Low barrier to entry, poor regulation undermines delivery of quality service in Nigeria’s logistics space – Dare Ojo-Bello
Dare Ojo-Bello, Founder and Chief Executive Officer of Dellyman in this interview with BusinessDay’s Frank Eleanya examines the evolving logistics sector in Nigeria. He shares how the sector can drive the success of e-commerce, with efficient riders and a well-articulated regulatory framework.
What would be the ideal logistics solution for the e-commerce sector in Nigeria?
An answer to this question will require looking at the experiences of customers when they shop online. Based on our assessment of the market and constant engagement with customers, and efficient e-commerce space in Nigeria will be one that guarantees early pickup, same-day delivery, and of course the safety of the package.
Today, with the growing e-commerce market, you also have an increasing demand for packages to be delivered on time. Delivery in 2-3 days is no longer acceptable news. That is what everyone is doing now. Customers demand more. Customers demand something closer to a walk-in experience when they shop online. They demand the same-day, and in several use cases, only a few hours. It is not okay anymore to say “it will get there in 24 hours which typically will be the next day. At the minimum, we think delivery should be the same day. I say minimum same-day because we are also pushing to bring this down to a matter of hours
Of course there are few dependencies that can affect the efficiency of deliveries of packages ordered online. Firstly, we need to reduce the incidences of returns which can be very high in the eCommerce space. When customers shop, they think they have an idea of color and size of what they want, but when the package ordered arrives, it may not meet the customer’s expectations. This means it has to be returned to the merchant and re-fulfillment of this order adds to the delivery timeline
Merchants and eCommerce service providers are taking advantage of the additional sales channel when customers shop online. But the success of eCommerce is almost totally dependent on the logistics system that powers it.
If e-commerce is going to benefit from an efficient logistics industry then we also need to ensure that from the beginning of the journey, the items are packed correctly, labeled well, and their delivery addresses are unambiguous. All of that will ensure that the delivery service that is plugged into the eCommerce can better guarantee timeline delivery.
We also have street addressing issues. Roads and streets are not properly addressed in Nigeria. So when customers try to describe their delivery locations, it may not be something that google map readily recognizes. And even if you are lucky to find a match with Google map, it may not be the exact address the customer intended.
Customers sometimes are to blame for specifying wrong addresses. A customer booked for delivery on Dellyman which was to be picked from Ajao Estate. In a hurry, the customer selected Ajao Estate on the other side of the road to International Airport. When the Rider called for pickup, the customer said the Ajao Estate is the one around Iyana Ipaja. Apparently, there are at least 5 Ajao Estate in the city of Lagos. These are a few of the issues that continue to affect the efficiency of logistics services supporting eCommerce industry
How long have you been in the market and what have been the lessons learnt?
As a tech platform, we started building approximately around July 2018, so this will be like two and a half years. A lot of that time has been spent understanding the market, iterating our solution to get us to the point that you can say we have truly had a platform that is addressing logistics challenges.
The Dellyman platform is a marketplace that aggregates logistic companies and their assets so that buyers of logistics assets can be seamlessly matched with asset owners. Dellyman was built with customer needs in mind. Anyone can build technology but when you deliver a product that connects with users and solves their problem, then you have a market. Like Peter Drucker said, “The real purpose of a business is not to create a product, but to create a customer”. So essentially, we are customer-centric in our approach to building our delivery market place.
We have spent the last 24 – 30 months iterating, which means after we launched our MVP, we have continued to use the feedback from customers and partners to improve the platform. These feedbacks can be anything from pricing to customer experience, personal grooming and attitude of riders, responsiveness of back-office customer support etc
We have learned a lot during this period. Some of the things we found out through this journey up to this point include the fact that at the central point of a successful delivery service is the quality of the riders. It looks like you can get everything right but if you don’t have the right riders, you really don’t have a delivery service.
Unfortunately, what we found out over the last two years (and we are still struggling with that) is that we do not have enough qualified riders. Certainly not in terms of their ability to ride a bike alone, but in terms of understanding the importance and place of customer service.
Customers are entrusting their packages in the hands of riders and they expect a duty of care and professionalism while handling these packages. Customers expect proper time management in addition to good attitude, courteousness and good communication.
Unfortunately, for most riders, they think as long as it gets delivered, then the job is done. But how and when it gets delivered is also very critical. So we raised the bar in Dellyman insisting that delivery is only successful when a package is picked within the pickup window and when it is delivered within the delivery window selected by the customer while booking delivery service on our platform. We consider these windows as the SLA to our customers and partners and their riders on our platform are being trained continuously to respect these SLAs. And our system is able to score each rider and partner on the success of meeting these pickup and delivery timelines
There is also the problem of where the riders are coming from and there is a history of how we all acquired them. Most of these riders came from the ride-hailing days where there were no standards by the companies that hired them. There were no background checks; no tests to confirm if the riders could ride; no safety checks, no psychometric test to check the state of mind of these riders. For the time it lasted, some riders were making as much as N300,000 per month while they were only required to remit only N2,000 a day (N50,000 per month) for using the asset.
As a result, we started seeing accidents with several fatalities. Even the ones who were good riders were driving in a hurry to make more money. No background checks also meant security issues. After the ride-hailing companies were banned, we all inherited these same riders and continue to recycle them. One of the challenges that we have today is that those same riders are trying to make the same amount of money they made in the ride-hailing days. One of the ways they do this is to go offline from the platform and engage in their private deliveries, using assets owned by the companies they work for. Its sheer greed.
Depending on the remuneration model, most logistics companies today promise anything from N40,000 to N100,000 per month as Rider pay. But riders are still living in the ride-hailing days and want to earn N250,000-N400,000 per month. No logistics company can offer this and hence riders cut corners. In an attempt to save money, some customers aid and abet these behaviours.
For instance, when a rider executes an order to a customer and then the customer turns around and says can I call you when I have delivery orders? They are opening the rider to unscrupulous behaviours. This kills the businesses of those who genuinely want to commit their time and resources to solve problems in the industry. Unless these behaviours from riders and come customers change, we may be killing a young and promising industry. Hopefully, as more customers lose money and suffer frustrations in the hands of such riders, they (the customers) will come to do the right thing.
How do you deal with the cost of technology and communicate that to your pricing effectively?
If you talk to anyone in the industry, they will tell you that the total cost of ownership of a bike (comprising of the acquisition cost, the helmet, tracker, insurance, approved papers, riders’ phones, the box on the bike, etc) probably comes to about N500,000 for an average 200c bike. If you are a businessman, you will imagine that if you spend N500,000 on an asset, you should at least get a return that is higher than what you get from other investment opportunities. Probably a 40-50% return percent return after all costs. That expectation drives revenue and hence the price.
Pricing today is unfortunately dictated by sole bike owners, unstructured businesses, and business owners who are not financially literate. They ride their bikes, have no office, little or no running cost outside fuelling their bikes. They don’t even have the right papers, have no insurance, and do not maintain their assets. Many of them don’t do a business plan to know if they are running profitably. Of course, they can’t guarantee quality service.
I believe the situation exists because of little or no barrier to entry in the industry and lack of consumer protection for customers who use delivery services.
As long as customers continue to seek after low price, they will not be able to demand quality service. On the other hand, the delivery companies (who are driven by the kind of standards being pushed by Dellyman) must position for a long term and focus more on service delivery. In my opinion, ultimately, consistently excellent customer service will attract customers that are willing to pay more.
How does the Dellyman platform work?
We have approached the industry with a marketplace model. We are like a “Jumia for goods” or “Uber for passengers” but for logistics services. We are an asset aggregator and market place with multiple vendors that onboard assets and offer these services to customers. We find the customers and match them with available delivery companies
Our aggregation model solves two problems. Firstly, the problem of capacity. If it was a platform with assets owned by only Dellyman, at best maybe, we will be able to raise money to own say 1,000 bikes. But now with an aggregation model, there is no limit to the number of assets we can have on the platform. Imagine 10,000 companies on the platform with an average of 3-5 bikes each. That is the power of aggregation.
The second problem our aggregation model solves is that of coverage. This means the spread of the assets across a major city like Lagos. Since customers can order goods and request for the delivery to any address, the assets on the platform must also be fairly distributed to eliminate failed or delayed pickup and deliveries