According to information obtained by Nairametrics, a Nigerian company that has been operating for two years and using delivery software to simplify delivering packages to companies and people has officially halted its activities. As a result of the challenging economic environment, DropX has decided to close its doors, adding to the growing number of Nigerian companies that are in danger of going out of business in 2023. DropX entered the market with lofty objectives, intending to revolutionize local delivery in Abuja by linking companies and people with effective and dependable services. The company was established in 2021 by Praise Alli-Johnson and Oluwatope Liasu. The startup company’s owners decided to shut down the company after it had been operating for two years, even though there was an early rise in interest due to the multiple obstacles that the company experienced.
The startup acquired early momentum by enrolling 2,000 customers, giving appealing incentives such as free first deliveries, and recruiting 500 drivers. Most of these drivers were vehicle owners already participating in the gig economy via ride-hailing services.
The difficulties that DropX encountered started when there was a discrepancy between the compensation expectations of drivers and the amount that users were ready to pay. To solve this problem, the firm adjusted its costs to be comparable to Bolt’s. Additionally, the company concentrated only on high-value clients who dealt with bulk food deliveries, cakes, luxury products, and other items. However, this particular market sector placed a higher priority on the condition of the things than on the pricing, which resulted in difficulties in achieving buyers’ expectations. The geographical issues that DropX faced were a result of its expanding user base, which included users located in various parts of Abuja. The efforts to focus on specific regions, such as Wuse 2, Maitama, Asokoro, and the surrounding areas, were unsuccessful since consumers outside these regions needed help receiving quick replies. The fragmented user base continued to be a problem even though attempts were made to improve user involvement, including the employment of corp members to promote the service.
The fact that there is competition for drivers’ time and price with other ride-hailing systems such as Bolt and Uber further complicates the situation. Afternoon demand skyrocketed, resulting in a rise in delivery orders made via the DropX platform.
Users were dissatisfied with the surge pricing strategy that the firm used, which was comparable to those of Bolt and Uber, and they often canceled their orders. The second effort, which consisted of making surges visible to drivers only, was greeted with mixed success, resulting in DropX being forced to pay the difference to keep the order flow going. DropX investigated the possibility of onboarding more freelance delivery bike drivers to cater to various customer categories. Regardless of the efforts, it became clear that freelance bike drivers needed help to provide high-value customers with appropriate service. In addition, customers continuously required that deliveries be made at a lower cost, which increased the number of requests for bicycles and decreased the number of requests for automobiles.
DropX, recognizing the constraints of the vehicle driver model, examined the prospect of engaging with independent off-takers and studying the possibility of partnering with current clients interested in managing assets such as bikes, cars, and drivers. The government of Abuja outlawed 100cc motorcycles, which disrupted the planned growth. Even though the effort to partner with TVS to provide tiny 100cc bikes showed potential, the expansion could have been more successful.
Several DropX users participated in off-app arrangements with drivers. They conducted monetary transactions outside of the app, further aggravating the difficulties that DropX was experiencing caused by the people issue. The creator saw a silver lining: he did not have to compensate for the difference in shipping costs despite people complaining about the issue.
It also failed for the corporation to work together with the Nigeria Postal Service (NIPOST), another obstacle it encountered. Even though NIPOST contacted DropX to form a possible partnership, repeated proposals to include more bicycles in the distribution system through a technology infrastructure and bike investment program were unsuccessful. The creator of DropX stated his dissatisfaction with the lack of progress and his exhaustion, especially regarding the fruitless efforts to establish partnerships and effectively traverse the hurdles posed by the constantly shifting logistics environment. In 2023, the failure of DropX serves as a cautionary tale for new businesses attempting to navigate the complicated terrain of the Nigerian business climate.
