The online shopping site, which is one of the most successful in the east Africa region, noted that although it had implemented various measures to detect and reduce the occurrence of fraudulent activities on its platform, there can be no assurance that such measures will be effective in combating fraudulent transactions or improving overall satisfaction among sellers, consumers and other participants.
It argues that additional measures that we take to address fraud could also negatively affect the attractiveness of our platform to sellers or consumers, putting it at a loss.
“For example, we may receive complaints from consumers who may not have received goods that they had purchased, or complaints from sellers who have not received payment for the goods ordered,” Jumia notes.
This activity may harm other sellers by enabling the perpetrating seller to be favoured over legitimate sellers and may harm consumers by deceiving them into believing that a seller is more reliable or trusted than the seller actually is.
The firm says it operates with limited inventory risk given that most of the goods it sells belongs to third-party sellers, meaning the cost of inventory remains with the seller.
“In 2018, approximately 90 per cent of the items sold on its marketplace were offered by third-party sellers.
The firm tells investors in the prospectus that its business has grown significantly over the years. By the end of last year, the firm had four million active consumers, up from 2.7 million at the same time in 2017.
But despite the growing in numbers, the firm is still in the red.
It says its consolidated operating loss increased from about Sh17 billion in 2017 to Sh19 billion in 2018.
The firm says illegal, fraudulent or collusive activities by employees could have a material adverse effect on its business.
“While we have not experienced any material events of this nature in the past, we have identified allegations of employee misconduct, which led us to improve our internal controls and our cash reconciliation system,” the firm said.