Agent Commerce Is Driving Jumia’s Emerging Rural Play In Uganda
As part of efforts to cut losses and tap new sustainable growth frontiers, Africa’s top e-tailer Jumia is seeing its decision to go beyond major cities and penetrate rural markets gain ground in Uganda.
Through its JForce Sales Program which boasts a network of thousands of individual agents helping people place orders in rural parts of the country, coupled with pickup stations dotting the landscape beyond the major cities, Jumia is advancing its expansion strategy which aims to onboard as many cities outside the Ugandan capital Kampala as possible.
“Uganda is in its nascent stages in e-commerce and given its unique demographics and population distribution, the country is poised for e-commerce growth at a much higher rate compared to other African markets,” the company shared.
A new report by Jumia Uganda obtained by WT—titled “E-Commerce in Rural Areas: Expanding Jumia across secondary cities and rural areas in Uganda”—suggests there has been some success in expanding beyond Kampala into upcountry and rural areas to meet the needs of populations hugely underserved by retail.
The East African nation boasts the youngest population in the world with 77 percent of its population under 25 years of age (15-24 years) with almost 70 percent of them living in rural areas, the report notes. This makes rural areas in the country a crucial part of the addressable market.
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In March, Jumia CEO Francis Dufay shared that the e-commerce business will target high-growth rural regions and smaller cities, emphasising that more than half of Africa’s 1.4 billion people reside outside of major cities or in rural regions where agriculture is the main economic driver.
“Jumia is pushing into these areas, we have the right suppliers and assortment of products and a light logistics model to address those smaller pools of consumers,” Dufay had told Bloomberg. “This would be much harder to do for bigger supermarkets and shops for instance.”
In Uganda where Jumia has operated since 2016, there exists a unique population distribution across the country, the report explains, which makes it difficult for businesses, especially vendors, to easily upscale across the country in a cost-effective manner given the high costs of setting up brick and mortar distribution points, especially for customers in sparsely populated areas, compared to other countries with more cities that have a large population (over 1 million).
Jumia thus currently operates 99 Pick-Up Stations (PUS) across 25 cities in Uganda with majorly rural zones like Gulu, Arua, Jinja, and Bugolobi among the most promising areas outside the capital. The report notes that 24 percent of Jumia deliveries made in Uganda are in remote areas in regions where choices for products are currently extremely limited for consumers and infrastructure is particularly constrained. Secondary cities make up 15 percent of Jumia’s delivery destinations in Uganda.
The Nasdaq-listed online retailer appears to be making strides in what might be considered unusual territory—Jumia has largely served Africa’s major cities, almost exclusively, before now—by leveraging the agent commerce model that is now finding its feet in Africa as Amazon-style e-commerce falters.
Last year, Copia Global raised USD 50 M to advance its e-commerce business which combines technology and a network of roughly 40,000 local agents to reach consumers in peri-urban and rural towns across East Africa, though the startup quit Uganda recently to focus on Kenya due to the economic downturn and constrained capital markets.
In December, Kapu announced USD 8 M in seed to grow its business which works with street retailers who receive a commission for products they help consumers order on its platform. Tushop, which kicked off 2021 with founder Cathy Chepkemboi at the helm, also bagged a USD 3 M investment last year for its business which depends on agents to physically collect and fulfil orders. All these companies are known to digitally enable shopper aggregation and fulfilment via agents in locations that’d otherwise be hard to reach with the classic e-commerce model.
Jumia’s recent efforts with its claimed 7,000+ agents in Uganda suggest further progress for the emerging agent commerce model. The agents are part of its JForce Sales Program, a gig-based nationwide platform for independent sales consultants through which they support e-commerce unplugged consumers to order online for electronics, appliances, fashion, groceries, beauty products and more on Jumia and in turn, earn a commission.
The agent/retail aggregation model allows Jumia to pass on reduced prices from its vendor deals to customers while providing employment opportunities in a country where jobs are in short supply, especially for younger people.
The report by Jumia Uganda identified phones and household goods to be among the top-selling categories among underserved communities in the country, with a re-order rate of 67 percent featuring largely youthful customers who view cost-saving as the major pull factor by far.
The rural consumer is interested in a variety of products that are not readily available in their local areas, the report notes. “Jumia provides a solution to this by offering a diverse range of products at affordable prices on its online marketplace. JForce agents assist the rural consumer in placing online orders and educating them on how e-commerce works,” it adds.
Jumia currently delivers to Uganda’s interior through 58 third-party logistics partners and the average cost of delivery to rural areas is USD 0.53 to USD 1.36, with delivery time taking three to four days outside of the capital.
However, rising inflation which continues to impact the purchasing power of Ugandans, local currency depreciation, and setbacks to internet penetration in recent years, are issues the e-tailer would have to contend with in its bid to make a dent in Uganda.
