Distributors are a crucial part of most industrial setups. They link manufacturers and consumers, by taking products from the former and supplying them to the latter. Without distributors, marketing would be a lot more difficult.
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If you intend to be a distributor, you may either become a wholesaler or retailer. As a wholesaler, you’ll get your products directly from the manufacturer, and sell them in bulk to retailers. And if you’re a retailer, you’ll sell the products in smaller quantities to final consumers.
Wholesale distributorship can be lucrative; it all depends on what niche you choose to play in, and how you go about the business. This article takes you through the steps to setting up a successful wholesale distribution business in Nigeria.
First, let’s look at some of the better niches for wholesale distributorship in the country.
Profitable Niches For Distributors In Nigeria
- Building materials.
- Electronic appliances.
- Phone gadgets and accessories.
- Fast Moving Consumer Goods (FMCG).
Things You Will Need To Start A Wholesale Distribution Business
You will need these things if you’re going to start a wholesale distribution business.
- Warehouse or store.
- Vehicle for transporting products.
- Inventory officers.
- A reliable manufacturer and the quality products they supply.
Steps To Starting A Successful Wholesale Distribution Business
These are the steps you should take to start a profit-making wholesale business.
Find A Profitable Niche
You do this by conducting market research. There’s no shortage of manufacturers, but the opportunities for new entrants in the distribution business aren’t as numerous. You will need to survey the available options and choose one that’s turning in good returns for the people already engaged in it.
Talk to existing distributors. Learn what the requirements to start are, and how long it takes to break even. Have a feel of the market for each product you’re considering. How big are they? Are they saturated or open to new players? Is default prevalent or uncommon?
If you can, you’ll want to look at the performance of that industry over time. Is it seasonal or perennial? Is demand rising, plateaued, or declining? Let the answers to these questions inform your final decision.
Learn The Ropes
You can do this after you’ve settled for a particular product.
Many people get into the wholesale distribution business with little or no practical trading experience. Unfortunately, this increases the likelihood that they’ll falter at it.
The more you know about running this business, the higher the chances that you’ll succeed. Thankfully, many distributors are willing to help newbies learn the ropes. It’s not a bad idea to get attached to one of these enterprises for a few months, just to see how they operate.
Choose A Manufacturer
It’s one thing to know where the profitable markets are. It’s quite another to select a manufacturer that meets your needs.
When choosing a manufacturer, go for one that offers a flexible distributorship package or agreement. Examine the details of their offering. Take note of the terms. See if the discounts, lines of credit, and other services meet your expectations.
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The ideal manufacturer will have great distributor relations. You can learn about this by talking to existing distributors of the company you want to work with.
Write A Business Plan
A business plan describes what a business is, what it does, the market it targets, the revenues it intends to make, and the cost of starting and building it. It’s a business’s roadmap to sustainable profitability.
Your distribution company should have a business plan. It will be the picture you align your business’s reality with, the model you work to replicate on the ground. It could also prove useful if you’re seeking funding from a formal lending institution (e.g. a bank).
Register Your Business
By registering your business with the Corporate Affairs Commission (CAC), you make it an entity recognized by the government. This provides you with protections and privileges that will come in handy in Nigeria’s challenging commercial environment.
Get A Store Or Warehouse
You will need a physical location to store your products. This could either be a sizeable store or a warehouse. What you go for will depend on the nature and quantity of the product you’re selling.
Things you should consider when choosing a wholesale store or warehouse include rent, accessibility, security, and protection from the elements (weather). If you’re distributing goods with a short shelf life, you’ll need a dependable power supply; you’ll often have to provide this yourself.
Hire Workers And Acquire Tools
The nature of your hiring and equipment acquisition will depend on the form your business takes. If you’re constantly moving products to retailers, you’ll need a vehicle (or vehicles).
You may also want an inventory manager (or several managers) to track and document products as they’re added or taken out of stock. Inventory and distribution management software will be needed too.
Finally, salespeople could help you find retailers who may be interested in your products. You may hire full-time sales professionals, or work with part-time sales personnel.
Build Strong Customer Relationships
The success of your business turns on the strength of your relationship with your customers.
We have already hinted at the customer acquisition process. This involves engaging retailers who may be interested in sourcing products from you. If you have capable salespeople on your payroll, they will help you gain a good number of customers.
Offer great service. Promptly attend to prospective and existing customer issues. Stay in touch with them. Do these things and you’ll make your retail clients your biggest fans. They’ll spread the word, and lead even more customers to you.
Wholesale distribution is capital intensive. It also tests you physically and mentally. But it yields great returns too, if you do it right.
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