In October, Sendstack, a two-year-old Nigerian logistics startup, pivoted from connecting business owners to last-mile delivery providers to offering fleet management software for companies with in-house fleets.
Kobo360, the Goldman Sachs-backed truck-hailing startup, is developing fleet management software for manufacturers, fast-moving consumer goods (FMCG) suppliers, and micro-fleet truck owners. This software will help users manage trucks from their fleet or contracted logistics partners, plan routes, and access invoice discounting.
Pure software fleet management is gaining traction among logistics startups for good reason. Software products typically boast margins of around 70%, significantly higher than the 20% commission charged by truck-hailing services.
Additionally, software solutions are easier to scale than aggregator models, which require substantial investment in building driver and cargo networks. At a time when investors are focusing on high revenue growth, pure-software models make a really good pitch.
Moreover, these applications give businesses complete control of their cargo movement, reducing risks related to lost shipments—a popular mishap in the sector.
It may also be the timing: rising fuel costs make Uber-styled logistics platforms that charge commissions more expensive for cargo owners and transporters.
While the revenue potential is considerable, selling fleet management software presents challenges. Finding customers can be tough due to a limited pool of companies that can afford the service. Closing deals with valuable clients can be complicated by bureaucracies, and many attractive companies already have providers. Even larger firms willing to pay $7–$50 per truck monthly often face high switching costs.
Kobo360, which has been operating for about seven years, may leverage its existing relationships with these businesses to get its new product through their doors.
