With operating costs surging, delivery companies are left with the challenge of balancing price hikes while retaining price-sensitive customers. As businesses struggle to adapt, a number of logistics companies are beginning to adjust their pricing models.

Remedial Health, a health-tech startup supplying medications to pharmacies, has been among the first to respond to these economic changes. In an email to its customers, the company highlighted the necessity of revising its delivery processes due to costly fuel prices. 

Similar changes are occurring across the industry, with several logistics companies adjusting their rates or preparing to do so. Fez Delivery, for example, has announced a 23% price increase, with the cost of deliveries between 0 and 5kg rising from ₦2,500 to ₦3,075. This change, while essential for business survival, is a tough pill to swallow for both the company and its customers.

Seun Alley, CEO of Fez Delivery, acknowledged the difficulty in implementing these changes: “Our prices definitely have to change. But what we want to do is to ease our clients into that phase. At the moment, we are taking serious blows to keep operations running.”

The rising cost of logistics is squeezing last-mile delivery services, many of which operate on thin margins. However, navigating these changes is a delicate balancing act. 

On one hand, companies must raise prices to remain operational, while on the other, they risk losing customers who are highly sensitive to cost fluctuations. According to Seun Omotosho, COO of Gokada, customers often opt for cheaper delivery options when urgency isn’t a factor, adding another layer of complexity to pricing decisions.

For smaller businesses, the situation is even worse. Olawale, an online phone and gadgets vendor, described how he has shifted to using public transport to deliver his goods after delivery services like DHL increased their prices significantly—from ₦12,000 to ₦14,000 for phones, and for laptops, from ₦12,000 to ₦21,000. 

This sharp rise has pushed many entrepreneurs to explore alternative, cost-effective ways of ensuring their products reach customers.

In response to these pressures, some delivery companies are exploring incentives and discounts to retain their customer base. In offering riders bonuses based on the number of completed orders or providing discounts to frequent customers, companies aim to mitigate the impact of rising costs. 

Others are looking further ahead, with a focus on electric vehicles (EVs) as a prospective long-term solution to the fuel price dilemma. While the adoption of EVs in Nigeria may still be a few years away, companies are optimistic that they could help reduce operating costs and stabilise delivery pricing in the future.

The issue of fuel price increases has also prompted discussions about how businesses in Nigeria can innovate to remain viable in an increasingly challenging economic climate. 

Across various sectors, companies are experimenting with new strategies to absorb costs without losing customers. For example, some industries are leveraging digital platforms to simplify operations and reduce overhead costs, while others are shifting to more sustainable business models.

Similar challenges are being faced globally. In other African countries, last-mile delivery companies are dealing with rising costs due to fuel price hikes and inflation. In Kenya, for instance, logistics companies are looking into expanding their fleets with electric motorcycles to cut down on fuel expenses. 

The move towards electric vehicles is gaining traction in other regions too, as companies strive to reduce their reliance on fossil fuels and explore greener, more cost-effective alternatives.

Ultimately, the ability of Nigerian last-mile delivery companies to weather the storm will depend on their flexibility in adjusting to these economic issues. 

Whether through gradual price increases, customer incentives, or long-term investments in sustainable technologies, the industry will need to adapt if it hopes to remain competitive.

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This launch signifies a substantial leap towards a cleaner, economical, and efficient solution for goods transportation, underlining Fez Delivery’s dedication to sustainability and environmental responsibility.

With the growing demand for Last Mile Delivery services, as the e-commerce landscape expands, it’s essential for service providers to offer cost-effective and eco-friendly options.

According to Statista, Nigeria’s eCommerce market revenue is projected to reach US$6,710.00m in 2023, highlighting the need for efficient delivery services to meet this growing demand.

In a move that mirrors global trends towards sustainable transportation, Fez Delivery’s latest electric motorcycles offers a sustainable, eco-friendly, and affordable solution to its customers. The Last-Mile delivery service seeks to empower businesses and individuals by providing efficient eco-friendly services.

FEZ ECO is a sustainable solution that reduces carbon emissions, as it utilises a fleet management system, aiding drivers in optimising their routes to avoid traffic congestion, resulting in faster deliveries and reduced fuel costs.

Additionally, it provides customers with user-friendly features for tracking their deliveries and receiving real-time updates, enhancing overall customer satisfaction.

The benefits of  FEZ ECO are:

• Cost Saving:Lower operational costs due to no fuel usage and maintenance expenses.
• Electric-Powered:Zero-emission electric bikes for a green and sustainable delivery solution.
• Nimble and Efficient:Maneuverability in urban traffic for faster deliveries.
• Smart Tracking:Real-time tracking and monitoring of deliveries for increased transparency and security.

This solution further provides an affordable option to customers, easing the burden of Nigeria’s current economic climate.

“We’re thrilled to announce a significant leap forward in our commitment to sustainability and innovation. Today, we proudly introduce electric vehicles to our last-mile delivery fleet. This monumental step not only aligns with our vision for a cleaner, greener future but also represents a milestone in our ongoing efforts to enhance the efficiency and reliability of our services. As we navigate toward a more sustainable tomorrow, we look forward to serving you with the same dedication and now with a greener footprint. Together, we’re shaping a better future, one electric mile at a time”, said Seun Alley, CEO and Co-Founder, Fez Delivery.

“We’ve been partners with Fez delivery for years, and their commitment to innovation and quality has always impressed us. Their previous products transformed our business, setting new standards for excellence. As we eagerly anticipate their upcoming product launch, we’re confident it will be another game-changer. We can’t wait to see what they have in store, and we’re excited to continue our successful journey together”, said Racheal Adetunji, CEO, ThriftWithRay.

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The seed round, which will also enable the startup improve its technology to enhance efficiency, as well as hire more talent and increase its marketing spend, was led by pan-African investor Ventures Platform with participation from Voltron Capital, Acasia Ventures and other angel investors. 

Seun Alley, with experience in the banking sector, founded Fez Delivery in 2020 to connect businesses and markets without issues of mistrust and inefficiencies. The company was built with the goal to be the first choice for customers, employees and investors worldwide, with a growth, focus on its profitable core logistics business and accelerating digital transformation in the sector. 

Fez Delivery offers hassle-free business practices, corporate participation and training activities, leveraging APIs and dashboards to enable its business clients have a seamless experience. The logistics company affirms to have over 17,000 customers using its platform, with 70% being individuals, and 30% made up of a combination of SMEs and startups.

Last year, FEZ for fintechs was launched by the company in a bid to provide debit cards and POS terminals to customers and agents in Nigeria. To further meet the demand, Fez Delivery developed a SaaS platform to onboard and verify two-wheeler logistics platforms of about five-10 fleet sizes. These third-party partners receive revenue from Fez Delivery as individuals get charged per delivery (distance/size of items) and businesses pay a flat-fee subscription (based on a set range of deliveries).

The Techstars Toronto-backed asserts to have completed 200,000 trips last year and grew revenue by 20% month-on-month. Flutterwave, Kuda Bank, Moniepoint, OPay, Red Bull and Famasi Africa are some of its clients.

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