Bolt Food to exit Nigeria after managing only 5% of market share despite “heavy investments”

Bolt Food is finally exiting the Nigerian market on December 7 after two years in the space. This was according to media reports that made the rounds on Thursday. The company has now revealed to Technext that it decided to exit the Nigerian market after managing to control a paltry 5% of the thriving Nigerian market. This was a far cry from its expectations after what it described as “heavy investments” in the market.

This was revealed by Bolt’s communications manager in Nigeria, Femi Adeyemo. He said the company made this decision after thoroughly evaluating its performance in Nigeria. He said Bolt operates on the principle of frugality and efficiency. This means that, at times, they make difficult decisions that improve the overall ecosystem of their services. Not continuing with Bolt Food in Nigeria is one of those decisions.

“Over the last 3 years, we have heavily invested in these markets, investing in low commissions to increase selection and incentives to encourage customers to move over to Bolt Food. Unfortunately, in Nigeria, these investments haven’t been successful and have only managed to achieve less than 5% market share,” he said.

Bolt Food’s run in Nigeria

The Nigerian online food delivery market was estimated to be worth $834.7 million in 2022. From 2023 to 2028, the market is expected to grow at a compound annual growth rate (CAGR) of 12.2%, reaching $1,719.4 million. 

It was probably against this backdrop that Bolt Food entered the Nigerian e-commerce space in October 2021. This was in the wake of the COVID-19 pandemic which ushered in an era of contactless activities. With people reluctant to leave the safety of their homes in search of food, the company believed it was a good time to enter the market, delivering food to consumer’s doorsteps.

However, it was met with stiff competition from other players like Jumia Foods, Gokada and O-Foods. While the competition at the time seemed pretty manageable, the entry of later players like Glovo, Kwik and Chowdeck, meant the competition became even more difficult to manage. These players entered the market with more innovation, appealing features, diverse offerings, and a resolution to upstage their earlier counterparts.

The situation was further worsened by the downturn in the economy of the country. Various government policies have effectively reduced purchasing power while driving the country’s inflation rate to new highs. With purchasing power reduced, demand became even lesser, with all the food delivery providers scurrying for limited business.

With economic indices not looking great in Nigeria presently, a lot of businesses are feeling the effect. This includes Bolt e-hailing, Bolt Food and other verticals. Thus, rather than fight a battle of survival on two fronts, the the company appears to be sacrificing its food vertical in Nigeria so it could focus all its resources on the main offering which is e-hailing and which appears to be facing its fair share of challenges. And the company believes this aligns with its long-term strategy.

“This decision aligns with our long-term strategy to run sustainable business lines and allocate resources where we can have the most significant impact and deliver the best services to our customers and partners. Our focus now, E-hailing services, will continue to work as usual and we currently have no intentions of reducing our operational activities,” they told Technext.

Challenges with food delivery

Nigeria’s food delivery industry appears to be witnessing impressive growth this year. This is attributable to the fact that the culture of fast foods and eating out is growing among the citizens, especially the younger population. Indeed, on October 31 2023, Chowdeck celebrated the milestone of delivering food worth over N1 billion in a single month. This was despite celebrating delivering items worth a billion Naira since inception earlier in March.

Chowdeck now operates in four major cities across Nigeria; Lagos, Abuja, Ibadan, and Port Harcourt. It claims to have 1,300 active riders making an average of N55,000 weekly. This means food delivery has the capacity to become a huge income earner for riders in Nigeria.

However, the food delivery industry faces several challenges, including managing customer expectations, improper food handling, fluctuating market prices, and logistical challenges. But despite these, the sector is poised for future growth and with this growth will come investments into solving the challenges.

However, it appears Bolt Food would not have a part to play in the future growth. Asked if there’s a chance that the vertical would be making a comeback in the future, the company said its focus is solely on its e-hailing services. It also said this exit is purely a Nigerian situation and won’t spread to other markets in Africa.

See also: App review: Chow deck, Konga food, Gokada food, Bolt food