A Nigerian startup using an app to facilitate deliveries for businesses and individuals has shut down after two years of its operation.
DropX adds to the growing number of Nigerian startups shutting down in 2023 as the realities of the harsh economy bite harder.
For this startup, several factors culminated in the founders’ decision to throw in the towel after pushing the business for two years.
Founded in 2021 by Praise Alli-Johnson and Oluwatope Liasu, DropX entered the scene with ambitious goals—to transform local deliveries in Abuja by connecting businesses and individuals with swift, reliable services.
The concept garnered early traction, onboarding 2,000 users enticed by free initial deliveries and enlisting 500 drivers, predominantly car owners already engaged in the gig economy via ride-hailing platforms.
Announcing the closure of the company via a statement, Alli-Johnson, said the problem started for the company when there was a gap between driver pay expectations and what users were willing to pay.
Alli-Johnson added that the problem became compounded because every user on the platform wanted cheaper deliveries. This saw requests for bikes skyrocketed, and requests for cars dropped.
While noting that DropX was meant to be an Uber for logistics and not supposed to manage assets like bikes, cars, and drivers, he said the company explored the option of independent off-takers, speaking with existing customers who showed interest.
It was able to get TVS to supply their small 100cc bikes and everything seemed promising until 100cc bikes were banned in Abuja due to government policy.
The founder disclosed that some users also engaged in off-app deals with drivers, taking cash off the app.
Alli-Johnson said the company was contacted by the Nigeria Postal Service (NIPOST) to explore the idea of collaboration but several pitches to the Service to get bikes everywhere through the app failed.
According to him, the idea pitched was for DropX to provide the tech infrastructure and bike investment schemes to get more bikes into the system, while NIPOST manages bikes and drivers, and they both share in-app charges for delivery.
