Jumia Is Battling With Internal Fraud and External Legal Threats Even as Its Losses Widen
Thursday, August 22, 2019
By Yomi Kazeem
Jumia, Africa’s largest e-commerce operator, is struggling with internal fraud, legal threats even as losses widened in the second quarter.
The company has disclosed it recently uncovered instances of improper orders placed and subsequently cancelled on its marketplace platform wrongly inflating its order volume. Some of the improper sales practices, the company said, were carried out by its own personnel in “Jumia Force,” its network of commissioned agents.
Cumulatively, the improper orders generated around €16 million ($17.5 million) in gross merchandise volume (GMV) value between the last quarter of 2018 and the first two quarters of 2019, the report shows. GMV is a metric used by e-commerce companies to highlight the total value of merchandise sold through the site.
Jumia claimed the fraudulent orders had had no impact on its financial statements even though it acknowledged the reported GMV figure for Q2 2018 had been adjusted in light of the improper transactions. Jumia management also revealed the employees involved have since been suspended pending a review.
Photo courtesy of Jan Truter.