Gokada, a prominent Nigerian last-mile delivery company, has transitioned to a more asset-light business model as part of its funding raising efforts, according to two insiders speaking to TechCabal. Oluwaseun Omotosho, COO of Gokada, confirmed the company’s strategic shift that began in 2022.
Defined by a company owning significantly less physical assets, Gokada’s move to an asset-light model indicates that it now owns just 10% of the approximated 5,000 bikes working on its platform. Instead of employing drivers, they are taken on board as partners who then pay a commission for each order they complete.
Established in 2017, Gokada’s first business model was based on a hire-purchase system for drivers. In this model, the company would initially purchase the bikes and then recover the cost through a daily repayment rate set for a maximum of three years.
Once the drivers made all their payments, they became partners. However, this policy was costly for the company as they had to cover the high maintenance costs associated with owning the bikes. These costs, which ran up to tens of thousands of dollars each month between late 2021 and early 2022, would have eventually led to the closure of the business, as stated by COO, Omotosho.
In response to these challenges, Gokada revised the hire-purchase agreement and transferred the upkeep costs to the drivers. This strategy led to an increase in Gokada’s revenue for 2022. Going forward, Gokada’s operational plans involve not purchasing bikes for drivers. Instead, the company plans to introduce drivers requiring bikes to financing companies, while the company will only manage the bikes and handle payment collection.
Gokada is currently in negotiations with potential investors regarding funding for this year, but COO Omotosho could not reveal further information. In 2022, Gokada contemplated selling a competitor, Kwik Logistics, but the deal fell through. In 2023, Gokada aimed to raise $100,000 through crowdfunding. In 2019, the company secured $5.3 million in a Series A funding round.
Amidst the strategic changes, Gokada faced a challenging period characterized by layoffs and a ban on two-wheelers in Lagos in 2020. This led to the company transitioning from providing ride-hailing services to focusing on delivery services. The same year, Fahim Saleh, the company’s then CEO, tragically died.
Subsequently, in 2023, harsh macroeconomic conditions led to the company letting go of at least 54 employees, moving to a smaller office, and renegotiating terms with vendors. However, since these events, no further layoffs have occurred, and the company currently employs approximately 30 people.
