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How To Start Your Own Distribution Business In Nigeria

Distribution business in Nigeria can be extremely lucrative. A distributor in Nigeria is someone who acquires the goods from the manufacturer and then supplies them to the retailer. Find out how to start your own distribution business in Nigeria right now!

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.

What It Takes

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 maximize your profits.

Choosing Your Niche

Before you make any real steps towards your own distribution business, you need to know what exactly you are going to sell. Unless you have a limitless startup capital, you can’t sell everything, which means you will need to focus on a single group of products, at least until your business gets off the ground

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You will need an area or segment that you want to specialize 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 niche and why will people choose you over your competitors?

Knowledge Of The Market

Distribution is a very lucrative business, but it is also highly competitive, as there are already plenty of powerful players in this market. You need to do a comprehensive study of the market, which may require you to have some extensive marketing training.

The goal of your study is to determine your position in the distribution market. You need to find your closest competitors and decide your USP, of unique selling proposition, is going to be. Without it, your distribution business may simply not survive the competition. You must have gone for market survey; know who need your product and how to market it to them before you start distributor business. Knowing who need the product will give you a sense of direction and the focus you need to succeed.

Acquire A Capital And Start up deposit

Like any other business, a distribution center cannot be launched without a startup capital, but its size largely depends on the type and size of your business, as well as the manufacturers you will work with 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 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.

Establish Your Office And Get a warehouse

The office of your distribution business may double as a warehouse, but they can also be separate. Both the office and the warehouse should be close to your partners and easily reachable from any location, so that your business could be cost-effective. 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.

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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 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.

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Develop contacts with manufacturers And Create Strong Relationship With Potential Customers

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. 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.

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 prioritize 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. When you are able to score the best prices and conditions when buying the products and sell them for profit in large quantities to your clients, your business is destined for success.

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Samuel future is a content writer with an English and literature background. Spurred by the desire to inspire young professionals, He started an online community where he shares relevant information aimed at building, empowering, inspiring, supporting and promoting employees to thrive in their careers.

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