“We Give Up”: Nigerian Startup Competing With DHL, Others Shuts Down
- DropX, a Nigerian startup, has announced it is shutting down operations in the country
- The startup was founded in 2021 to change local delivery in Abuja through dependable services
- Government policies and inability to meet demands, among others, affected the business
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
After two years of operation, DropX, a Nigerian startup that provided businesses and consumers with an app to simplify deliveries, has ceased operations.
Praise Alli-Johnson, co-founder of DropX, announced this in a statement on Linkedin.
Source: Getty Images
Big plans cut short
DropX, founded in 2021 by Alli-Johnson and Oluwatope Liasu, came into the market with big plans to change local delivery in Abuja by providing people and companies with quick, dependable services.
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Two years down the line, the startup "got tired." As its user base grew to 2,000, so did its spending on nearly every delivery.
Alli-Johnson said:
“I’d say we just give up. We chose to avoid the sunk-cost fallacy. The concept of hyperlocal delivery on demand sounds great, but it demands more than just a great app and technology. All the fancy route optimisation and device tracking can’t overcome actual human factors and infrastructure deficits.”
Challenges faced by DropX
Speaking to the challenges that affected business, the co-founder noted that with both bikes and cars on its platform, everyone wanted cheaper deliveries.
According to him, the request for bikes skyrocketed, and requests for cars dropped for subscribers, even for the high-value clients initially attracted to the platform because of cars.
He said:
“At this point, bikes weren’t enough, so we are back to the problem of high demand and failed requests. After calling to beg users to try the car option when they can’t find a bike, we decided to find a solution while we throw money at the problem again — we paid drivers the difference.”
After speaking with TVS about supplying its small, reasonably priced, and well-functioning 100cc bikes, the business eventually made headway.
The bikes also guaranteed fewer risks of accidents, required less gasoline, and were simple to maintain.
Alli-Johnson, however, said the agreement was terminated when 100cc motorcycles were outlawed in the city due to official legislation.
Off-app deals by drivers
The co-founder also highlighted how some users engaged in off-app deals with drivers, taking cash off the app and hijacking the startup's revenue.
He added:
“We found ourselves funding deliveries from our salaries at SendPulse, not generating income. One night at 2 am, I removed the app from the Google Play and Apple Store. We were drowning.”
He also explained how the startup had to pitch to different groups within NIPOST for months for possible collaboration ideas that couldn't come to fruition.
DropX's closure comes just a few days after Legit.ng reported that Pivo, a Nigerian fintech startup, also announced the cessation of its operations.
DropX's closure comes a few days after Legit.ng reported that Pivo, a Nigerian startup fintech firm, also shut operations.
"We're walking away": Nigerian fintech Zazuu shuts down after raising $2m
Legit.ng reported that Zazuu, a fintech company focusing on Africa, has officially ceased its operations due to the inability to secure additional funding.
The closure announcement was made through a LinkedIn post where the startup acknowledged the challenge of obtaining sufficient growth funding as the primary reason for the shutdown.
Established in 2018 by four Nigerian entrepreneurs—Kay Akinwunmi (CEO), Korede Fanilola (COO), Tosin Ekolie (CTO), and Tola Alade (CDO)—Zazuu aimed to revolutionize the remittance payment landscape in Sub-Saharan Africa.
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Source: Legit.ng
