Fuel price hike: Dispatch riders say they now spend more and earn lesser for delivery

Since the Bola Tinubu-led government announced its unmediated plans to remove subsidies in May, the dispatch rider industry has been on a downward spiral. And now, riders say that their income has dropped drastically even though the cost of delivery has more than doubled.

It’s the freelance dispatch riders with no full employment but work as contractors for e-commerce companies that have been on the receiving end of this spiral the most. These riders are paid by the companies per successful trips that they make. Success in the dispatch rider world means that they have delivered the product and the customer has received them intact. If the customer rejects the product, these dispatch riders are not paid.

“Income has declined more than 100% when we factor in all the expenses, operations and increment of the fuel altogether,” Ayoade Ibrahim, the secretary of the app driver association, Amalgamated Union of App-based Transport Workers of Nigeria (AUATWON) said.

How the fuel price hike is affecting delivery businesses

With fuel subsidies removed and a hike in the prices of delivery following the fuel price hike, fewer customers have been patronising businesses that offer exclusively delivery options, the backbone of the ecosystem. For instance, when Amonia was told that she had to pay N7,000 for a product worth N3,500 she decided not to order at all.

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Social commerce businesses like the one Amonia refused to order from have had to deal with these price hikes, costing them many customers. Their frequent collaborators, companies offering delivery services are left to come up with commonsense ways to navigate the situation

“Knowing fully well that logistics is usually the end point of every transaction, the increase has not only affected us as a logistics business, but the social commerce businesses, because at the end of the day, when they come to us and get the price and communicate to the customer. the customer says it’s too expensive,” Omowunmi Omoseyindemi, the co-founder and COO of the delivery company Fastryders said. “It’s either they don’t buy any more, or they prefer to pick it up at a later time.”

For full-time delivery businesses like Omoseyindemi’s, raising the prices more than a reasonable threshold could mean going out of business entirely. The case of the e-commerce and social commerce businesses that pay for their services is different because their entire product is making deliveries. Deliveries are not just another huddle they have to jump through to survive the hard economic realities of the country. It is what they do.

Omoseyindemi said that Fastryders has been holding regular consulting sessions with their customers to help them navigate these times, teaching them to streamline their deliveries and also streamline their orders.

“We’ve been able to deal with the rising cost of fuel by helping businesses streamline their deliveries. We offer them advice on what can work for them to have affordable rates for their customers,” she said.

The effects of decreased orders

But even with these consulting sessions, Fastryders has been experiencing up to a fifteen per cent decrease in orders. Yet, raising prices to augment the decline in orders and maintain sensible profit margins is not a wise business decision for Omoseyindemi.

“We cannot really jack up prices the way our competitors have doubled their prices and are still making headways,” she said. “Our model is to enable e-commerce and social commerce businesses to be able to deliver to their customers and if we jack up our prices, we could push them out of business. Customers are buying online for convenience,” she said.

She also said if the cost is higher than the services they will begin to buy the items themselves.

It’s also the dilemma that has crippled many freelance dispatch riders, who also have to maintain a certain price point while working with lower resources if they would attract the few customers available.

Read also: Looking for better days: The real stories of Lagos dispatch riders

“When the company says there are fewer orders, they lower the price to the detriment of the riders. They are just trying to convince you to make orders. That is the true picture,” Ibrahim said.

Coupled with this, dispatch riders say they still have to deal with the underlying challenges that they have had for years battled with, like having to pay for food that spoils on delivery, and deficits from previous trips.

“Some of them can’t even maintain their vehicles,” Ibrahim said. “The businesses they work with have not provided any palliative to cushion the effect of what the riders are going through.”