How Ecommerce Drives Logistics Growth in Nigeria- Ayomide Oriade
When the Nigerian Postal Service recently announced a hike in license procurement and renewal fee for logistics firms in the country, Nigerians raised in unison to condemn this move. The social media which is somewhat a revolution platform for Nigerians was littered with backlash and angst against the hike.
Many questioned why a player will double as a regulator in the industry where it plays, while others termed the move as a ploy by the big players to gag competition from new entrants and sustain their grip in the industry. Minister of Communications and Digital Economy, Isa Ali Pantami, had to wade in to suspend the hike and douse the ensuing tension.
From whichever angle one chooses to view the scenario, one thing is clear to all: the outcry was in defense of the small and medium scale enterprises venturing into the logistics space in Nigeria, as well as other businesses benefiting from the services of these delivery agents who are fast becoming an integral part of business survival and sustenance in several commercial hubs across the country.
While it is difficult to ascertain the number of logistics firms in Nigeria, a random search suggests there are over 1,500 operators in the country, yet there exists a huge service gap in the sector as Nigerians embrace more eCommerce services that connect sellers with buyers across regions of the country. To fill this service gap, logistics companies are springing up at rapid speed, with some setting off with just two to three branded motorcycle riders.
Though the demand for delivery services has been on the rise before the novel Covid-19 virus, the crucial role played by e-commerce and logistic services during the pandemic has further drawn more attention to the business opportunity in the sector.
These small companies help bridge the service divide for individuals and small firms who can’t meet up with the service price of the major players. However, the most important factor in the recent surge in delivery services in Nigeria is the offerings and investment in the sector by ecommerce platforms.
In the thick of Covid-19 lockdown, ecommerce rode on the wings of logistics to keep what was left of the economic activities afloat, while ensuring people got essentials delivered to them while in safety. Their services were also made available to the government for the delivery of essentials to health workers and centres.
The investments of the likes of Jumia and Konga in logistics have expanded to cater to other businesses. According to Jumia Nigeria CEO, Massimiliano Spalazzi, The company has opened up its logistics services to the public. “We have the right infrastructure people, partnership and technology required to help third parties and partners to solve logistics and marketing challenges,” he said. Through its point-to-point line hauls, Jumia said it has an established network that handles bulk movement in key markets across different product categories.
Interestingly, the investment of e-commerce companies is helping to bring rural consumers to the digital shopping space. Jumia said it processed 20 million packages and we were able to achieve 25% deliveries in rural areas through a network of over 6,500 direct agents. “Today, we have built Kxpress our logistic platform to the point where we are not only delivering for conga, but for other partners. We work with franchises in local areas. So we partner and empower local people who know the dynamics of villages in Nigeria to deliver the last-mile for us,’ said Konga CEO Prince Ekeh.
When the Lagos State Government clamped down on commercial motorcycle riders in the Lagos metropolis, bike-hailing companies such as Opay and Gokada lost their relevance, and many youths who had found employment succour in this investment lost their jobs. Renowned e-retailer, Jumia, quickly struck a partnership with Gokada to meet increasing delivery demand for Jumia Food.
No doubt that ecommerce has proven to be a critical logistics enabler in the Nigerian business landscape. At the current trend, the next few years promise a logistics business boom in Nigeria, with ecommerce services as growth drivers for the sector; just as it is obtained in advanced climes where e-commerce platforms serve as critical logistics and delivery backbone.