Nigerian On-Demand Logistics Startup DropX Shutdown Operation

DropX, a Nigerian on-demand logistics startup that uses an app to facilitate deliveries for businesses, has shut down after two years of operation.

In a lengthy post on LinkedIn titled “CLOSURE- We Threw in the Towel”, the startup Co-founder Praise Alli-Johnson divulged the struggles that led to the shutdown of DropX.

Disclosing the factors that led to the closure of the company, Mr. Praise, started by stating that at the initial stage, DropX set out to build a hyperlocal delivery platform, connecting businesses and individuals needing to deliver any item with independent delivery agents, which without any challenge.

He noted that the company’s user growth was smooth because businesses in need of delivery services are abundant. The company implored a strategy of offering free delivery on the first 3 orders which saw it easily onboarded 2,000 users.

However, trouble started looming for the company when there was a challenge in trying to find the balance between driver pay expectations and what users were willing to pay.

To address this, he noted that the company aligned its prices with those of Bolt and catered exclusively to high-value customers dealing with bulk food deliveries, cakes, luxury goods, etc.

Here is an overview of several other challenges that led to the shutdown of DropX, as disclosed by the company’s Co-founder Praise Alli Johnson;

Hyperlocal and Ubiquitous was a lofty ambition:

According to him, he stated that it quickly became apparent that users were scattered across Abuja, from Wuse 2 to Kubwa, from Apo to Gwagwalada. Users outside of Wuse 2, Maitama, Asokoro, and environs weren’t getting responses as they were too far apart. The company worked on getting more users in town (Wuse 2, Maitama, Asokoro, and environs, and around the Garki area), and hired corp members, all hitting the street, and the problem was solved.

• High demand:

Mr.Praise disclosed that since DropX drivers also worked for other ride-hailing platforms like Bolt and Uber, the company found itself competing for time and pricing. Demand surged from 2 PM in the City of Abuja, leading to increased delivery requests on the DropX platform.

There was an attempt to fix this by implementing a surge model like Bolt and Uber, but users disliked it, often canceling their requests. A second attempt, making surges visible to drivers only, was met with mixed success. The company ended up paying the difference just to keep orders going, meanwhile, the problem was only solved partially.

As the company’s user base expanded, he disclosed that he realized the car driver model couldn’t accommodate all user segments; as there was need for more bikes. DropX hit the street and got independent delivery bike drivers onboarded. Despite onboarding independent delivery bike drivers, the company learned they couldn’t serve their high-value clients adequately.

• The problem of options:

With both bikes and cars on the platform, everyone wanted cheaper deliveries. Requests for bikes skyrocketed, and requests for cars dropped, even the high-value clients that started using DropX because the company was using cars.

“At this point, bikes weren’t enough, so we are back to the problem of high demand and failed requests. After calling to beg users to try the car option when they can’t find a bike, we decided to find a solution while we threw money at the problem again — we paid drivers the difference”, he noted

• People problem:

According to him, some users engaged in off-app deals with drivers, taking cash off the app. The company later got to a point of funding deliveries from salaries, thus not generating income.

The CEO noted that while navigating these challenges, the company continued funding delivery differences just to stay afloat. It found itself relieved on days with low delivery requests.

Founded in 2021 by Praise Alli-Johnson and Oluwatope Liasu, DropX entered the logistics scene with an ambitious goal to transform local deliveries in Abuja by connecting businesses and individuals with swift, reliable services.