Funding, big players, others frustrating logistics industry

By Lucas Ajanaku

Big players, funding, low return on investment, commoditisation of the last logistics, poor regulation and so many others were at the weekend identified as some of the challenges confronting the logistics industry.

Speaking on the sidelines of Dellyman’s Partners Forum in Lagos, its Chief Executive Officer, Dare Ojo-Belo, further identified low investment in assets (impacting capacity and coverage), poor standards and service quality due to low barriers to entry, absence of regulations and low quality riders (mostly untrained and several cases untrainable) as other challenges.

He lamented that big players such as DHL is resisting grant of access to its infrastructure over perceived impression that the small players were the dangerous threat the industry faced.

According to Forbes Online, Shopify, the global e-commerce sales would reach $4.2trillion by this year’s end while US e-commerce sales will hit $710billion by end of 2020. It said the accelerated e-commerce growth was due to pandemic, a situation that led to 150per cent growth in online retail orders in the US and Canada. In Africa, revenue from e-commerce is projected to reach $20billion by end of this year too.

Ojo-Belo said to maximise the immense potential of the logistics space in the country, there’s need for asset aggregation for increased coverage and capacity, adding that there’s also the need to liberalise technology so that partners could have access to best-in-class technology platform.

He said geofencing in the “Uber-like” model will help to reduce time to pickup, arguing that  schedule delivery will allow for increase asset utilisation and optimization.

He said a “Jobberman for Riders” will not be a bad idea, promising that Dellyman will launch a riders Institute soon while  the existence of partner delivery hubs will reduces failed pickups and deliveries.

He said bike clinics (for access to genuine spare parts and quality mechanics); anchor partners (for inter-state and nationwide expansion); engagement with industry regulators (through an association as a government pressure group); and increase trust and confidence of consumers (through strong enforcement of service level agreement (SLA).

Ojo-Belo said the growth drivers of the industry inlcude increased spending power of millennials, access to smarter technologies and devices, increased internet penetration, cashless society, Covid-19 and the new normal (like Zoom, logistics is pandemic resilient), growing population especially in emerging markets such as Africa, influences shaping their followers’ buying behaviors, consumer engagement and customer experience using personalisation technologies by mimicking in-store experience.

While he has set the target of between 150,000 and  200,000 deliveries per day in the next 48-60 months; between 50000 and 80000 deliveries per day in the next 18-36 months; and between 10000 and 30000 deliveries per day in the next 12 months, he said the firm has partnrered Law Union & Rock for the security of deliveries.

“What we’ve done with Law Union & Rock  is to say, look, take a percentage fee on every single delivery, the premium starts from the time you pick, and then the policy ends after delivery is done. And you understand that, so the deal we have negotiated with them now is 2.5 per cent. But point 175 per cent goes to them. And then Dellyman also has, you know, a share of that commission. Now, that’s not something we say to the public. The important thing is that we have a Law Union & Rock , that charges insurance on the basis of when the item is picked to when it is delivered. So what the customer does, and it’s not Dellyman pays, so the customer comes online, and he says this my goods, watch 200000, I don’t want anything to happen to it, I will say okay, choose insurance as an option. The system will then tell them that this is the premier you are going to pay, just to give you an idea. If the goods was worth N100,000, the premium would be N250. If it was N200,000, the premium would be N500. So a lot of customers are excited that Oh, so with N250, I am covered for my N100,000 and Law Union & Rock says they will settle the N100000 if something happens. So that takes care of the insurance issue. And that’s how we’re able to guarantee that if something happens, okay, will be when you will be ready to be held accountable,” he explained.

He said the firm will increase brand awareness and visibility through aggressive marketing campaigns; deepen technology for better customer experience and usability;  focus on merchants, retailers (online and offline); expand partnership with e-commerce payment companies (Express Payment, Flutterwave, Paystack); partnership with major malls, grocery stores and food delivery platforms; partner with transporters and courier companies for inter-state deliveries; anchor partners for nationwide roll-out and affiliate marketing.