DropX.  a  Nigerian startup using an app to facilitate deliveries for businesses and individuals has shut down after two years of its operation.

The CEO and co-founder of  DropX ,  Praise Alli -Johnson announced the closure via a  Linkedin statement.

Co- founders Alli-Johnson and  Oluwatope Liasu founded DropX in 2021.

According to the CEO, the team set out to build a hyperlocal delivery platform, to connect businesses and individuals in need of delivery services with independent delivery agents.

The company got good  traction, from the start.

With the first three orders free, DropX onboarded  2,000 users and enlisted  500 drivers. 

The drivers were predominantly car owners already engaged in the gig economy via ride-hailing platforms.

Orders were great, at an average of  a minimum of 3 deliveries per user per month.

According to the CEO,  the troubles  started with the revenue growth not being at pal with the activities and volume of work done.

The factors responsible for this outcome as identified by Allí-Johnson in his closure statement include these challenges faced by the startup;

  • There was no balance between driver pay expectations and what users were willing to pay:
  • Being hyper local and ubiquitous was hard as users were scattered across Abuja.  
  • Drivers also worked for other ride-hailing platforms , there was competition for time and pricing. implementing a surge model led to users canceling their orders. The company ended up paying the difference just to keep orders going.
  •  Car driver model couldn’t accommodate all user segments as the user base expanded . Bike drivers couldn’t serve  high-value clients adequately.
  •  With both bikes and cars on the platform, everyone wanted cheaper deliveries. Requests for bikes skyrocketed, and requests for cars dropped. Bikes weren’t enough.
  • Government policy in banning 100cc bikes aborted a promising plan for cost effective commuting.
  •  Some users engaged in off-app deals with drivers, taking cash off the app. 
  •  Founders funding deliveries from personal accounts and not generating income  was tiring.
  • Possible Government collaboration via NIPOST didn’t pull through.

Recounting the efforts put into keeping the company going ,  Alli-Johnson  said “While navigating these challenges, we continued funding delivery differences just to stay afloat. We even found ourselves relieved on days with low delivery requests”

He  also explained why the company didn’t take the option of fundraising.

He  believed the company hadn’t achieved PMF. 

Raising funds would mean “burning cash and adding  someone else’s cash to the fire”

“I strongly believe VC funds are for growth after stabilising.  If I were a VC, I wouldn’t give us money at the stage we were in” the CEO said.

Still towing the brighter side of the journey, the CEO declared that the team didn’t fail, but got tired and gave up.

What’s Next?

Moving on from DropX, the founders are each opening new chapters.

Oluwatope is exploring other things. Completing her CFI, she’s keen on returning to finance, working in Investment, and the like.

Alli- Johnson now heads SendPulse’s Startup support initiative in the African market.

He also hinted on starting something new while being open to other work opportunities .

“I’m starting something else (I might be mad or something), let’s see how it goes.

I’m open to any work opportunities, excelling in Startup support, growth, and the idea of Entrepreneur in Residence (EIR), and anything in VC (analyst, scout, etc.)”

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