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eCommerce in Nigeria: Guaranteeing same-day delivery

Article written by Dare Ojo-Bello

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eCommerce, Dellyman deliverymen
Dellyman deliverymen

Sometime in June this year, business publication, Stears Business published an in-depth analysis on the challenge of logistics in Nigeria as it affects the ecommerce industry.

Dellyman is happy to have been mentioned as part of the solutions to the seemingly intractable challenge of logistics in the industry. We are grateful to Stears Business.

What we have set out to do with Dellyman is to confront the challenges in the last mile logistics industry head-on by guaranteeing same-day delivery for anyone wishing to move packages in Nigeria and across the African continent. Let me share an experience that motivated me into launching Dellyman.

I had just purchased a new laptop but also needed a licensed Microsoft Office software to be installed on this new system. It was a Wednesday and I figured if I got the Office software delivered by the weekend, I would have enough time to install it, move my files from my old system and do some productive work.

So, I ordered and paid for Microsoft Office 2016 from Jumia and the platform promised delivery would be within 1-3 days. So I hoped I could get it on Friday or in a worst-case scenario on Saturday morning. Sadly, it never arrived all through the weekend.

That meant that I could not effectively use my new laptop since I didn’t get the Microsoft Office 2016 delivered, even though I had paid for it. That money would later be used to purchase something else on Jumia. This is an all too common experiences for many online shoppers but for me, it was a disappointment I was not prepared to continue to live with.

This issue of delayed delivery is pervasive across the ecommerce industry with provider of service struggling to deliver packages in good time (especially same day or next day). And that is probably the number one reason we launched Dellyman; to attempt to guarantee a same-day delivery especially for priority and time-sensitive packages.

Enters Dellyman…

Many people are not sure what Dellyman is and why we launched. Well, Dellyman is an asset-light logistics marketplace. Unlike your regular delivery guys, Dellyman is made up of hundreds of last-mile delivery companies.

Arriving at this model was not by chance. It came after a comprehensive study of the last-mile delivery value chain and interrogating the challenges that bedeviled it. And I would share some of those findings.

Dellyman

Dellyman bike

We found that the logistics market is broken due to a number of reasons. First, we operate in an environment of low trust.  Promises have been broken and nobody trusts that if they pay for delivery, the package will arrive as promised.

Sometimes that distrust has been planted by a seemingly harmless lie by a rider who is at Ajah but tells a customer that is expecting a pickup or delivery in 10 – 15 minutes in Ikeja that “he will be soon be there”.

And there are more serious problems where the goods never arrive because some riders will just disappear with customers’ packages.

The industry has not given the kind of assurances that the customers need to be able to trust last mile providers a bit more. This could be because there are no consumer protection regulations and/or that they are not well enforced. So, there is a problem of trust and that was the first thing that we found.

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We also saw that even though the ecommerce retail market is on the rise, the assets which fuel the supply side of the industry were not growing at the same rate. This may be because serious players are yet to make the necessary investment in the industry.

And unless sufficient assets are made available to meet the growing demand for eCommerce, last mile logistics will remain broken.

There are other problems as well, including the need to leverage technology, create transparency and provide excellent customer support.

Delivery is about keeping promises. When customers are promised quick pickup and timely delivery, they (the customers) also make the same promises to their own customers (especially in situations involving merchants selling goods). The industry needs trust in order to thrive and keeping to delivery promises across the entire ecosystem engenders that trust.

The Dellyman solution…

Having interrogated the problems of lack of trust, insufficient asset, idle capacity, etc, the first thing we sought to do was to gain back consumer confidence. This means a situation where a customer would be able to trust that every company listed on the Dellyman platform is fully verified, for safety and quality service. We are able to share information with customers about our partnering companies’ abilities and capacity to deliver quality and prompt services.

The Dellyman platform ensures the entire process of pickup and delivery is transparent with complete traceability. In the sense, a customer is able to see the entire delivery journey from sender to receiver of the package.

Our technology solution allows the delivery companies (and their drivers/riders) interact with each delivery order as well as the sender and receiver of the package from pickup to delivery. Customers know the status of their orders and whether they are assigned to riders, picked up and in-transit, delayed or delivered etc. Our offline and real time tracking tools ensure the customer is never left in the dark.

The Dellyman aggregation model speaks to the issue of capacity. By aggregating logistics assets into a single market place, we can better guarantee availability of assets to customers seeking delivery of packages on our platform. Today, we have onboarded over 600 logistics companies with at least 150 of these fully verified.

Once onboarded and verified, the logistics companies get access to our robust technology so they don’t have to build or own one. This means that they can onboard and track their riders, set their prices and manage delivery orders seamlessly from pickup to delivery. When customers initiate a delivery order, we match them first with delivery companies with assets closest to the pickup location to reduce pickup time. Additionally, we provide data such as number of completed deliveries, distance of the closest rider or driver to pick up, social proof (ratings and reviews) from customers who have used the services of each listed company in the past etc.

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Driving profitability for logistics players using the Dellyman model

deliveryman

Dellyman deliveryman

There are three legs to a typical delivery. The first is the distance between the rider and the pickup; the second, the distance between pickup and delivery, and the third leg (what I call going back home), is the distance between the delivery and the logistics provider’s default location. Interestingly, the only billable leg is the second leg, that is from pickup to delivery point.

The problem with being able to bill only one of the three legs in the delivery journey is that the logistics company will bear the cost of travelling the distance to pick up. Sometimes this could be a distance of 30-40km depending on how far the rider is to the pickup location. Apart from the delay in pickup, the cost of fueling this leg of the journey impacts the profitability of the logistics company.

The third leg of the journey (going back home) is even more costly. The reality that a rider could travel back empty after delivery is scary. For most delivery companies, idle capacity remains the bane of growth and profitability.

Kabu Kabu or Uber for Logistics: While Dellyman is using aggregation to solve capacity, it is leveraging geofencing technology to guarantee faster pickup and asset optimization (by reducing idle capacity). We are the Kabu Kabu or Uber for logistics

A Kabu Kabu cab driver sets out from Ikeja with his first passenger going to Lekki. At Maryland, he might encounter a new passenger going to Surulere. And yet another customer heading to Obalende from Yaba. He is picking and dropping passengers along the way.

By the time the driver arrives Lekki, he may pick passengers heading out towards Apapa. And the process of pickup and drop-off continues until the driver is done for the day. So we see the possibility of a Kabu Kabu completing 30 – 40 drop-offs in a day without necessarily staying in a park to be loaded with passengers. He only goes back home when he is done for the day. This is the same model used by Uber taxis.

Our Uber for logistics model ensures that delivery assets don’t travel back empty after each delivery. This helps the return on investment for an average delivery company and they can continue to maintain their assets and invest in new assets. The more assets they contribute to the ecosystem, the more it helps capacity and coverage. Ultimately, the Customer is able to purchase prompt and efficient delivery service at an affordable price.

Dellyman deliveryman

Dellyman deliveryman

Transparent billing: Today customers bargain delivery prices with service providers. With the proliferation of logistics companies in a market with no barrier to entry and poor regulation, this sometimes can be to the advantage of the customers.

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A better and more transparent approach to pricing is to bill based on distance, traffic, weight or size of package etc. For our light assets (such as bikes) we have adopted a distance-based pricing model that applies rates on the distance between pickup and delivery calculated by google map.

Each logistics company on the platform is able to set their price and when customers book for service, they do not have to worry about negotiating price since the price from each provider is automatically displayed at the time of booking the delivery order.

The future of ecommerce: The ecommerce market is increasing in its attractiveness due to convenience, good shopping experience, ability to view and shop for unlimited products across several channels (omni channels) as well as multiple and secured electronic payment options.

While shopping online guarantees comfort and convenience, customers’ expectations to have access to their purchases as quickly as they would if buying from a traditional brick and mortar shop remains a huge challenge.

According to a Mckinsey report, “customers’ desire to get their goods delivered same day when ordered online tends to increase the value of online purchases but also creates an opportunity for the eCommerce and logistics market”.

Traditional ecommerce today is built around warehousing. When a customer shops online, the order is fulfilled from a warehouse or fulfilment hub closest to delivery, where the order is packaged and sent through a delivery van to the customer. Where the products are not readily available in the warehouse, the merchant or vendor selling on the ecommerce is required to bring the package first to the warehouse operated by the market place.

Certainly, such a structure that requires a vendor to first deliver a package to a warehouse where packages are then aggregated before being shipped to customers, cannot be said to be efficient.

This model needs to change if customers must get their packages delivered same day within the city. Using the Dellyman platform integrated with ecommerce, orders placed by customers trigger a pickup from vendor directly to the customer.

The Dellyman platform immediately locates logistics providers closest to vendor location to reduce pickup time. Needless to say, the pooled assets on the platform ensures we find service providers at all times so that same day delivery is guaranteed

Ecommerce and marketplace companies need to be bold and confident to offer same day delivery where customer orders are shipped from vendors directly to the customers. And those are the ones that will win the ecommerce market tomorrow. Dellyman makes this new way of delivering customer orders possible.

While it may be true that logistics alone cannot solve all the problems of ecommerce, addressing the problems with delayed or failed delivery goes a long way to deliver on the same-day delivery promise and by extension the success of ecommerce.

Dare Ojo-Bello is the founder/CEO of Dellyman Logistics, Nigeria’s pioneer marketplace for logistics companies. You can reach Dare on +234 806 003 1112 or via email at [email protected]

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