Jumia was one of the first online retail outlets in Nigeria who then expanded to include other

brands such as Kaymu, Jovago, Lamudi, and Carmudi. Jumia remained the most valuable
brand so the team rebranded all of these supporting products and platforms as Jumia became
the biggest and most valuable brand in the country. We will be discussing the Jumia Board's
decision to shift from an online retail model to a marketplace model and why we think is was
the right decision at the time. We will evaluate using porters five forces strategy and a
PESTEL analysis and use the industry growth cycle and Jumia’s logistics system to illustrate
why we are in favour.

The risk of new entrants in the Jumia Nigeria retail to marketplace A is regarded to be low as
the market is already made up of controlling gamers which is why the introduction of
newcomers would have little effect on the present members. The industry for Jumia Nigeria
from Retail to Marketplace A is extremely saturated, and competition among competitors is
already fierce, generating numerous barriers for newcomers to establish themselves in the
market. The bargaining power of the buyer is regarded as moderate to high in the Jumia
Nigeria from retail to marketplace A industry. The existence of several controlling players in
the market to provide nearly identical commodities to the customer is the reason for the great
bargaining power. Replacements for disposable Nigeria from retail to marketplace A such as
cotton napkins are widely available in the market increasing the purchaser’s bargaining
power. The purchaser’s bargaining power is minimal due to the strong brand name image,
excellent quality, skin friendly, eco-friendly, and many other personalized features as well as
appealing marketing. The bargaining power of purchasers from retail to marketplace A is
classified as high to moderate. There are a few players in the market such as K-C which
makes its own plastic for Jumia Nigeria From Retail To Marketplace A, that help to regulate
the provider's bargaining strength. As there is no substitute easily available on the market for
creating non-reusable Jumia Nigeria From Retail To Marketplace A, the supplier's bargaining
position is strengthened.

In this instance, PESTEL can be used to see what may affect the strategy of Jumia to optimise
their profitability, brand awareness and more by switching to the marketplace model. The
economic external factors for Jumia are obvious. The ‘supply constrained market’ of the
online retail model shows that there is ample demand for the products of Jumia but there are
simply not enough products. This excess demand can be entirely changed by switching to the
marketplace model as Anammah said “the retail model restricted our product selection”. He
added that there is a greater opportunity for monetization, advocating that it is the correct
choice to adopt this new model and maintain their competition with Konga. However, simply
following largest companies such as Amazon or Alibaba may not have the same effect in
Nigeria. Sociocultural differences between countries of origin may impinge upon the end-
goal of this strategy. The companies of different countries with different sociocultural norms
with the same strategy will have a different effect on the company. Missing house numbers
and the fact that 85 % cash payments still hold delivery drivers at risk despite the change to a
marketplace model. This is not a deterrent from switching to the marketplace model in
comparison to the online retail model as it is an ongoing problem that exists with the delivery
of products which can be invested into with the success of their switch of model. It is evident
that the switch will elevate Jumia to a much larger scale giving them the competitive
advantage over Konga.

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 One key reason why Jumia Board's decision to shift from an online retail model to a
marketplace model was the correct one relates to their logistics system. Jumia’s tactic to
create their own logistics system rather than partner with an international provider such as
DHL was undoubtedly a bold one, but Nigeria’s infrastructural urban system simply can’t
support this strategic objective. By transferring to a marketplace model, Jumia could avail of
the opportunity to relieve their warehouse operations and inventory and thus prioritise
improving their logistical operations. While the J-force initiative has been a clear success for
Jumia, this innovative sales program need not be abandoned as many of these intermediaries
could be relocated to act as a platform between third-party users, thus assisting in any issues
of payment and hopefully reducing scams. Furthermore, Jumia must maintain competition
with Konga, and this strategic objective may finally allow them to increase profitability by
reducing their vast expenses as they attempted to gain market share. Jumia will target an
existing market using existing technologies, thus implementing an incremental innovation
strategy to hopefully become more profitable.

In conclusion, as the industry life cycle of Jumia progressed it became inevitable that the
online retailer would have to shift to a marketplace model to continue its growth. The
decision to alter the model came in 2016 was proven correct as discontinuities in the Nigerian
economy and the vastly intensifying competition from Konga meant change was necessary.
Jumia exploited these discontinuities through superior technology and limitless product
selection. Examining the industry life cycle of Jumia proves that change was made at the
correct time as after their early growth in the African market stalled and there was a need for
a shakeout before their development begins to decline. The business level strategy required a
differentiation to its model to become the sole marketplace for Nigerians.

This chart displays the industry growth for Jumia from September 2020-October 2021 as they
only began trading on the stock exchange in 2019. However, it shows how the company can
decline progressively if different strategies for differentiation aren’t implemented. In early
2016, Jumia’s industry life cycle would show a lot of growth and not much decline as a result
of their shift to a marketplace model.

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