Last-mile delivery services increase base prices to ₦3,075 as fuel costs bite

Like most businesses affected by the recent increase in fuel prices, last-mile delivery companies in Nigeria are reevaluating their pricing. 

“In light of the current economic conditions, particularly the significant rise in fuel prices, we find it necessary to make an adjustment to our delivery process,” Remedial Health, a health-tech startup that supplies medications to pharmacies, wrote to its customers via Email. 

Four logistics companies told TechCabal they have raised delivery prices or plan to raise them. Fez Delivery, which charges ₦2,500 ($1.52) for deliveries between 0 and 5kg, will now charge ₦3,075 ($1.88) for those deliveries. The company says it will raise prices by 23%.

“Our prices definitely have to change. But what we want to do is to ease our clients into that phase. So, at the moment, we are taking serious blows to keep operations running,” said Seun Alley, Fez Delivery CEO. 

Raising delivery prices is essential to last-mile delivery companies with thin margins. Yet, it’s not always straightforward given the price sensitivity of many customers.

“Depending on the urgency required some customers don’t mind going for the least priced service when items to be sent are not needed urgently,” said Seun Omotosho, the COO of Gokada. 

Some customers are now relying on regular buses to get their products delivered. 

“I now use public transport to aid my business because DHL prices jumped from ₦12,000 to ₦14,000 for phones and for Laptops from ₦12,000 or ₦13,000 to ₦21,000,” Olawale, an online phone and gadgets vendor said. 

Last mile delivery companies are faced with twin but difficult tasks of adjusting prices to make up for increased running costs while retaining customers. For some of these companies, offering incentives to riders (based on numbers of orders they complete) and discounts for top customers is the solution. Others are optimistic that electric vehicles might be the silver bullet.  

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