Consumer Fraud and Robbery costs Jumia over Sh105 Million

Jumia warehouse in Kenya
Jumia warehouse in Kenya
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Jumia first opened shop in Kenya in March 2013. The Kenyan platform is ranked third in revenue in Africa after Nigeria and Egypt. Over time Jumia Kenya has gained a strong footing in the e-commerce industry in Kenya. With a wide range of products, best pricing and exceptional customers vendors experience while shopping, Jumia has succeeded in its operations but with a share of business struggles.

The e-commerce platform has revealed that it lost at least Sh105 million to consumer cyber fraud and a robbery in the last two years in a filing as it seeks to list shares on the New York Stock Exchange.

In its filing, e-commerce platform said that in 2017, Sh55 million was unaccounted for by Jumia Kenya after a group of consumers fraudulently used electronic payments to acquire goods while late last year, merchandise worth Sh50 Million was stolen after a break-in incident in its warehouse in Kenya.

“We face the risk of fraud perpetrated directly by our consumers. Consumer fraud may harm seller confidence in the integrity of our marketplace and the certainty of payment,” said Jumia in the filing

The Initial Public Offer (IPO) prospectus also uncovered a further Sh81 million had remained uncollected in 2016 from customers who purchased goods across Kenya due to the platform’s insufficient cash reconciliation system, which has been automated.

“The extent of the effect on our cash flows in 2016 was due to our previous use of an insufficient cash reconciliation system, which has now been replaced with an automated one that allows us to monitor transactions in each of our markets on a daily basis,” added Jumia

Political instability, regulatory uncertainty and logistics nightmare in African markets as some of the other risk factors facing the company have affected Jumia’s operation as cited by the filing.

Jumia was valued at over $1 billion (about Sh100 billion) in 2016 and it had accumulated losses of $192.4 million (about Sh19 billion) as of end of December 2018.

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