Jumia Kenya has revealed that one of its employees stole over Ksh 21.1 million by manipulating vendor payment records. The company which is owned by Jumia Technologies AG disclosed these details to US regulators. It says that it discovered the fraud in September 2021 according to Business Daily.
The statement by the company says, “In September 2022, we discovered that an employee in Kenya manipulated certain vendor payment entries and misappropriated payments in 2021 and 2022.” Jumia did not reveal the identity of the employee or share the details of how the fraud happened.
“While the financial impact, in this case, was not material (below $150,000), any such illegal, fraudulent or collusive activities by our employees could have a material adverse effect on our business, financial condition, results of operations and prospects and could subject us to liability or negative publicity,” the company said.
According to Jumia, anticipating and detecting fraud is one of its biggest challenges so far. There are so many participants on its platform and this makes it hard to detect and prevent fraudulent activities. Even though I tend to agree with this, the company has to do more to prevent fraud. For a company that is still not profitable, they have to invest more in fraud prevention or they will keep losing money. Fraud is quite common with ecommerce sites and even Amazon reportedly lost close to $10 million through fraud.
Jumia Still Not Profitable
Besides fraud, Jumia is still a struggling ecommerce platform that is yet to turn a profit. In Kenya, the platform grew so fast reaching a bigger part of the population but we don’t hear much about it these days. Jumia tends to be slow when it comes to delivery times compared to some of the smaller retailers who have their own websites and social media pages. The smaller retailers are also flexible when it comes to pricing and product availability.
I have not used Jumia in close to a year and the reason is that I don’t see any reason to do so. I can get everything that is on Jumia directly through the retailers in Nairobi and in most cases I can do so at a much lower price.
Jumia has to find an advantage that sets it apart and makes it worth buying through its platform. As things are right now, that does not exist.