Baillie Gifford, once a stalwart supporter of Jumia, the African e-commerce powerhouse, has made a significant move that sent shockwaves through the investment world. The news of Baillie Gifford selling off its entire 18 million-share stake in Jumia has left many wondering about the future of this tech giant and the implications for the broader e-commerce landscape.
“Baillie Gifford has sold its entire 18 million-share stake in Jumia.”
As reported by [techpoint.africa], this strategic shift marks a stark departure for Baillie Gifford, which saw its ownership stake in Jumia dwindle from a substantial 7.4% back in November 2024 to a mere 0% by May 2025. The financial repercussions are hard to ignore, with Jumia’s share price plummeting from over $26 during its IPO frenzy in 2019 to hovering around $2.5 at the time of sale.
“Jumia’s Q1 2025 report showed a 26% year-on-year revenue decline.”
The decision to divest fully from Jumia underlines the challenges facing the company as it grapples with fierce competition from global e-commerce behemoths. Despite implementing cost-cutting measures and setting ambitious targets to achieve profitability by 2027, Jumia faced an uphill battle amidst declining revenues highlighted in their Q1 report for 2025.
“Strategies to reduce losses included cutting marketing expenses and exiting unprofitable markets.”
In an attempt to weather the storm and stay ahead in an increasingly competitive market, Jumia made strategic moves like reducing marketing expenditures, pulling out of unproductive territories such as South Africa and Tunisia, and concentrating on more cost-effective promotional channels like SEO and local radio advertising.
The emergence of new players like Temu and Shein further complicated matters for Jumia. These aggressive entrants into key African markets brought disruptive pricing strategies coupled with influencer-driven marketing campaigns that resonated strongly with consumers seeking trendy bargains.
“Neither retailer has established full physical operations on the continent.”
Temu’s promise of steep discounts combined with rapid delivery within two weeks upon launching in Nigeria posed a direct challenge to established players like Jumia. Meanwhile, Shein expanded its footprint across urban hubs in South Africa, Kenya, and Ghana using innovative marketing tactics to capture market share swiftly.
In response to these threats, Jumia pivoted by fostering stronger ties with international vendors—particularly those hailing from China—to diversify its product offerings at competitive rates. Francis Dufay, CEO of Jumia, emphasized this shift during discussions with investors:
“We have significantly strengthened our relationships with international sellers… Our Chinese vendor base is scaling rapidly.”
Despite these efforts towards fortification against intensifying competition, losing Baillie Gifford’s backing poses potential hurdles for attracting future institutional investments necessary for sustaining growth amid cutthroat rivalry.As reported by [techpoint.africa], this development underscores a pivotal moment for both Jumia and the broader e-commerce sector in Africa as they navigate through turbulent waters towards profitability.
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Attribution:
Original article: [techpoint.africa]
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