Investment firm Baillie Gifford recently made headlines by selling its entire 18 million-share stake in Jumia, a leading African e-commerce company. This move marked a significant shift in ownership, as Baillie Gifford’s stake in Jumia had dwindled from 7.4% in November 2024 to 0% by May 2025.
The decision to divest from Jumia comes as the investment firm likely faced substantial losses. Jumia’s stock price has plummeted over the years, dropping from an initial high of over $26 during its IPO in 2019 to a mere $2.5 at the time of sale. The declining value of Jumia shares underscores the challenges the company has been grappling with amid stiff competition and financial struggles.
In its Q1 2025 report, Jumia revealed a concerning trend with a 26% year-on-year revenue decline, despite implementing cost-cutting measures and aiming to achieve profitability by 2027. The company reported efforts to trim losses by reducing marketing expenses, exiting unprofitable markets like South Africa and Tunisia, and focusing on more cost-effective advertising channels such as SEO and local radio.
Despite these initiatives, Jumia continues to face mounting pressure from global e-commerce giants entering African markets with aggressive strategies. New players like Temu and Shein have started making waves with competitive pricing and innovative marketing tactics. Temu launched in Nigeria offering attractive discounts with speedy delivery promises starting November 2024 while Shein has been expanding its presence across South Africa, Kenya, and Ghana leveraging influencer-driven campaigns.
In response to increased competition, Jumia is adapting by increasing its collaboration with Chinese merchants on its platform to diversify product offerings at competitive price points. Francis Dufay, CEO of Jumia highlighted this strategy saying,
“We have significantly strengthened our relationships with international sellers, especially from China.”
With Baillie Gifford completely divesting from Jumia after gradually reducing its holdings over time, concerns arise about the impact on attracting future institutional investments for the e-commerce giant striving towards profitability amidst fierce global competition.
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