‘Why efficient logistics system is critical to improving $10b eCommerce potential in Nigeria’
For the eCommerce sector, estimated to worth over $10 billion in Nigeria, pioneered by the likes Jumia, Konga, Deal Day, Gloo.ng and lately Yudala, an efficient logistics system has been identified as critical for their growth and expansion of the sub-Sector. As such, Tunde Kehinde, the Founder of African Courier Express (ACE), a logistic firm and a pioneer co-founder of Jumia in Nigeria in 2012, in this interview with ADEYEMI ADEPETUN, spoke on the need for operators in the sector to invest hugely in logistics. Excerpts…
What does ACE actually stands for? ACE is an acronym for African Courier Express. It is Nigeria’s largest direct to consumer delivery network.
We help retailers, banks, insurance companies and other businesses deliver goods directly to consumers all over Nigeria from point A to B.
The service also allows users to track packages real time as well as making provisions for payment collection at points of delivery. Why the move from Jumia to ACE? We actually saw big opportunities in logistics and during our stay at Jumia, what we discovered most challenging was the ability to deliver goods to customers on time in a market where the road network is not good, the addressing is challenging as well.
So it makes it difficult to deliver to consumers their packages, collect their payment and also reconcile that cash. So we had to build our own system in house.
We also discovered that if at Jumia, we are having this challenge; other businesses too should be having such. So we see logistics as a big enabler for eCommerce and retail businesses in this market. If you can have a strong platform, where the everyday business, the SMEs can ship and be sure their goods will get to their customers; they can then relax and focus on other things that will improve the business.
So, our target at ACE is to be the platform that will enable such. We left Jumia because we saw gap in the market and I think we are currently bridging them.
The fact remains that eCommerce is fast becoming a major contributor to the economy, so all logistics around it, including the Information and Technology must be adequately taking care of. Since when did you start ACE and what is the delivery process? We are about a year and half old.
We officially launched in November 2013 and fully kicked off in January 2014.Talking about the process, there are several ways one can leverage the platform.
One is that our client manager will work with you to understand how your business works. And then they will help you to designate, to determine if you would like us to pick up from you or you would like to drop off for us to pick and deliver.
If you prefer to drop off, once you get the items to our hub, we then initiate the tracking process so that you will get a tracking link and then one of our riders will start your package along the delivery route.
What that means is that within Lagos, we are delivering the next day for items received from clients and across the country within three days. And throughout the process, you will get status updates from us.
And if you like, we can collect payment for you at the point of delivery, reconcile it and remit back to you in a very neat format that you can use for your reporting purposes.
The gaps you identified in the eCommerce space that prompted you to bring up ACE, how have you been able to bridge them? In the last year and the half, we are now in five cities including Lagos, Abuja, Port Harcourt, Ibadan and Abeokuta. We have shipped to over 200,000 customers.
We deliver for a variety of merchants. So, from small firms to large enterprises including Mr. Price and Chicken Republic, among others, we shipped for them.
We collect a sizeable amount from our merchants for pay on delivery services. I think we are seriously helping the eCommerce market to solve the biggest pain they have, which is look, there is demand for my products, but logistics is not my expertise.
I cannot walk into the popular players, the blue chip companies because they are out of my price range, but I needed a service that is top notch and that is what ACE does.
I must say this, 85 per cent of our delivery orders are pay on delivery. Do you only deal with online retailers or both? We deal with individuals and businesses that need to move goods from one place to another.
And these clients are free to ship anything across Nigeria. Funding is a great challenge for most e-commerce start-ups, how did you get funding to embark on capital-intensive business like logistics? It is true that in Nigeria there have not been exits in the start-up space in a large scale. So it’s true that people in general are skeptical to invest in start-ups.
But what is also true is that if you have the right experience and team, including the right approach to a problem, there will be people willing to invest in your business.
That was how we got our funding. This is because we built Jumia to successful level and people believed in us that we could make logistics successful as well. We have been fortunate to have investors from day one.
One of our largest investors now is Interswitch. If you have a world-class product, a world-class team, it is always very likely that you will get investors easily looking to help you create something amazing.
What we are looking to create is the largest delivery network across Africa, where anyone, Nigerian, or anyone from West or East Africa can ship what they want and when they want it affordably while tracking it real time.
Given your experience in the last two years in the logistics space, how would you assess the Nigerian logistics industry? E-commerce has become quite wide with the introduction of couple of players like Jumia and Konga style.
The reason being that there is quite a need in Nigeria, because if you look at Lagos where you have about 17 million people, there are only three international quality shopping malls. And if you go outside of Lagos, the availability of goods even decreases further.
Therefore, e-commerce has become a good value proposition in Nigeria but the fact is the biggest challenge was always getting the goods from the warehouse to the end consumer.
There were big players but their processes were not customized to the needs of the consumer and now there are small players but do not have the IT infrastructure and management structure in place to scale. So that was how ACE came to fill that gap because we solved the challenge in Jumia and we realised that we could also do that to help other players in e-commerce to help them scale.
What particular new solutions has ACE brought into the market? We used to run Jumia Nigeria and we grew that brand from just five employees to about a few thousands by the time we left. And the greatest challenge we saw was, how do we get these items across this country in a deterministic fashion, so that you can tell your customer that his ‘order X’ is coming within one or two days?
That was a great challenge and we tried to build our own delivery network in-house but even that was not enough to meet the demands.
And we said look, why not create a platform where the everyday Small and Medium Businesses or individuals can ship what they want, receive payment at point of delivery and track packages real time in a way that delights the customer.
And then we launched the ACE about a year and half ago and have since then shipped to over 200, 000 customers. We have presence in five cities across the country and we have collected payments for everyone, from small merchants selling in big marketplaces to offline giant retailers like Chicken Republic.
There are several new innovations we have brought to logistics in Nigeria. First, we have introduced our own delivery proprietary technology into the market, customised for the Nigerian consumer.
What that means is that you can now tell at every point in the delivery process where your package starts. This is something that no one else is doing.
Our riders have their own mobile application at the point of delivery when they update our system that an item has been delivered. We get a notification and our business merchant gets an alert and then the end customers can reconfirm that they received their package.