A retailer that many may never have heard of is understood to be planning a float that would value it at more than $1bn.
Jumia, an African ecommerce platform and marketplace, is reported by Bloomberg to be planning an IPO on Wall Street.
Its mooted valuation would make it one of the proverbial start-up ‘unicorns’ that achieve a capitalisation with nine noughts.
In sterling, Jumia would be worth more than £770m, a capitalisation higher than some of the best-known names in UK retail.
Launched in 2012, Jumia’s mission is to be “the most beloved and trusted shopping destination for Africans”. Trading from Algiers to Accra, from Cairo to Kampala, Jumia seems to be well on its way to fulfilling its goal.
In its 2017 financial year, Jumia achieved gross merchandise value up 41.8% to €507m (£444.9m). Like many other growing etailers, it posted an adjusted EBITDA loss − €120m (£105.3m) in its case – partly reflecting investment.
The lack of profitability will no doubt give sceptics ammunition, but it’s a feature that has been reflected across digital retail and is shared with businesses that have gone on to be stellar successes. According to Jumia’s website, it has 4 million subscribers and more than 10,000 active vendors.
Jumia and Africa may seem a long way from the day-to-day battles on the British high street but in some ways, they are not.
The rise of Jumia over such a short timescale is a reminder of how rapidly the world of retail is changing and how that is enabled by new technology.
According to Bloomberg, key to Jumia’s investment story is that two-thirds of Africa’s 1.2 billion population still don’t have access to the internet, creating a vast market in the future as connectivity is rapidly expanded.
The ongoing development and deployment of new technology surely opens the door to new forms of international opportunity
In recent years, many big UK retailers have scaled back their international presence. There are certainly great success stories about overseas growth, such as Primark, but whether it’s Kingfisher in Russia or Tesco in South Korea, there have been numerous retreats.
However, the ongoing development and deployment of new technology surely opens the door to new forms of international opportunity in markets that might not have been considered before.
If Jumia is successful, it will be the latest example. A flotation could net $600m (£466.8m) for communications company MTN, which bought into the etailer a few years ago.
Its other backers are impressive, including Goldman Sachs and Rocket Internet – the tech investment specialist and incubator that funded businesses such as Zalando and Hello Fresh.
But perhaps the big beasts of British retail should be focusing more on new types of business in new markets. That’s what their international peers and rivals have been doing, evidenced by the fight between Amazon and Walmart for control of Indian ecommerce business Flipkart. The latter eventually won, shelling out $16bn (£11.8bn) for a 75% stake.
While the local pressures afflicting the UK high street are understandably front of mind, perhaps some solutions can be found overseas, whether through investment opportunities or good ideas.
Maybe such deals needn’t rely on sums as big as the $16bn Walmart invested in Flipkart. Perhaps, just as retailers invest in start-ups at home, they should be backing them overseas too as they seek new growth markets. Even if they don’t invest, they can pick up new ideas to solve some of the problems they now face.
Alibaba may hold clues to how to reinvent the UK’s high streets and revitalise stores. It has made bricks and mortar as central to its vision of ‘new retail’ as it has technology. Over the long term, no doubt some of its ideas may prove duds, but some are likely to succeed.
While the health of UK retailers’ domestic operations needs to be the priority, perspectives – and deals – from the wider world might prove practical ways forward.