Distribution Business in Nigeria; requirements, profit & how to start

With Nigeria economy close to recession, finding a steady and reliable source of income can alleviate the downturn when it arrives. The best way forward is to establish a business that is in high demand and easy to manage.

Distributorship business in Nigeria is one of those businesses that are in high demand if you can discover products that are popular in demand. Maybe, you have been thinking about what goods or products to supply to start earning money? Look around your environment, carry out a market survey, ask people what products they enjoy most and you will definitely find what to supply.

On this article, you will learn what it takes to start a distributorship business. How to start distribution business in Nigeria and profitable distributorship business you can start in Nigeria. Look! I will not end there. I will proceed to usher you into 2020 best-selling products in Nigeria of which you can actually apply for their distributorship.

Distributorship business opportunities in Nigeria

 The business of distribution in Nigeria is one of the most profitable businesses one can venture into and you will never regret becoming a distributor. Most newly emerging companies situated in the cities like Abuja, Lagos, FCT, Kano Aba, Onitsha, and sub-urban areas are in constant search of reliable distributors. Companies in this category relax their requirements for you to be their distributor because of their quest to penetrate the market. They only stiffen their requirements after they gain their feet in the market. So, you have to take advantage of these types of companies when they are new and sign up as a distributor before it gets too late.

On the other hand, if you have the capital there are popular brands that have already made a name in Nigeria you can apply for their distributorship. These brands include; Coca Cola, Beer, Nest cafe, Indomie-instant noodles, Cowbell, Milo, FMCG, Chivita, Wheat flour, Dangote vegetable oil, Cement, and many more.

There are also some products with high demand you can start its distribution in Nigeria with little or no capital. Such Products like eggs, bread, bakery and many more. So, there is quite a good number of distributorship business opportunities in Nigeria.

 

Starting Distributorship Business in Nigeria

The main purpose of buying and selling of goods is to ensure goods get to the consumers living in far off places. As goods and services move from producer to consumer they may have to pass through various individuals. One of these various individuals is called a distributor. A distributor does distributorship business or wholesale distribution business.

The wholesale Distribution business is simply the buying of products from the producer of the product for the purpose of reselling to retailers for profits. Starting a distributorship business in Nigeria is a profitable venture. Being the first distributor to enter a partnership with a new manufacturing company can make you a millionaire within a few months.

5 Key Expectations of a Distributor

You need to understand what is required of you as a distributor before embarking on distributorship business. As a distributor;

  1. You are to buy goods/products directly from producers in large quantities and sells in relatively smaller quantities.
  2. You are expected to sell different varieties of a particular line of product. For example, a distributor who deals on paper is expected to keep all varieties of papers
  3. You may need to employ a number of sale agents for distribution of a product.
  4. You need a large amount of capital to be invested in the business.
  5. You may also be required to provide credit facility to retailers and financial assistance to the producers or manufacturers.

How to become a Distributor of a Business without Capital

You can become a distributor to many companies without having a kobo.  All you need to do is to draft a winning business proposal, submit it to the company, what most of these companies does is to request for a guarantor or surety who will stand for you and if you meet up with that, you become their distributor. It is that simple! This is how one of my friends started a distributorship business in 2014 at Onitsha and today she is controlling over 20 million naira. This lady as of the time I’m writing this article has built and furnished her 3 storey building in Enugu metropolis.

 

How to start a distribution business in Nigeria

You can follow the following steps to start a distribution business in Nigeria:

  • Acquire Knowledge

In its simplest form, a distribution business is a routine buying, storing and selling of goods and services. However, these routine activities can sometimes become confusing and complicated. You need the knowledge to be able to manage a confusing and complicated part of the distribution business.

For example, as a wholesale distributor, you need knowledge of how to handle stocks whose expiration date are close, so that it will have a minimal impact on your profit margin. You need to know when to take inventory and empty storehouse.

A good knowledge or understanding of the principles of supply chain management is needed to be able to efficiently maximize profits in the distribution business. Understanding the principles of demand and supply, scarcity and scale of preference are also important. You need to understand when to switch between commodities or deal on mix commodities. So, attain our training and workshops to acquire knowledge to empower yourself with these principles before starting a distribution business.

  • Raise capital

You cannot become a distributor of big brands in Nigeria without having a huge capital. Most big brands will demand that you purchase one or half trailer of their products as a take-off.  This is a serious deterrent to many enthusiastic distributors.  So, if you are thinking of becoming a distributor of big brand in Nigeria, you need to source for capital.

There are so many ways to source for fund to start a business. However, whichever way you think can help you raise funds to start the business embark on it. Where capital becomes a hindrance, you can go for distributorship of new a product from a newly emerging company.

  • Get a warehouse and office space

You need a warehouse and office for storage and distribution. Distribution business is more like buying and selling but what sets distribution business, apart, from ordinary buying and selling of goods is the quantity of goods you are dealing on and the kind of people you are selling them to.

Without a warehouse and office, you can manage this large volume of goods and services. This is the reason why warehouse is one of the major requirements for signing up for distributorship business in Nigeria. And most companies will verify that you have a warehouse before letting you sign up for their distributorship program.

  • Register your business

Registering a business in Nigeria has become necessary for a successful business venture. You will see many manufacturing companies reject your proposal as a distributor because your business is not registered.

The implication of this is that you need to register your business name before applying for distributorship in Nigeria. Corporate Affairs Commission (CAC) is the governmental body in charge of registering business in Nigeria. The registration process is simple.

  • Find a product niche

Finding a product niche with high demand is the hardest step in starting a distributorship business in Nigeria. Most new brand will fold up because they can’t penetrate the market. When you become a distributor of such brand, your loss your money.  This is the danger of becoming a distributor of new emerging brands.

Other the hand, big brands that have already made names are not easy to partner with. If you are not billionaire or millionaire you cannot become their distributor. For example; try to apply for MTN Nigeria Airtime distributorship program and you will understand this very well.

To find a product niche with hot demand, first analysis the market futuristic success of the product especially for newly emerging brands. Does the brand have a future? Who is/are the brain behind it? You need to get the answer to these questions correctly. For an already established brand, you need not worry because you are joining them to leverage on the already wetted ground for distributorship.

  • Apply for distributorship

Once you register your business name, get a warehouse and raise substantial capital. it is time to crack the hard nut which is applying for distributorship.  First, you may need to send a copy of your distributorship proposal to the companies you want to sign up distributorship contract with, as they may want to see it. Others may require you fill their distributorship forms online or offline.

Whichever way, you have to be meticulous. Read the company’s terms and conditions very well. Be sure you know what you are entering into. Ask question where necessary and be certain you are not going into monkey business. You can apply for distributorship in 1 – 2 or more companies at the same time to be on the safer side so that if one company rejects you, you will get the approval of the other.

  • Develop a plan

Once you get a company’s approval for distributorship program, develop a plan. This may be part of what you send as a proposal to the company. All you need to do is to edit whatever plan you have on the proposal to suit your business plan.

Otherwise, draft a new business plan. This plan should be detailed and problem-solving. This is very important as it might affect your overall performance later on.

  • Get distributor material

After you have developed a good business plan, get all your distributorship materials set. This may range from getting a truck/bus/car to getting office materials.  If you don’t have enough capital, buy and start with important ones.

  • Discover your target market

Who is your target market? These are the retailers you will be dealing with. You have to scan and discover them.  During the course of your market survey, you might discover that your target market is not within your geographical location.

If your target market is not within the geographical locations you are assigned to cover then you have to do some sort of marketing to discover them elsewhere. Marketing entails a lot of strategic means you apply to discover your target market and promote your product. One strategic Marketing you can embark on involves moving to a different geographical location you are not covering to make contacts with people who deal on a similar product. Introduce your product to them and show them the opportunities they stand to gain in retailing your product.

  • Connect with potential customers and build strong relationship for continuity

The final step to starting a profitable distributorship business is to connect with your potential customers or retailers by taking their contacts. The contacts should include phones, business address and email address.  Build a strong customer relationship with them for continuity in the business by calling them on phone to find out their challenges.

Where there is a need, you can assist them by teaching them tips to successful retailing and brand awareness building. You can also organize workshops and training for them.

You can repeat step 9 and 10 weekly, monthly or quarterly to stay ahead of your competitors.

key to a successful distributorship business

Whether you are starting or already into the distributorship business, the key to a successful distributorship business include:

  1. Always try to maintain a good customer relationship.
  2. Build a 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.
  3. Concentrate more on the turnover rather than on cost. The distribution business is a game of volume.
  4. Always reach out to your customers whether in the name of advertisement or marketing.

For more detail on the key to a successful distributorship business, read 7 secrets to starting and running profitable distributorship business

Requirements for Distributorship Business in Nigeria

Below is what you need to be a distributor of products in Nigeria:

  1. Warehouse or shop 

Most company when you apply for distributorship, the first thing they want to know is how you intend to store their product so that it will not get spoil by either rain or sun. In most case, they will maintain they see your shop or warehouse before they release their products to you. So, you need a storage room or warehouse if you want to go into the distributor business.

For someone who wants to start small, you can store the products in your house if you have space or leave them in your truck if you have one. The truck must be well secured.

2. Registered Business name 

some company require that your business name is registered. They will prefer dealing with you as a company rather as an individual. This is not applicable to most companies.

3. Startup deposit

Some established companies will require you to deposit some amount of money with their company before giving you their products. Some others will require you to start with a half trailer of their product. But for new companies who are still in need of distributors, you may only need a surety to qualify.

As I said earlier, it is better you start with new companies that are not yet popular if you don’t have enough money. The only thing you need is selecting best-selling products before signing any agreement with them.

4. Means of Transportation and sales agents

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 a truck 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. So, be wise and make use of your sixth sense.

5. Certifications, License and Permits

Sensitive products like drugs, chemicals required that you must get a permit or be certified by regulatory bodies in the industry before you will be allowed to be a distributor. This is to ensure that you have acquired the skills and technicalities that will enable you to handle such products.

6. Knowledge of the market

You need to go for a market survey; know who need your product and how to market it to them before you start the distributor business. Knowing who needs the product will give you a sense of direction and the focus you need to succeed.

How profitable is distributorship in Nigeria

In general, the distributorship business in Nigeria is a profitable enterprise. However, how big you started, the product line your distributing and your daily sales volumes will determine your profit at the end of the day. As a distributor of a product line, you can be making up N500000 to N1 million per month as profit if you are a major distributor covering a geographical zone.  At the end of the year of the company’s sale, the company might still pay you commission as their major distributor. If you are starting on a low scale, I will not guarantee that you make profit or much profit on earlier months.

Here you are, ready to get started with distribution business, which distributorship business can you apply for?

Best-Selling Products in Nigeria 2020

Here are 2020 best-selling products you can actually apply for their distributorship;

  1. Hand sanitizers and facemask – this is one of the top-selling products in Nigeria 2020 due to COVID 19 pandemic.
  2. Sachet and Bottle water – This is one of the most selling products and profit-making business. Starting Sachet and bottle water distribution business is very easy and requires little or no capital. The major thing you need to start sachet and bottle water distribution is a space car or truck.
  3. Soft drink and Alcoholic Beverages like beer – This is another top-selling product in Nigeria that you can apply for its distributorship.
  4. Skincare products
  5. Drugs and Pharmaceutical products
  6. Poultry feeds and eggs
  7. FCGM
  8. Instant noodles
  9. Food beverages
  10. Electronics
  11. Aluminium roofing sheets like ALUMACO

Conclusion

The business of distribution is a profitable enterprise in Nigeria and there are so many distributorship opportunities. We have covered all the detailed steps to start a profitable distribution in Nigeria. We also added secrets to successful distribution business and hot products you can start its distribution, all that is required of you is to apply what have you have learnt. You can always come back to this site to ask questions or use our business ideas to build your business or develop new business.

 


Please note: The selection of these products as the best-selling products in Nigeria in 2020 are based on Market surveys and public opinions as of the time this article is written. So, any of the products can be removed among the best-selling products in Nigeria and new ones added at any moment. We advise you check this page regularly for updates for best-selling product in Nigeria.

10 thoughts on “Distribution Business in Nigeria; requirements, profit & how to start”

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