With the current economic clime in Nigeria, finding a reliable and steady source of income can be extremely difficult. Establishing the right kind of business can signify the end of your financial woes.
Distributorship business in Nigeria can be very easy to start if you know the goods that are popularly in demand. Have you been thinking about what goods and products you can supply that can earn you money? Look around your environment, investigate and research what products people need and try to supply them.
If you have been looking for detailed information on how to start distribution business in Nigeria; then you’ve come to the right place. This blog post will give you all the necessary information you need to start your own distribution business in Nigeria.
Distributorship opportunities in Nigeria: Overview
Distribution business in Nigeria can be extremely lucrative especially if you target popular goods. For example, there was an article in the Nigerian Finance & Investment weekly paper that talked about a Nigerian woman who was a high school graduate. She became an entrepreneur out of necessity, starting as a distributor of Mouka Foam, with N200, 000.
While this might look like a huge amount, the manufacturing company wanted an investment of at least N400, 000, an amount that she didn’t have. Not one to give up easily, the young lady proceeded to negotiate with the manufacturer, and surprisingly, they accepted the money she had.
Since then, she has come a long way and is making a lot more than she invested, with an income greater than N200, 000 every month. This happened some years ago and the situation isn’t different. The key to starting a successful distribution business in Nigeria is to start with whatever you have. Even if you can only afford N500, 000; invest and keep reinvesting your profits into your business to achieve growth.
Who is a Distributor?
Distributorship in Nigeria isn’t limited to a certain group of people. Anyone can become a distributor. Distributors are people who have a business relationship with manufactures that they represent. Most times, distributors maintain exclusive buying agreements that limit the number of participants or enables distributors to cover a certain territory. Therefore, the distributor becomes the manufacture’s direct point of contact for prospective buyers of certain products. Most times, distributors rarely sell a manufacturer’s goods directly to consumers. Wholesale representatives and retailers generally find distributors to buy products for resale.
Understanding the distributorship business
Before a manufacturer sells his product to the consumers,, there are several steps involved- including the wholesaler and retailer. This is where a distributor or wholesaler comes in to add value.
For manufacturers, pushing large quantities of goods in the market requires an effective and efficient distribution channel, and this is what distributors help them accomplish. They purchase the goods in bulk, break them down into smaller units and then sell them on to retailers, who further break them down to sell to consumers.
While there are manufacturers selling directly to consumers, there are wholesalers who also do just that. A wholesaler or distributor needs a warehouse to store and distribute the goods from. Just like any other business, the major idea behind a distribution business in Nigeria is to buy and sell goods to earn profit. What sets it apart is the quantity of goods and the kind of people you are selling them to.
Starting a distributorship business in Nigeria
Before you start the business, you will need certain skills and knowledge that are vital to running a successful distribution channel. These include negotiation skills, financial acumen, business management and your networking skills. Below are the necessary steps to take to start your own distribution business in Nigeria.
How to Start a Distribution Business in Nigeria
Step 1: Training
In its most basic form, a distribution business is just a routine of buying, storing, transporting and selling. However, even this routine can become confusing and complex. Every wholesale distributor knows a number of tricks to manage it efficiently in order to maximize profits. Therefore, it’s advisable that you know a good understanding of basic supply chain management principles.
Of course, these tricks aren’t revealed to just any outsider. For instance, a distributor knows how to handle stock that is close to its expiry date, so that there is minimal impact to their profit margin.
Step 2: Decide your niche/area of specialization
You will need a niche or segment that you want to specialise in- it could be fast moving items such as groceries and food items, or construction supplies and materials, or even electronics and gadgets.
You need to look at a number of factors, such as products that have a high turnover, products that are easy to market and distribute products that you are passionate about and the competition in the market for the product that you want to sell. What is your USP and why will people choose you over your competitors?
Answering these questions will help you decide on a niche that is most suitable for your distribution business.
Step 3: Understand your target market/customer base
Before you start a distribution business in Nigeria, it’s important that you identify your customer base. The key to this type of business is to clearly define your target market. This should be for the basis of your strategy regarding how you want to run the business including the people and market you want to serve.
Depending on your budget and general preference, you might decide to cater to stores around your neighborhood or sell to retailers who in turn sell to local consumers.
Step 4: Create a business plan
Outline a distribution process that will define your business plan. If you are distributing an already existing product, draw a pattern of competition. Those who have been there before you may have amassed a lot of influence, therefore, figure a way to fit into the system. Basically, doing something different from what people are used to will help.
Step 5: Name registration
When you’ve finally made up your mind on what product to distribute, it’s time to register your business. You’d be surprised that most companies might require their distributors to have a registered business.
Step 6: Get a warehouse and office space
The hub of your distribution business in Nigeria will be your warehouse as this is where you will store and move your goods from. Select a warehouse that is close to the potential customers of your niche, and most importantly has great transport links and easily accessible roads. This will matter when you register with companies as their distributor. Having a separate or exclusive office area is not essential; you can easily dedicate an area of the warehouse as office space to reduce overhead costs.
Step 7: Develop contacts with manufacturers
With the basic setup done, you will need to find manufacturers or suppliers of products that are within your niche. Generally, manufacturers need a distributor to be registered with their company, as well as meet some criteria for gaining distributorship rights. Other requirements could include proof of a specific turnover amount and some limitations regarding the locations.
As a beginner in the distribution business in Nigeria, gaining distributorship rights with large companies who have an established network may be hard, but you can still begin as a sub-distributor by collaborating with a larger wholesaler. From there, you can climb your way up the ladder. You can also look for new companies who are on the lookout for wholesalers in the meantime.
Step 8: Get Distribution Tools
Since your job as a distributor is to move needed products from one place to the other, you shouldn’t wait for people to come looking for you. Get vehicles, motorbikes, any distribution machine that fits your goods and services. Retailers are always happy when goods and service are delivered to their door post.
To succeed as a big distributor, you need a truck or space car as well as sales agents. This truck or space car will be needed for taking the products from the production company to your warehouse and to retail stores across cities. You can hire trucks if you can’t afford one. It is advisable you take the products to the retailers than to wait for them to come to you because when they have another distributor that offer to bring the same products you sell to them to their shops, they will quickly abandon you.
Step 9: Find and connect with potential customers and build strong relationships (Marketing)
When all of that is set up, you will need to connect with retailers to register with them as a supplier and sell your goods.
At the end of the day, what’s going to make-or-break you as a wholesale distributor is your ability to form strong, lasting relationships with your customers. Instead of solely prioritizing profit, you should focus on customer service, adding value during sales conversations, and making faster order fulfillment a priority. If you achieve this, you’ll be well on your way to building a long list of repeat customers.
If you plan to enter a competitive niche you will need to devise an appropriate marketing strategy, which considers market penetration strategies, such as selling your goods at a lesser rate than your competitors sell. This is one of the most effective ways to gain initial traction for your distribution business in Nigeria. You will also need some advertising and marketing strategies to make your customers aware about your product and get more retailers for your distributorship.
When done right, a distribution business in Nigeria can be one of the most reliable and steady income sources that you will find. You do not need a considerable investment to access and be eligible for most distribution opportunities, but there are still many opportunities out there if you don’t.
Whatever you may have, along with the right skill-set and the will to learn will be enough to help you become a successful distributor. Your greatest challenge is not money or product, but your ability to market your business and products is pivotal.
What you have to know as a distributor
- You are to buy goods/products directly from producers and in large quantities and sells in relatively smaller quantities.
- You are expected to sell different varieties of a particular line of product. For example, a distributor who deals with paper is expected to keep all varieties of paper, cardboard sheet, card, etc.
- You may need to employ a number of sale agents for distribution of a product.
- You need large amount of capital to be invested in the business.
- You may also be required to provide credit facility to retailers and financial assistance to the producers or manufacturers.
Keys to a successful distributorship business in Nigeria
- Always try to maintain good customer relationship.
- Build large customer base. The most important thing you need is not the products you want to distribute but the buyers of the product you are distributing.
- Concentrate more on the turnover rather than on cost. Distribution business is a game of volume.
- Always reach out to your customers whether in the name of advertisement or marketing.
Popular items that are most suitable for distributorship in Nigeria
- Diesel/ petroleum products
- Beans and other food stuffs
- Pasta/ spaghetti
- Mattresses and pillows
- Building materials
- Car parts and engines
- Ladies items/ accessories
- Male items/ accessories
- Mobile phones, laptops, and accessories
- Body care items e.g. body creams, moisturizers, etc.
- Cooking gas
- Fitness equipment
- Baby items
- Food spices
- Essential oils
- Electrical equipments
- Medical equipments