Economic disruption from the coronavirus outbreak has largely affected businesses across multiple sectors in Nigeria, with many enterprises forced to shut down for good as the pandemic takes a huge toll on the broader economy. But some companies have been bucking the trend, mostly in industries that have become more essential as a result of social distancing measures and movement restrictions aimed at curbing the spread of the virus.
One such company is Dellyman, Nigeria’s pioneer asset-free logistics marketplace, which Ventures Africa reported mid-May was seeing double-digit growth, an uptick in all major indices, and generally growing significantly amid the ongoing crisis. Five months later, chief executive Dare Ojo talks to us about how the industry has fared so far as well as what it will take to achieve a return to pre-Covid levels.
Ventures Africa (VA): Can you give a general view of how the delivery industry has been affected by this unprecedented crisis?
Dare Ojo (DO): COVID-19 brought unprecedented impacts across all sectors of the economy. While some of these impacts are negative, some have surprisingly been positive. The delivery industry is one of many examples where the COVID-19 crisis had relatively positive impacts.
With movement restrictions imposed across several cities in a bid to contain the spread of the virus, many people had to rely on the services of logistics providers who had some form of concession by the government within the period to carry on their businesses. Additionally, we continue to see more brick-and-mortar shops launching eCommerce platforms as a quick response to the stringent operating conditions rolled out to businesses during the lockdown.
Consequently, some delivery operators (including Dellyman) saw a significant uptick in their businesses and positioned themselves to take advantage of the growing opportunities in the sector.
VA: At the company level, has it affected your profitability?
DO: More than profitability, the period has helped to increase our brand awareness and the increased patronage has allowed us to continue to collect valuable feedback that has helped to accelerate the iteration of our solution over the last few months. This has translated to more traction for the company.
In terms of profitability, it is too early to tell how these opportunities translate to our bottom line. The market has witnessed a massive increase in the number of providers most of which are small, with low-cost structure, and are better able to use price as an entry and competitive strategy.
Despite this, Dellyman has an opportunity to quickly differentiate itself in the market and communicate a unique sales proposition that brings unmatchable value to its customers. We don’t want to (and cannot) compete on low prices. Our strategy to identify customer pain points and deliver extra value is aimed at ensuring customers see “value pricing” as opposed to low prices. Ultimately these customers’ increased business deals, high retention rate as well as referral to other prospective customers, will translate into a good bottom-line for Dellyman.
VA: Can you give a glimpse into other performance metrics amid the pandemic? Have you seen growth or decline?
DO: The Dellyman delivery marketplace saw an uptick in all major indices, including a 45 percent spurt in the number of active customers and a surge in the number of logistics companies, which drove our completed orders to 93 percent within the period. More so, our revenue grew more than 20 times, with average monthly growth within the period averaging 145 percent.
VA: How are you navigating through the pandemic, especially during the March to April lockdown? How did you get through that and what’s your general strategic response so far?
DO: So, Dellyman has set out to address the same-day delivery challenge as well as the delivery of priority and time-sensitive packages in Nigeria and that has informed all the strategic approaches we have taken so far.
During the pandemic, we formed strategic collaborations with relevant partners, worked with the state authorities to facilitate easy movement for our riders, and focused on addressing the major pain points of our customers in order to guarantee same-day delivery.
So far, those measures have paid off and resonated well with our customers as we have been able to build trust while tackling the challenges of same-day delivery head-on.
VA: Lastly, in your opinion, what will it take for the industry to find its feet after being hit by COVID-19? Do you see opportunities to be exploited?
DO: As mentioned earlier, e-commerce will continue to surge especially as a consequence of this pandemic, and so will the opportunities for the logistics industry that powers it. The pandemic has opened up a new way of thinking, a new normal. To take full advantage of the growing demand for online purchases, e-commerce companies need to rethink how they fulfill customer orders. The Covid-19 crisis has proved that the warehousing model is not only inefficient but also unsustainable.
The idea of vendors sending items to an e-commerce company’s warehouse where it gets sorted before being shipped to customers is a deficient model and one that makes same-day delivery near impossible. This model obviously can never hope to deliver on time-sensitive and priority packages – another growing opportunity in the industry.
We have long argued the need for the warehousing model to change and Covid-19 provided the industry the opportunity to re-assess it. And we are not surprised that a lot more retailers and marketplace are now by-passing the delivery companies’ warehouses and instead shipping directly to customers to save time and cost, especially for last-mile delivery. Obviously, these savings in logistics costs are passed on to the customers giving the eCommerce company an opportunity to win in the market.
Now, the fact that goods can be shipped from the vendor or seller directly to the customer does not automatically translate to cost savings. In place of the warehousing and sorting model where delivery companies are able to batch orders to save cost, Dellyman’s aggregation and scheduled pickup model allows logistics assets closest to pickup locations to be targeted when customers request delivery service. This reduces pickup time but we are also able to pick up more packages along the same route. So at the end of the day, goods are “batched” on the move, thus helping the optimization of the delivery asset while eliminating the delays caused by warehousing and sorting operations.
Customers need fast and efficient delivery starting with quick pickup. They also need to save money whenever they ship their packages. It will initially appear that this is too much of an asking but that is the model and promise that Dellyman set out to deliver and that is the model that will ultimately save the struggling e-commerce industry in Nigeria.