Currently, we are living in uncertain and difficult economic times, and finding a reliable and steady source of income can be difficult. Starting the right kind of business can be the key to all of that.
Have you thought about what goods and products you can supply that you can make money from? Look around your environment, investigate and research what products people need and try to supply them.
If you have ever considered exploring distributorship opportunities in Nigeria you have come to the right place as this blog post will help you start your own distribution business in Nigeria.
Distribution business in Nigeria can be extremely lucrative, for example, a while back, there was an article in the Nigerian Finance & Investment weekly paper, which 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 nothing more than N200,000.
While this may be a big amount, the challenge to her journey was that the manufacturing companies wanted an investment of at least N400,000, an amount that she did not have. She did not give up and proceeded to negotiate with the manufacture, and surprisingly got her way, and they accepted whatever investment 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. A distribution business is a highly lucrative business in Nigeria, most importantly; you just need to start somewhere. The key here is to start with whatever you have, even if it is just N1, and keep reinvesting your profits in to your business to enable your growth.
Understanding the business
Before a manufacturer sells his product to the end user, there are several steps in between- 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 an 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 end-users, 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 basic idea of a distribution business in Nigeria is to buy and sell goods at a profit. What sets it apart is the quantity of goods and the kind of people you are selling them to.
Starting the business
Before you begin the business, you will need some skills and knowledge that are vital to running a successful distribution channel. These include negotiation skills, financial acumen, business management and your networking skills. Here is a short walkthrough to starting 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 tricky and complex. Every wholesale distributor knows a number of tricks to manage it efficiently in order to maximize profits. Gain a good understanding of basic supply chain management principles.
These tricks are those that would not be visible 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. This is just one example, but there are a number of other things that you will need to know in order to maxamise your profits.
Step #2: Decide your niche
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 chose 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 market and customer base
Before you start you must identify your customer base. A key to this type of business is to clearly define your target market. This should 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: 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 your overheads.
Step #5: Register and 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 meanwhile.
Step #6: Find and connect with potential customers and build strong relationships
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 prioritising profit, you should prioritise 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.