Jumia Technologies AG (NYSE:JMIA) Q1 2020 Earnings Call Highlights
Sacha Poignonnec, CEO
“Our mission of facilitating consumer’s access to goods and services helping sellers reach those consumers in a seamless way, while making a positive impact on the African continent has never been more relevant. And in these difficult times, we think that we had a crucial role to play, helping the consumers and communities we served stay safe and as much as possible functioning through the crisis. We are also hopeful that it will accelerate and help accelerate the long-term shifts towards e-commerce.
Let me walk you through how we have adapted to the situation, as well as the business impact that we have observed so far. I’m now on Page 3. Our number one priority has been and remains the health and safety of our team, consumers, and community. We took rapid action to adjust all our operations. We implemented work from home across all our offices. We took actions to operate our logistics infrastructure in accordance with high standards of safety and hygiene.
Measures we put in place includes setting up separate team shifts, checking employees temperature, sanitizing facilities several times a day, we required the use of masks and gloves, as well as sanitizers for the handling and delivery of the orders. And all members of our warehouse staff and our delivery partners were trained on all the best practices of personal hygiene and social distancing.
We have also facilitated social distancing, of course by implementing contactless safe delivery, which has been enabled [property] by JumiaPay, which allows consumers to prepay their orders online and have been delivered without the need for cash exchange or physical contact with the delivery agents. Again, making those changes has been a huge task and we are incredibly grateful to our colleagues and delivery partners working on the frontline.
Moving on to Page 4, we launched a broad effort to our consumers and communities celebrate and thank what we call the JumiaHeroes through the social media campaign after the week after launching it, the #JumiaHeroes was already trending on social media. We also established the solidarities fund for our JumiaHeroes, which is funded completely voluntarily by Jumia employees and [confidentially by] staff contributions.
And more broadly in these difficult times, we think that we have a responsibility to support our communities leveraging our assets. Thanks to our team and cross border platform in China, we were able to donate half a million masks. Through health ministries across Africa for use by health workers, you can see in the right side of the page a few pictures of the delivery meetings. And we’ve done that across multiple countries.
We also supported local governments in nine countries with pre-educational campaigns on our platform to help consumers access reliable health and safety information and the campaign was setup within 48 hours, and generated over 5 million impressions to date. This is also what we are [about making] people’s lives easier and contributing to the community not only during good times, of course, but during also challenging times.
Now, in terms of business impacts, if you turn to Page 5, we have seen a combination of short-term supply and logistic challenges and positive impacts/unique opportunities for the long-term. Most of these trends of course, emerged in the final half of March 2020 and they’re not yet fully reflected in the Q1 results that we are publishing right after that, but we expect those impact to continue playing out in the couple coming quarters.
So, on the one hand, we see certain challenges on supply and logistics in some parts of the business. On supply, the cross-border operations were disrupted from manufacturing shutdown in China. This supply chain disruption in China also impacted some of our local sellers, especially those who source their goods from China, in consumer electronics, phones, fashion category, and we also faced cross-border logistics challenges due to country locked down, which had impacted the cargo operations.
At local level, the confiner’s measures restrict seller operations. So, in some areas, some sellers do not even have physical access to their inventory. In some areas, the confinement measures prevent them from dropping their packages through the junior logistics. In some countries, many of the restaurants that simply closed until further notice. Then on logistics, we are facing capacity limitations, which of course affects our ability to fulfill consumer demand.
We have curfews in many countries, which are impacting the operating hours and of course, in turn [constrained] the delivery capacity. In South Africa, for example, the deliveries of fashion items were just completely suspended for a few weeks. And overall, the implementation of the safety measures, which I mentioned in our warehouses, like [indiscernible] or safety dispensing are leading to reduced order processing capacity.
Those are the challenges. Then on the other hand, of course, we are seeing unique opportunities for long-term, e-commerce and payment adoption. More and more sellers are embracing e-commerce and are keen to join Jumia because of course offline distribution channels are disrupted. We are seeing unprecedented demand from brand and sellers. And since March we have started to announce many new partnerships, including with household care and FMCG brands, like Reckitt Benckiser, Unilever, P&G, Nestle, Coca Cola.
On Jumia food we see grocery and convenience retailers very eager to join our on-demand platform, which has the logistic infrastructure to complete deliveries in less than 45 minutes. We also did some partnerships to deliver fresh foods. On the demand front, we have seen a surge in demand for all the essentials starting of course the second week of March and the grocery category have experienced a big full time increase in terms of items sold compared with last year.
And we hope of course that those dynamics will help accelerate the consumption shift towards online. This demand is also helping us generate sales and advertising efficiency. On the advertising front and the advertising revenue front, we’ve seen resilient demand, as the advertisers favor direct response online channels that can deliver measurable results. And last but not least, the launch of contactless safe delivery is helping us to further promote JumiaPay, which provides an opportunity to drive long-term payments adoption.”