Adewale Adisa, the General Manager for Sendy Fulfilment in West Africa speaks to BusinessDay’s Frank Eleanya on how the company is tackling fragmentation in the logistics sector in Nigeria and Africa using technology.
Is it spending fulfillment, which one is it and what is Sendy?
So the business itself is Sendy and Sendy is what we call the fulfillment infrastructure business and that basically means we help small businesses enable trade by providing very, very affordable logistics services and procurement services. We do that in two ways with Sendy. We provide what we call procurement services where we warehouse, pick and pack, and make deliveries on behalf of small businesses. We also have another part of the business called steady supply that deals with trade and a small return.
What’s your view of the logistics market in Africa?
The logistics market is extremely fragmented. In Africa, logistics is one of the major problems preventing trade from happening in the sense that, sometimes as high as 60 to 70 percent of the cost of goods are related to logistics. So, it’s cheaper to move things from the US or the UK to Nigeria, than to move it from Ghana to Nigeria, basically because of the fact that the logistics systems can support how our trade is.
What are the big issues that you see in logistics in Africa today?
There are a number of issues, starting from infrastructure. The roads are bad, interconnectivity is a problem. Getting from point A to point B is not usually a straight line. You need to go around the roads, poor maintenance, and with the impact on vehicles, you have to keep on continuously fixing the vehicles to pass. And because we don’t produce these vehicles in Africa, it means we need to buy in dollars, that’s another level of expense. And then of course, it’s a black tax, in the sense that when you put vehicles on the road in Africa, or like maybe in Europe or North America where you don’t have to worry about things. You know exactly what the cost of the device is from point A to point B. In Africa you have to go to a friendly policeman for non official charges, and sometimes moving from one city to the other, you need to pay different state taxes. So all those things pile up and affect the logistics here.
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I read your profile, and I saw that you’re talking about trucking, you’re talking about delivering things across Africa. What exactly is the innovation that Sendy is bringing to the market?
We believe strongly that Africa can grow if we should trade more with each other so that’s what we’re trying to achieve. With trade, this can only happen when logistics, you know, the ability to sell outside. So for instance, Frank stays in Ikorodu, the ability for Frank to be able to service customers in Ikeja or Ibadan is him being able to move those items quickly and affordably. And the last bit is that when Frank is able to do that, then Frank will need capital. He will need money in order to be able to expand his business. Sendy as a business with the fulfillment offering, that’s what we do to customers, to sellers.
We service small sellers and small businesses who cannot compete with larger businesses with the social network those guys already have, and we enable them to distribute affordably. We move items for them, so we tell them first of all, Frank sells phones, power banks, and I tell Frank, first of all, let me take away all the issues around operations. Bring your power bank and put it in my warehouse, and I will store it for you. Now, Frank gets five orders tomorrow, one to Ikorodu, one to Ekpe, one to VI. Normally Frank would have to take these items and put them in a packet and then start calling.
What then happens is that it goes to our app which is on the Playstore. He puts in the names and the items he wants us to help him fulfill. Those items are sitting in my warehouse, we put them off the warehouse, off the shelves, we package them and put them in boxes. Then we use our delivery assets, be it bikes or vans, or whatever to get into the last line. Frank can see the contract being delivered.
The beautiful thing about this is, we charge 15 percent of the value of the item to do deliveries. Imagine you’re selling the power back for N2000, that means 15 percent of N300. I am actually in the best position to support Frank if I am able to provide financial services. I know you’re selling, I know the kind of services you provide, I can help you to buy more items to keep up. That is how fulfillment services work. We believe that this will have a significant impact on enabling trade and growing businesses within Africa.
How widespread is Sendy across Nigeria and in Africa?
In Africa, we play in different markets. We are very widespread in Kenya, Uganda, Côte d’Ivoire, we are in Nigeria. And we are moving into new markets. In Nigeria , we are active. We’ve got fulfillment centers in Lagos and Abuja to start with. We’re going to cover Nigeria, but we want to start with the big markets because we also realize that even a lot of sellers who are not in those two markets are selling into those markets. So in the locations we have, Abuja and Lagos, we have a lot of sellers who are in Enugu, Kwara, Kano, whose items are in the storehouse for deliveries into Abuja, and Lagos where a lot of their clients are. If someone brings an order form Timothy in Kwara state, it will take five to seven days for these guys to get there and the cost is very high. But now, those guys are still able to do delivery, at 15 percent of the cost of the items which also works.
How many days does an item take to get to its location via Sendy?
Within Lagos and Abuja we do maximum the next day, depending on when the order comes in. When the order comes in early enough, obviously, we could deliver the same day but most orders that come in midday go towards the end of the day, for those ones it’s the next day. So our promise usually is the next day and we try to continuously beat that promise.
What kind of policies should be in place to enable the industry to thrive?
We understand that logistics has a critical problem in this country. Good infrastructure gives you some kind of support, because a lot of these logistics businesses have assets that exist in place because of poor infrastructure. Another one is security. Sometimes the reason things don’t move as quickly across states in Nigeria is this: logistics businesses are unable to move overnight because of the security challenges. So that also impacts policies.
How Much has Sendy raised?
Sendy has raised over $20 million over the past seven years. We are not a business that is set up to raise money consistently. We believe more in building a real business, and so we have to be very careful about how we raise.
What is the long term goal for Sendy in Nigeria?
You know, we’ve been around for a while in Africa, but in Nigeria, actively for about four months. We’ve seen businesses. There’s a seller in the first month he was with us who barely sold N150,000 worth of goods. By the third month, his turnover with us was close to four million because we enabled him to reach markets that he was finding hard to reach. He is based in Lagos. We enabled him to start selling in Abuja, into places in Lagos for customers who he will not take orders from. So in two years, we want to be able to point to the 100-200 businesses that have quadrupled, that have done 10 times their revenue because we’ve enabled them to reach markets that they normally would not have been able to reach.
When we speak to people about fulfillments, which is what we do, sometimes people are anchored on deliveries. So when I say I’m a procurement business, people say “Oh wow, you’re like DHL.” Yes I do what they do but I’m not exactly what they are. I provide, like I said, businesses, the ability to outsource all the logistics operations to us. So I help them warehouse their items, they are not to worry about that so the business can focus on what is critical which is growth and sales. When the orders come, I help them pick and packet, and I also provide them financial services.
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