Popular African e-commerce store Jumia Technologies AG has identified improper sales at its Nigerian salesforce. These sales contributed to 4% of its first-quarter sales.
Even though the company claims to take measures against this wrongdoing, this recent finding aligns with the report by short-sellers ‘Citron’. The report caused a crash on Jumia’s share price during its initial public offering at the New York Stock Exchange earlier this year.
According to Bloomberg, Jumia discovered that some improper orders were placed and subsequently canceled. Some of these orders were made through J-Force–a team of independent Nigerian sales consultants. These orders account for 2% of 2018 gross merchandise volume and eventually rose to 4% in the first quarter of 2019.
According to Jumia co-founder and Chief Executive Officer Sacha Poignonnec, J-Force grants Jumia the opportunity to interact directly with customers.
He said Jumia advertises for candidates to join J-Force, and also grants users the opportunity to earn unlimited income while having complete freedom and control over their activities.
Jumia reported these improper sales practices after they were tagged “an obvious fraud,” by Citron. The shares fail 14% to $12.73 again dropping below the $14.50 listing price.
According to the e-commerce company, their second-quarter losses grew to 60% at $74 million, because of an increase in costs associated with share options from the IPO. The company aims to make profits by 2022.
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