#BounceExclusive: 'Nigeria’s E-commerce Logistics Market Is Worth N21bn Only'
When Obi Ozor and Ife Oyedele II quit their jobs in America and returned to Nigeria to launch Kobo in 2016, they hoped to tap into the evolving e-commerce goldmine – reaping billions of naira with a snap of finger – through logistics.
They started a company called kobo360, an asset-free online logistics solution that helps small businesses which were struggling to scale due to non-affordable delivery options.
They had several assumptions and projections about the viability of the market, one of which was that Nigeria’s e-commerce logistics market was worth approximately $1 billion, about 358 billion naira at the time.
One year down the line, their story, based on experience and data gathered through their beta testing, shows a completely different picture.
“Kobo entered the ecommerce last mile delivery market with projections showing 12,240,000 deliveries across the industry monthly at an average cost of 2,440 naira per delivery and a 25% profit margin, bringing the market size to 1 billion dollars, about 358 billion naira,” the two founders told Bounce News in an exclusive interview in Lagos.
According to them, after one-year of jumping into the action, the actual figures turned out to be just 628,000 deliveries per month across the industry at a surprisingly average cost of 2,800 naira per delivery and 15% profit margin as against the projected 25%.
This was just about 5% of their projected monthly volume across Nigeria's e-commerce.
*Co-founders of Kobo360, Obi Ozor (left) and Ife Oyedele II (right).
In contrast, China’s e-commerce giant, Alibaba does 1.97 billion deliveries monthly.
“Clearly, the ecommerce last mile delivery market was not as large as Kobo’s initial projections,” they said.
But now, armed with these data, Kobo is re-strategizing to focus on haulage logistics (trucking) through a new App.
The new KoboApp, according to them, will use software to map out the most efficient trips and routes for fleets, ensuring reverse logistics are in place for each trip.
Their expectation is to help reduce average logistics cost by 30%.
The idea was inspired by the insight provided during the company’s year in beta. Each haulage trip generated $980, about 300,000 naira on average and market research showed 12,000 trips monthly in Nigeria alone.
Extend this to the entire continent, about 120,000 haulage trips happen monthly. Market projections also revealed a 32% year on year growth in the industry.
Read More: 3 Ways To Build A Successful Business
“We have made a decision to pivot the company’s focus to trucking in Nigeria and across Africa in the next few years,” they told Bounce News.
“We are still bullish about the last mile e-commerce delivery business especially with the expected entrance of ecommerce giants like Alibaba in Q3 of 2019, and Amazon in Q2 of 2020,” they said.
Profiting in haulage in Africa, they argue, is not without its challenges.
“Haulage in Nigeria is a unique endeavor, plagued by lack of transparency in pricing, poor infrastructure and inefficient systems, especially when it comes to managing reverse logistics,” they said, adding that they hope the new technology will help solve the problem and build a unicorn in logistics from Africa.
Dare to be different, transform information into intelligence.