Strategic Change, 15(5), 213-229.

Manteghi, N., & Zohrabi, A. (2011). A proposed comprehensive framework for formulating strategy: a Hybrid of balanced scorecard, SWOT analysis, Porter's generic strategies and Fuzzy quality function deployment. Procedia-Social and Behavioral Sciences, 15, 2068-2073.

Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 78-93.

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Vining, A. R. (2011). Public agency external analysis using a modified “five forces” framework. International Public Management Journal, 14(1), 63-105.

Williams, B., & Figueiredo, J. (2014). Lessons from an innovation-leader and tools to learn them. Journal of Industrial Engineering and Management, 7(4), 932-960.

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