Jumia Technologies has reported a 20% drop in sales in its popular Phones and Consumer electronics category. This according to its recently released full year financial report.
Jumia attributes the drop to a deliberate internal action to reduce promotional campaigns and other incentives that were previously used to drive the category.
If you are an active shopper on the platform you might have noticed that towards the end of 2019 there was a sharp decrease in promotions in the phone category.
The consumer category is one of the flagship categories for the e-commerce site since most of the products in the category tend to be standardized and its hence easier for consumer to quickly compare offline and online prices.
The consumer electronics category however, tends to have lower lifetime customer value since it’s now in vogue for customers to squeeze the maximum utility out of the smartphones they purchase.
This means that if a customer exclusively shops in the consumer electronics category it’s tough and expensive to influence them to make repeat purchases within a short period of time.
This is the key driver behind Jumia now shifting most of its promotional budget towards FMCG items.
Another issue worth mentioning is that Jumia expects the phone category to be amongst those that will be affected most by the corona virus epidemic.
The virus that first originated from Wuhan, China, has already began disrupting critical supply chains and Jumia expect that the disruption will trickle down to its African operations and negatively affect is bottom line in Q1 and Q2 2020.
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Kevin is a tech enthusiast and the lead writer at MobiTrends.co.ke. He has been writing about smartphones and tech related topics since October 2012. About Us | Contact Us
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