Logo of jester cap with thought bubble.

Image source: The Motley Fool.

JUMIA TECHNOLOGIES AG (NYSE:JMIA)
Q4 2019 Earnings Call
Feb 25, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to Jumia's results conference call for the fourth quarter of 2019. At this time, all participants are in listening only mode. After management's prepared remarks, there will be a question-and-answer session. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Safae Damir, Head of Investor Relations for Jumia. Please go ahead.

Safae Damir -- Head of Investor Relations

Thank you, Andrew. Good morning, everyone. Thank you for joining us today for our fourth quarter and full-year 2019 earnings call. With us today are Sacha Poignonnec and Jeremy Hodara, Co-Founders and Co-CEOs of Jumia, as well as Antoine Maillet-Mezeray, CFO. This call is also being webcast on the IR section of our corporate website. We will start by covering the safe harbor. We'd like to remind you that our discussions today will include forward-looking statements. Actual results may differ materially from those indicated in the forward-looking statements. Moreover, these forward-looking statements may speak only to our expectations as of today. We undertake no obligations to publicly update or revise these statements. For a discussion of some of the risk factors that could cause actual results to differ from these forward-looking statements expressed today, please see the Risk Factors section of our final prospectus filed in connection with our initial public offering on April 15, 2019.

In addition, on this call, we will refer to certain financial measures not reported in accordance with IFRS. You can find reconciliations of these non-IFRS financial measures to the corresponding IFRS financial measures in our earnings press release, which is available on our Investor Relations website.

And with that, I'll hand over to Sacha.

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Thank you, Safae, and welcome, everyone. Thanks for joining the call. We wrapped up 2019 with a very busy fourth quarter. We had our highest volume of orders ever, surpassing 8 million and we also took important actions to support our path to profitability and long-term growth. Before we go into the results in details, I would like to briefly summarize these actions, so we can all look at the results with this in mind.

First, we initiated a rebalancing of our business mix toward higher consumer lifetime value business. In practice, this means reducing promotional intensity on certain product categories and items, while consciously driving faster growth of the more affordable, higher purchase frequency ones. This led to a softer GMV growth, but it's supported consumer acquisition and the usage growth. As a result, our annual active consumers reached a record 6.1 million and orders increased by 49% on a year-over-year basis. We are confident about the relevance of this business mix rebalancing, because it supports not only usage on our platform, but also our path to profitability. Gross profit grew 64%, reaching EUR25 million in Q4 and gross profit after Fulfillment expense was positive at EUR1 million in Q4 compared to a loss of EUR2 million at the same period last year.

The second series of actions we took relate to the portfolio optimization that we had flagged in our Q3 earnings release, and here we exited three countries, Cameroon, Rwanda and Tanzania, and while we believe that those countries have a lot of potential in the long term, we decided to allocate our resources to the countries that best support our long-term growth and path to profitability. Our pan-African footprint and geographical diversifications are key assets for us and we continue to invest across our 11 countries of operations. And two, we entered into a distribution and commercial agreement in relation to our travel portal, which is flight and hotel booking. And as part of the agreement, we continue to promote those services on Jumia that we redirect the relevant traffic to our partner who manages the operational aspects of the business. We are very confident that this enhanced focus and those efforts to optimize our capital allocation will help us build stronger foundations for the long-term success of Jumia. So again, we feel very strong about those actions that we took in Q4, both on the business mix and the portfolio optimization, and we think they will meaningfully contribute to our success.

And I will now pass it on to Jeremy, who is joining us today, and he will walk you through our Q4 performance in more detail.

Jeremy Hodara -- Co-Founder & Chief Executive Officer

Thank you, Sacha. Hello, everyone. If you'd like to join me on Page 5, please, let's take a closer look at our top line growth dynamics. As mentioned by Sacha, we are focused on driving usage, consumer adoption, and engagement on our platform. This led us to rebalance our business mix in favor of the categories that best serve these objectives, while supporting our path to profitability. As part of this rebalancing and to address the profitability aspect, we reduced promotional intensity and the consumer incentives on selected product categories and items, notably within the phone and the consumer electronics categories. The chart on the left of the slide shows that most product categories experienced GMV growth in the 20% to 50% range in Q4 2019 compared to Q4 2018, while phones and consumer electronics saw GMV declines. In terms of items sold, most of our product categories saw growth, above 40% and even the phone and electronic categories increased in terms of items sold. These are still very relevant categories for us and they drive usage and consumer engagement. We believe the build out of the everyday product categories is key to meaningfully penetrating our addressable market and driving the e-commerce adoption.

Looking at our top line growth drivers at group level on Slide 6. We see a headline 3% contraction in GMV in Q4 2019. Perimeter changes as a result of the portfolio optimization undertaken in the quarter as well as previously reported improper sales practice, GMV of Q4 2019 would have been EUR293 million, up 6% from EUR275 million in Q4 2018. Annual active consumers for the full year 2019 reached a record 6.1 million. It's up 54% compared to 2018. Our net consumer adds in 2019 were 2.1 million compared to 1.3 million in 2018; 71% increase. This is a result of our constant focus on consumer adoption. The record traffic on all our platforms, which surpassed 1 billion visits in 2019, as well as improved conversion rates. Orders increased by 49% to 8.3 million in Q4 2019 from 5.5 million in Q4 2018 on the back of both new consumer acquisition and repeat purchase.

Our cohorts on Slide 7 exhibit strong repeat purchase momentum. Our efforts to drive more assortment relevance and to diversify our product category mix are clearly paying off when we see the repeat purchase patterns of our returning customers across cohorts. On the chart on the left-hand side, repeat consumers from the given cohorts are increasing their purchase frequency as they return for more everyday product categories. And you also see that the first-year consumers are increasingly starting from a higher base of annual orders, showing improving traction as we capture new consumers. In parallel, we see a reduction in average basket size as consumers trend toward affordable everyday product categories. 2019 is the year where we see the acceleration in both the purchase frequency and drop in basket size as a result of the diversification effort on the marketplace. These trends give us confidence that we are building a unique digital destination for everyday needs in Africa. Our focus is on getting more users on the platform, converting usage into purchase, and driving the consumer lifetime value.

I'd like to give you some insights into how we drive consumer engagement and use Black Friday 2019 activations as a case study on Slide 8. Jumia pioneered the Black Friday event on a pan-African basis in 2014, and every year, we strive to engage consumers with innovative and exciting content. In the 2019 edition, we launched the collections initiative, where we showcased in a curated manner the depth of assortment on our marketplace. Some of our top-performing collections were fashion friendly [Phonetic] that featured our fashion best-sellers, walk in style for footwear, and homemade food for cooking ingredients. In addition to content, we introduced Gamification with trivia games, happy hour, where we launched exclusive deals on the app and treasure hunts, where consumers were invited to scout the app for coupons at specific time.

On the marketing side, while most of our marketing is online focused and performance-driven, our offline marketing is carefully crafted to maximize impact. In Egypt, for example, the soundtrack of the Jumia Black Friday commercial made it to the second position in the Arabic top charts, with heavy rotation across major national radio channels. This illustrates our ability to create highly engaging content, tailored to local preferences. Our relentless effort to drive usage and engagement are geared toward building our pipeline of future consumers and positioning Jumia as a digital platform of choice to reach African consumers.

And let's now move to our progress on JumiaPay Slide 10. In Q4 2019, we continued expanding the range of services for both consumers and sellers. Our JumiaPay app offer consumers an increasing range of everyday digital services such as utility bill payments, airtime recharge, transport ticketing, as well as financial services provided by third-party partners. In Q4 2019, we introduced an international top-up feature, where JumiaPay app users can send airtime recharges to prepaid phone numbers internationally. We also expanded the range of consumer financial services into saving products with the launch of the AXA Money Market Fund in Nigeria. We also rolled out the Mastercard Tuesdays on our platform in Kenya, Nigeria and Egypt, during which JumiaPay consumers who pay using Mastercard enjoy an additional discount and launched a campaign allowing Mastercard users to win trips and tickets to watch UEFA Champions League matches.

On the seller front, we piloted with a selective group of our sellers in Nigeria our JumiaPay Business platform, which covers payment, financial services and marketing tools. While the payment and closed-loop wallet functionalities of JumiaPay have so far been consumer facing, this initiative allows us to explore the merchant and SMEs markets starting with the base of sellers active on our platform.

Moving on to the performance of JumiaPay in Q4 2019 on Slide 11. JumiaPay TPV increased by 57% year-over-year and this led to an increase in the penetration of JumiaPay to 15.2% of GMV in Q4 2019 versus 9.4% in Q4 2018. Here, I like to point out that this penetration is calculated for the total Jumia GMV, when JumiaPay is currently only available in six markets, some of which we have recently launched. If you take the same number in Nigeria or Egypt, where JumiaPay was launched in 2017, it's of course much higher.

Moving on to Page 12. JumiaPay growth trends are even stronger on the transaction basis. The number of JumiaPay transactions jumped 110% year-over-year. We had more transactions in Q4 2019 than during the entire year of 2018. This led to an increase in the penetration to 29.5% of orders in Q4 2019, up from 21% in Q4 2018. Our Marketplace business is a powerful flywheel to drive the penetration of JumiaPay. The JumiaPay is also a driver of consumer acquisition and usage in its own right with the growing range of everyday digital services available on the JumiaPay app.

I now hand over the call to Antoine, who will walk you through our update on our financial performance.

Antoine Maillet-Mezeray -- Chief Financial Officer

Thank you, Jeremy. Hello, everyone. We are now on Page 14. In parallel, we're driving usage and consumer adoption of our platform. We seek to monetize this usage and transactional activity in a gradual manner. Marketplace revenue increased in Q4 2019 by 50% year-over-year, primarily driven by increased usage of our platform and our efforts to build and monetize a suite of relevant services to our platform participants.

Gross profit rose 64% year-over-year to EUR24.8 million, with our gross profit margin rising to 8.2% of GMV, up 336 bps in 12 months. We are very pleased with the material step up in gross profit, as this is partly a result of the enhanced promotional discipline we enforced, as well as the rebalancing of our business mix toward margin-accretive business.

Let's now take a closer look at all various marketplace revenue streams on Slide 15. Commissions, which are fees charged to our sellers, increased by 62% year-over-year. Commissions growth outpaced GMV growth as a result of an increase in the share of product categories with higher average commission rates, notably, fashion and beauty, as well as enhanced promotional discipline and reduced deployment of consumer incentives, some of which are accounted for as deduction from commission revenue. Fulfillment, which comprises delivery fees charged to consumers, increased by 52% year-over-year in parallel with order growth. Changes in the packages mix, notably an increased proportion of packages, shipped from overseas sellers and increased deliveries outside primary cities, contributed to the increase in the Fulfillment revenue. We saw double-digit gains in Value Added Services revenue, which includes services provided to our sellers around logistics, packaging, and content creation. As we move into 2019, we further expanded the fourth leg of our monetization strategy with marketing and advertising services, which represented 9% of our Marketplace revenue in Q4 '19. Marketing & Advertising revenue more than doubled year-over-year in Q4 '19.

Let's now move on to the progress on cost efficiencies. As a reminder, we have three main costs in our P&L. Fulfillment costs, which is largely variable, Sales and Advertising expense, which is discretionary to a certain extent, and general and administrative expense.

Let's start with Fulfillment expense, Slide 17. We are pleased to report that our gross profit after Fulfillment expense was positive in Q4 '19, reaching EUR1 million compared to a loss of EUR2.1 million in Q4 '18. If you look at our Fulfillment expense in absolute terms in Q4 '19 compared to Q4 '18, we see an increase of 38%, which is below our order volume growth. It is worth noting that the Fulfilment expense is influenced by a number of factors such as the original package, it's destination as well as the type of goodwill shipping and its size.

When we deep dive at the level of a given logistics routes -- I am now on Slide 18, we see that volume increases drive Fulfillment cost efficiencies. On this page, we are taking the example of the logistics route using Nairobi addresses for small- and medium-sized packages. Our freight and shipping cost per package decreased by 24% in the course of '19. This was largely a result of triple-digit increase in packages volume, which allowed us to increase the number of third-party logistics partners on the route and drive more competition among them. This, of course, helps us negotiate better rates on the cost per package. So, the Fulfillment cost is very much a scale game, and our effort to drive usage and higher purchase frequency are key to extracting volume-driven savings on the variable costs and operating leverage on the cost of the physical infrastructure.

Our second main cost component in Sales and Advertising. I am now on Slide 19. Sales and Advertising expense increased by 14% in Q4 '19, while we grew orders, active consumers, and GMV across most categories much faster. Our Sales and Advertising expense per annual active consumer in '19 decreased by 21% from 11.6% in '18 to 9.2% in '19. We have been very disciplined with our marketing budget and sought to increase returns on our marketing investments by increasing the share of traffic on the app, which helps reduce reengagement costs.

Finally, our third major cost area is technology and G&A. I am now on Slide 20. Our technology and content expense increased by 18% on a yearly basis, as we continued investing in our tech infrastructure. G&A is an area where we've seen an uplift in our cost base in the course of '19 compared to '18, as we set up the infrastructure to operate as a listed Company. While G&A, excluding SBC, increased by 45% in the first nine months of '19, compared to same period in '18, the rate of yield increase significantly decreased in the fourth quarter of '19, reaching 80%. We incurred EUR2.2 million of restructuring expenses as part of our portfolio optimization and headcount rationalization initiatives, and we expect to see the benefit of these initiatives over the coming quarters.

I'd like to give you more color on what is included in this EUR31.7 million of G&A, excluding SBC and restructuring expenses. The largest component is staff cost, which is 31% of the total of EUR10 million in the fourth quarter of '19. This is the main area where we expect the savings from the actions we took in Q4 '19 to materialize. Then, approximately 25% coming from depreciation and amortization, provision and other non-cash expenses, followed by 23% coming from professional fees and subcontracts, which include expenses related to legal and audit services and another 21% of other G&A, which includes office and infrastructure costs.

As a result of increased usage, increased monetization and cost efficiencies, our unit economics are improving. I am now on Slide 21. Our adjusted EBITDA, excluding restructuring expenses, increased slightly in absolute terms from EUR48.6 million in Q4 '18 to EUR51.2 million in Q4 '19. The business mix rebalancing we undertook had a clear impact on our unit economics in Q4 '19. We have smaller size, but more profitable orders. On the table on the right-hand site, you can see that while our average order value decreased by 35% from EUR56.2 to EUR36.4, the order contribution of gross profit minus Fulfillment expense on the per order basis turned positive to EUR0.12 per order. Our cost efficiencies drove a 24% decrease in opex per order, leading to 29% decrease in EBITDA loss per order. This is what we have in mind when we think about profitable growth, i.e., growth that positively contributes to our bottom line, while supporting the long-term usage of our platform.

Moving on to Page 22, our positive profitability is further supported by our asset-light business model. Capex during the full-year 2019 was EUR5.7 million, which is less than 1% of GMV. We operate Jumia Logistics as a platform with very limited capex requirements. Net change in working capital resulted in an outflow of EUR11 million over the full year 2019, which is approximately 1% of GMV. As a result of these features, our adjusted EBITDA is a close proxy for cash utilization and the delta between operating cash flow and adjusted EBITDA is less than 1.5% for the full year '19. Finally, at December 31, 2019, we had EUR232 million of cash available, including EUR170 million of cash and cash equivalents and EUR62 million of term deposits, which are cash balances placed on a nine months deposit basis.

With that, I'll hand the call back over to Sacha.

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Thanks very much. I think we are making very good progress and certainly, we made the right decisions to be more focused. If you look at the results in Q4, you can see still very robust growth and efficiency gains. The headline GMV growth is lower, but we are comfortable with that. We are driving that and as you have seen in almost all categories, they're still growing strongly.

Now, before we go into Q&A, let's look ahead. Our goal for 2020 is to continue to deliver on the four pillars of our strategy, and to do it, while reducing our adjusted EBITDA loss in absolute terms compared to 2019. We previously said that we want to show a clear trend of EBITDA loss reduction and we remain committed to that. Now, if we take each pillar in terms of usage growth, we've seen during 2019 that the growth in consumer adoption and orders outpaced the GMV growth and we will continue to see the same trend across at least the next two quarters, because first, the effect of the business mix rebalancing that we initiated will continue to play out over the first half of 2020. We will continue to enforce stronger promotional discipline and we will continue to drive growth of the everyday product categories, which are great consumer acquisition categories and high-purchase frequency ones as we mentioned. So, as a result, we expect flat to negative GMV growth year-over-year over the next two quarters with the stronger, of course, growth of orders and active consumers.

Secondly, of course, there is the recent virus outbreak in China, which is likely to affect growth over the coming quarters. And here, we are starting to face some challenges to fulfill our cross-border sales. Also, many of the sellers in our Marketplace start to face procurement issues. So, this can affect both the product availability and the prices and what is favorable to us in those situations is that the consumers can be sometimes even more eager to find the best prices and this can bring them to Jumia. Of course, we don't know exactly what's going to happen by the -- given the evolving nature of this outbreak, we'll have to monitor, and of course, we're not in a position to estimate everything here, but we certainly wanted to flag that there may be some headwinds from this.

Secondly, in terms of JumiaPay, here we closed 2019 with JumiaPay live in six countries and the transactions almost multiplied by four compared to last year. And in 2020, we want to really continue to drive the penetration of JumiaPay on platform in a gradual manner and continue also to expand the range of services available, both for the consumers and for the sellers.

On monetization, we have seen, as we have said, a very meaningful step up. The gross profit increased by 72% this year versus last year and we will continue to place emphasis on the build out of our existing revenue streams and with a strong focus on the marketing and advertising services.

And last on the fourth pillar of the strategy in terms of cost efficiencies, I think 2019 was the year where we saw the first quarters of positive gross profit after Fulfillment expense. And certainly, we intend to continue to generate positive gross profit after Fulfillment expense in the coming quarters. In terms of sales and advertising, we've made significant progress as well and we expect to maintain roughly a stable amount of investment in absolute terms for the full year 2020. In terms of G&A, which is a cost component, which has increased cost component, which has increased in the course of 2019. Here the portfolio optimization and also some rationalization initiatives that we undertook will generate savings and this will start already in Q1 2020. So again, for us to grow in 2020 is really to continue to see the usage of Jumia growing, to see JumiaPay continue to grow, driving monetization and cost efficiency, really the four pillars of our strategy, and to do this while demonstrating tangible progress on the path to profitability with a reduction of our adjusted EBITDA loss in absolute terms.

Thank you very much for your attention and we are now ready for questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Mark Mahaney of RBC Capital Markets. Please go ahead.

Mark Mahaney -- RBC Capital Markets -- Analyst

Thanks. I think I'll just stick with two questions. One, could you talk about market share shifts in those 11 core countries where you operate? Is it clear to you that you have maintained market share? Or do you think that you've lost market share? And then any particular markets you could call out would be helpful.

And then secondly, in terms of getting to a path to reaching self-funding status, so a little bit more detail perhaps on your EBITDA loss goals. It sounds like you expect EBITDA loss to be lower in 2020 versus 2019. Should we start seeing a sequential decline in EBITDA losses in absolute levels, starting in the March quarter? Is that later in the year? And when do you actually think you'll be able to reach EBITDA breakeven or reach a point where you're self-financing? Is that by the end of 2020 or is that 2021? Thank you.

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Thanks, Mark. On the first question about market share, I mean, certainly here, we have not seen any very meaningful change in the competitive landscape recently. And so to some extent, the categories where we decided to be more disciplined and consciously drive some contraction, I think, on those we're very comfortable with that and we don't see any significant shift here. So, this is very much driven by us rather than anything else.

And in terms of EBITDA and timing, so, we're not going to comment on timing, because we really want now to establish this trend. And I think as we have said last time, our goal is to really show a clear trend and show some clear milestones of profitability and yes, we want to have an absolute EBITDA, which is going to be lower in absolute term, the lower loss in 2020 versus 2019 and we want that. Of course, on a quarterly basis, we established this trend, right? So, we will have to see how this trend plays out. It's hard to tell exactly how it's going to pay out, because of course, on a quarterly basis, there may be some fluctuations, but we certainly want to see the trend we very clearly established over the next four quarters.

So, here we'll have to see how this plays out. And from there, as we reach those milestones, we will bring you those milestones when we will see, for example, certain countries or certain new aggregates reaching profitability. In this year, we were profitable after Fulfillment expense. One day, we will be profitable after Marketing and so on and so forth. And as those milestones come together, we will bring them. So here, it's our commitment to do that.

Mark Mahaney -- RBC Capital Markets -- Analyst

Okay, thank you.

Operator

The next question comes from Aaron Kessler of Raymond James. Please go ahead.

Aaron Kessler -- Raymond James -- Analyst

Great, thank you. Just maybe circling back on the GMV growth. I think last quarter we talked about kind of 20% to 30% GMV growth. Can you maybe provide a little more clarity? Was the updated kind of view was -- or I guess, was the previous guidance not contemplating declines in the electronics and film categories? And if we looked at the GMV growth kind of ex-electronics and phone, kind of, what type of GMV growth did you see in the quarter and how has that trended? Thank you.

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Yes, thanks for the question, Aaron. Yeah, I will start with the second one. I think you -- we've published on that page the growth by category in terms of GMV and you can see, most of the categories are between 20% and 50% indeed, and of course, in volume, this is even higher. I think last time when we spoke, that's what we were foreseeing. And here, we're not necessarily trying to solve for a particular number on that. And I think we also going with where the consumers are going. And I think we had many discussions with many of you. Would we rather have 6 million consumers and ex of GMV? Or would we ever have less consumers, more GMV and all those considerations? I think here, our intention is very much to drive the usage of Jumia. And we look at the usage of Jumia by how many consumers use it, how many times do they use it, how much they spend and all those metrics.

And so, I think we are really solving for that equation of driving the right usage and driving the best usage, which puts us in a position to really meaningfully capture the long-term market share with those consumers, as well as monetizing the platform the most effectively, right? And the usage, the more consumers, the more orders, this helps us a lot to drive, of course, the adoption of JumiaPay, because the more transactions that the consumers do, the more chances we have to convert them. Also, the marketing and advertising is really good and also the volumes in terms of Fulfillment.

So, I think we were seeing this as 20% to 50% and I think we had more reduction on those categories than we anticipated, because that's where we saw the results going. So, I think that's it and that's why also for this year, we want to rather give you the trend qualitatively in terms of where the usage is going to go. And I said that the GMV would likely be flat or declining in the first two quarters and the other one's growing faster than giving you actual numbers, because I think throughout the quarters, we can see sometimes some evolutions and we want to hear -- give you rather qualitative trend and quantitative on this one.

Aaron Kessler -- Raymond James -- Analyst

Great. Thank you.

Operator

Your next question comes -- the next question comes from Sarah Simon of Berenberg. Please go ahead.

Sarah Simon -- Berenberg -- Analyst

Yes, hi. I've got three questions, if I may. First one was on active users. You talked about the growth rate versus the 4 million at the end of 2018. But I'm guessing that the 4 million includes people who are in markets which you've subsequently exited. So, do you know what the like-for-like number would be in terms of customer numbers. I'm guessing the growth rates even higher?

Second question was on China. Is it right to assume that the shift away from electronics and phones probably makes you less dependent on China in terms of orders coming from there than before? Any color you can give on that would be helpful.

And then the third one was on the rate of cancellations, failed deliveries, and returns. I'm kind of surprised you didn't highlight the good improvement in that. But can you talk about what drove that? Is that just JumiaPay? Or is that also any benefit from the new pickup infrastructure that you put in place in terms of the deals with Total and stuff? So, anything you can give us that would be helpful. Thanks.

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Sure. Thanks, Sarah. I think on the active users, you are right, there is definitely some impact here. At the same time, because we report the active users on the 12-month basis and we closed those countries and geographies toward the end of the year, it's rather limited, right? So, that's why we didn't want to call this out, because by design, there is a little bit of that. So the growth would be even higher, but it's not very meaningful.

And in terms of the phones and China, yes, of course -- I mean, almost every consumer electronic products in Africa but also I think in the world is manufactured in China. So, it's -- we will be less dependent for sure. At the same time, all the other categories in some way or another, they depend some -- in some way or another on a broader supply chain, which included a lot of parts and a lot of semi-finished products, etc., which can be manufactured in China. So, I wouldn't be too -- it's good in some way, but the rest, to some extent depends on China as well for packaging and for accessories and for lot of things even in many different industries. But certainly, phones and electronics are probably even more dependent, you are right.

And the rate of failed deliveries and cancellation returns, I think we are -- we've been saying that this rate has been going down with time. And here, we wanted to highlight it as an update, right. Every now and then we give some updates on some topics and suddenly, we're very pleased with that. And this is something that we have seen over the years to continue to play out and there is really no silver bullet behind that, but rather multiple trends and levers, which are driving this improvement.

Certainly, there is a certain notion of consumer education to some extent. So, some consumers are getting used to the experience and I think some consumer education. There is a lot of also improvement in our technology and processes, right? So, the faster you deliver the goods and the packages and also the easier it is for the drivers to find the consumers and for them to connect with each other. So, for example, we have a delivery app for our riders and they can automatically send SMS when they are approaching the users, etc. So, making it easier for the consumers and the driver and the delivery associates to meet and find each other. As you have mentioned JumiaPay, of course, is helping, because we have higher delivery rate on the packages, which are shipped with JumiaPay. And some of the recent initiatives that we have talked about with the pick-up stations, they also help, because the pick-up stations, the address, the need for certain consumers to decide when do they want to pick up the item instead of when the driver reaching out to them. So, for some consumers, it's more convenient and this is good, and also it's a delivery that costs less. So, the delivery fees that the consumers pay on the pick-up station tend to be lower. So, as a result, they are even more excited I would say to collect their packages. So, I think it's a lot of operational improvements behind this and we are confident that this rate is going to continue to increase with time.

Sarah Simon -- Berenberg -- Analyst

Thanks. Shall I just ask one follow-up? The ban on scooters in Nigeria, that's just taxis, right? So, it shouldn't -- is it right to think that it shouldn't affect you?

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Correct.

Sarah Simon -- Berenberg -- Analyst

[Speech Overlap] scooter taxi ban?

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Exactly. So, this is a specific need to the transportation of people and we are not impacted at all. Also because our deliveries take place with a mix of motorcycles, cars, and trucks as well as pick-up stations as we just talked about, right. So, the ban is specifically on the transportation of persons, people and on motorcycles and in the tricycles.

Sarah Simon -- Berenberg -- Analyst

Okay, thank you.

Operator

The next question comes from Brian Nowak of Morgan Stanley. Please go ahead.

Brian Nowak -- Morgan Stanley -- Analyst

Thanks for taking my question. I wanted to talk about 2020 GMV alone. And I think it's come down quite a bit versus certainly a year ago. Curious to sort of think about, as you sort of step back, what are sort of one or two of the biggest surprises that you think sort of caught you off guard in your ability to grow GMV this year? And then just so we can sort of have the one, two bullets, what are the key steps you're taking to sort of fix those challenges that you've had over the course of the last year on the GMV front?

And then on the -- going back to sort of the breakeven sort of EBITDA breakeven, given the cost reductions you've taken and the efficiency improvements, are you in a situation where you could get to breakeven even if GMV doesn't grow in 2020? Or is getting to breakeven predicated [Phonetic] on GMV growth? Thanks.

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Sure. Thanks, Brian. So really, yeah, I think in terms of how we saw 2019 play out, I think we saw throughout the year and I think you -- we have seen it together as we were looking at the numbers really and we have brought those analysis and the growth of the categories and the growth of the items sold per categories, we are seeing a clear faster uptake of those lower item value items -- the lower value items and the categories, which are more affordable, right. And I think this has been possible because we have put over the last two, three years, this is something that has started a while ago, a lot of efforts in driving those categories, for example, the grocery category, the FMCG, the food deliveries, also consciously driving more affordable assortment in the fashion categories and also in the mobile phones and mobile accessories, etc., categories.

And I think as we saw the year playing out, we saw that there was this amazing engine to drive consumer acquisition. And I know you and I, we talked a lot about back then the number of users that we would get for the year, right? And this equation between the number of users and the GMV and I think here we have seen that the success of those categories and the strategy to drive the usage of Jumia in terms of the number of consumers and the frequency and the number of purchases made us really reallocate our focus toward those categories. And as we did that, we decided to be also selective with some of the incentives. We were in the promotional intensity that we were putting behind mobile phones and laptops and certain categories like that, which are very price sensitive and if you step back, we are still doing very well in those categories and there's still a meaningful part of our business and we love them, they bring a lot of good usage in the past. They were really the headline categories to drive a lot of traffic to the platform and also a lot of marketing and conversations, right. So, I think those categories are still key for us, but as we saw the other one taking off so well, I think we decided to do this rebalancing. And to some extent, this is something that we thought would play out at some point, but maybe not as fast as it played out here.

And certainly we are absolutely not concerned about this -- the trend and the relationship between this trend and the path to profitability. If at all, we are actually very confident, because if you look at it, if you take out those -- this very concentrated drop on two categories, all the other categories are still growing well and even faster in volume. And as we see our unit economics, if you look at the unit economics of Q4, I think it's very good news that our orders are growing very fast, because now that every order is positive and the gross profit after Fulfillment, we can see that the more orders we have, the closer we get to profitability, right.

So, I think we commented on the GMV trajectory for the next two quarters to be in order [Phonetic] because that's what we see. And then maybe we will see more growth coming or maybe not, but I think we are again very comfortable with the dynamism of the marketplace and the top line drivers.

Brian Nowak -- Morgan Stanley -- Analyst

Great. And then just the question on breakeven. If you are in a situation where GMV may not grow this year, could you still approach breakeven or are you still predicated on leverage to get to breakeven?

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Yeah. No, we could still very much, right? And again, as I said, if we are gross profit after Fulfillment positive on an order basis and we are growing the orders very fast, we will be closer to breakeven "regardless of the GMV", right? So, I think we still want to see some GMV growth because it's one of the indicators for us of the relevance, but certainly being on an order basis positive after Fulfillment is a very good situation to be in right now, because as we see more orders, we get closer to profitability.

Operator

The next question comes from Ralph Schackart of William Blair. Please go ahead.

Ralph Schackart -- William Blair -- Analyst

Hi, good morning. Two questions. First, how much opportunity do you still have to rebalance the products and portfolio mix and potentially further reduce any incentives in the platform? Are the major changes done? Or maybe talk about the opportunity to rebalance further impacts of the business. And maybe the follow-up, just on JumiaPay for business, maybe talk about that opportunity a little bit more, please. Thank you.

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Sure. Thanks, Ralph. I think we've done quite a bit on the rebalancing already. And so, the way we are driving the business already now in January, February is quite close to how we were driving it already in November, excuse me. And we're still always optimizing, right? So, we look at every consumer marketing channel, for example, and we look at consumer lifetime value and so on and so forth and we review our category mix, but also our local footprint, right. So, certain regions, certain cities, it's constant optimization, but I would say, maybe 80% of what we did in Q4, we still do in Q1 and then we added even more in Q1. So, I think the heavy lifting is done. The rest is more like constant optimization of the business mix on the category, on a consumer, on a marketing channel, and on the geographical basis.

JumiaPay for businesses, of course, a very big opportunity for us both in terms of, I would say, operational efficiency, in terms of future monetization potential, and the way we are approaching this is very much around we want our sellers to see some value in using JumiaPay. To give you a simple example, today, we have, as you have seen, the dozens of thousands of sellers and almost on a weekly basis on average, we send them through bank transfer, which is the payout of the business that they have conducted on Jumia. And right now, we are piloting that instead of sending them a transfer, we actually credit their JumiaPay wallet. As we do that, of course, they can go into their JumiaPay wallet and they can withdraw that money on their bank accounts, because of course, they still need a bank account to operate their business. But as we are doing this, we are also starting to channel more and more financial services to those sellers, because as they login to their JumiaPay and telecenter wallet, they can see that they have access to, for example, lending offers and we have disclosed that in the past and given a case study about this. They have access to more financial services, which is for them very good and those SMEs are most of the time very much underserved. So here, there is a lot of operational efficiency for us in paying out all those merchants in a very meaningful way. And as we do that, we take a bigger agenda with them, because they see JumiaPay as a solution for them to operate their own business but also to themselves improve their operations.

If we look even far away and more far away, we have on our platforms pretty much a lot of sellers who are small sellers who also have a store. Some of them are retail chains and we have also all the restaurants with Jumia Food and we also have all our logistic partners. So, if you think about our ecosystem of participants, you have a lot of physical assets. If you think about all the pick-up stations we have, all the stores who already work for Jumia, all the restaurants, all the drivers, all the logistic partners, also on the JForce agents, we have those dozens of thousands of JForce agents who are already working for Jumia and with Jumia, right. So, if you take this whole ecosystem and suddenly you move it to JumiaPay, then we have an extraordinary physical infrastructure and a lot of physical assets to drive more financial services, more financial inclusion. For example, cash to wallet service and wallet to cash services and every one of those participants can contribute to being a JumiaPay agent, right.

So, this is very powerful and already a lot of our JForce agents and a lot of our pick-up stations, they ask, can I please distribute some of the JumiaPay services, so that the consumers when they come to my station, they can also pay their bills, right. They want to do that. So, I think we see our ecosystem as a great, great, great engine to drive the adoption of JumiaPay physically in the real world. And I think that's something that we will start to see paying out more and more. I hope I answered your question, Ralph.

Ralph Schackart -- William Blair -- Analyst

Yes, that's great. Thanks, Sacha.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Safae Damir -- Head of Investor Relations

Sacha Poignonnec -- Co-Founder & Chief Executive Officer

Jeremy Hodara -- Co-Founder & Chief Executive Officer

Antoine Maillet-Mezeray -- Chief Financial Officer

Mark Mahaney -- RBC Capital Markets -- Analyst

Aaron Kessler -- Raymond James -- Analyst

Sarah Simon -- Berenberg -- Analyst

Brian Nowak -- Morgan Stanley -- Analyst

Ralph Schackart -- William Blair -- Analyst

More JMIA analysis

All earnings call transcripts

AlphaStreet Logo