DropX Delivery: Closing Chapter After 2 Years of Operations in Nigeria

Infostride News has learned that a Nigerian startup utilizing a delivery app to streamline deliveries for businesses and individuals has officially ceased operations after two years in the market. The shutdown of DropX adds to the increasing number of Nigerian startups facing closure in 2023 due to the challenging economic landscape.

Founded in 2021 by Praise Alli-Johnson and Oluwatope Liasu, DropX entered the market with ambitious goals, aiming to revolutionize local deliveries in Abuja by connecting businesses and individuals with efficient and reliable services. Despite an initial surge in interest, the startup faced numerous challenges that ultimately led to the founders’ decision to close the business after a two-year run.

The company gained early traction by onboarding 2,000 users, offering enticing incentives such as free initial deliveries, and enlisting 500 drivers, primarily car owners already involved in the gig economy through ride-hailing platforms.

DropX’s troubles began when a misalignment occurred between driver pay expectations and what users were willing to pay. To address this issue, the company adjusted its prices to align with those of Bolt and focused exclusively on high-value customers dealing with bulk food deliveries, cakes, luxury goods, and more. However, this market segment prioritized the condition of items over cost, leading to challenges in meeting user expectations.

As DropX expanded its user base, it encountered geographical challenges, with users scattered across Abuja. Attempts to concentrate on specific areas, such as Wuse 2, Maitama, Asokoro, and environs, proved challenging as users outside these areas struggled to receive timely responses. Despite efforts to increase user engagement, including hiring corp members to promote the service, the dispersed user base remained a persistent issue.

The competition for drivers’ time and pricing with other ride-hailing platforms like Bolt and Uber further complicated matters. Demand surged in the afternoon, causing increased delivery requests on the DropX platform. Although the company implemented a surge pricing model similar to Bolt and Uber, users disliked it and often canceled their requests. Even a second attempt, making surges visible to drivers only, met with mixed success, forcing DropX to cover the difference to maintain order flow.

To accommodate various user segments, DropX explored onboarding more independent delivery bike drivers. Despite this effort, it became evident that independent bike drivers couldn’t adequately serve high-value clients. Additionally, users consistently demanded cheaper deliveries, leading to a surge in bike requests and a decline in car requests.

Recognizing the limitations of the car driver model, DropX considered collaborating with independent off-takers, exploring the possibility of partnering with existing customers interested in managing assets like bikes, cars, and drivers. An attempt to collaborate with TVS to supply small 100cc bikes showed promise until the government banned 100cc bikes in Abuja, disrupting the planned expansion.

The people problem further compounded DropX’s challenges, as some users engaged in off-app deals with drivers, conducting cash transactions outside the app. Despite users complaining about the situation, the founder found a silver lining in not having to cover the delivery difference.

The company also faced a setback in its attempt to collaborate with the Nigeria Postal Service (NIPOST). Although NIPOST approached DropX for potential collaboration, multiple pitches to introduce more bikes into the system through a tech infrastructure and bike investment scheme failed to materialize.

DropX’s founder expressed disappointment with the lack of progress and burnout, particularly in unsuccessful attempts to secure collaborations and navigate the challenges of the ever-evolving logistics landscape. The shutdown of DropX serves as a cautionary tale for startups navigating the complex terrain of the Nigerian business environment in 2023.