Investing in Jumia Technologies has its advantages over investing in most other markets today. First of all, we will be dealing with a low cost area where the margins are thin due to the lack of international joint ventures. That is a positive sign for investors. Second, we have the second best performing market in the world, the e-commerce industry. It is a sector that continues to expand at a rapid rate and therefore e-commerce adoption has risen significantly.
There are three core components to any good investor’s checklist when it comes to emerging technologies. Those components are demand, market leadership, and competition. Jumia provides a great solution to the e-commerce market in a market where it is not yet mainstream. It also has multiple services that are being sold in bigger markets than anyone else on the planet, Africa. All of this gives Jumia a significant advantage over potential competitors.
When someone asks us what are the things we are looking for in a new technology, we often reply by talking about demand. Demand is a good indicator for the health of an emerging technology, because if there is no demand, there will be no innovation. There have been many cases where established technologies have sensed the need for new technologies but were unable to provide a market for it. If a company is able to recognize the demand in the marketplace then they are well on their way to becoming a market leader.
Competitors are always coming up with exciting new products. However, many times those products don’t convert very well or are not widely adopted. As a result, companies with a lot of resources tend to dominate the market. As a result, these companies invest far too much in the r&d to continue to compete with their competitors. Because they invest so much in the r&d, they end up not being able to reinvest the earnings of their competitors into research and development so they remain in the same spot year after year.
One of the reasons why Jumia Technologies became a market leader is because they provide solutions to customers and businesses that were previously inaccessible. Investing in emerging e-commerce becomes increasingly important as the technology becomes more commonplace in the marketplace. We expect that technology investors will continue to take a long term view of e-commerce investments. In doing so, they become aware of companies that are well positioned to capitalize on the growth curve.