Even in the face of Nigerian contracting economy occasioned by lower import receipts, higher fx rates, and increasing inflation rate, online retail sales still offers good prospects. This is primarily because of the convenience of shopping and more efficient logistics handling.

Increase in online shoppers indicate one thing - a growing market. As the economy gets adjusted to the newly introduced floating fx policy, there are indications that overall increased business activities will follow.

One of such business sectors to enjoy this is online retail sales. Whether you're selling on social media, your own store, or some other marketplaces. Which will remain profitable if you do your homework properly.

Making 100% profit in a month is almost impossible, however, with the right mix and good timing, this can be achieved. The modest returns that one can consistently accrue from monthly online sales is within 15% - 20%. I will attempt to look into the steps required to achieve more than average returns in online sales.

As an online retails seller, running your business requires that you engage in the following activities on a regular basis:

1. Sourcing of Products
2. Uploading Products
3. Order Processing
4. Delivery
5. Payment

I'll delve into these activities shortly, which will give you insight on finding the right mix

OK... Waiting...

Sourcing of Products

This is probably the most important aspect of retail sales. A lot of time is spent in this activity, and the sales outcome will become visible the moment your work is properly done here.

The different aspects involved in sourcing your products are under listed.

- Research: Category of products - Just as there are products that have massive appeal to consumers, so also there are products categories that sell above average. This is usually cause by a number of factors. Your work here is to determine the category of products that have massive appeal. A good search online can help.

One of the best places to do this is using Konga, since they indicate the number of sales made for each product. Dealdey is a good place also, because number of products sold are usually indicated beside the product.

I have realized that the best selling categories across platforms are Fashion, Electronics, Mobile Phones & Accessories. That's why the commissions charged by online marketplaces for these categories are usually higher.

Research is an ongoing activity as consumers' buying behaviour is dynamic, and constantly changing. New products are periodically introduced into the market, and you're constantly on the watch for buyers' responses to them. Social media will also help as these products are also discussed there.

- Number of products - At some point you will have to determine how many products to sell. A number of factors may already limit them, like, amount of money available, storage space, availability, price of the items etc. All things being equal, a higher number of products improves your chances of selling. But things don't usually work out that way, cause some products have more appeal than others, while some products offer higher profit margin.

Since capital is a crucial factor, you'll need to make sure that you can raise as much as possible, especially as your revenue depends on volume of sales. This leads to profit margin.

- Profit Margin - It is important that you determine your profit margin before purchasing products for sale. Especially if you're using loans to finance your business. Profit margin on sales generally, and also individual categories and products.

Remember that commission charged on the product categories differ, and in some cases different products in the same category are charged different commissions. A safe profit margin to assume would be between 10% and 15%. Anything higher could make your prices less competitive in the market.

- Inventory led VS Just In Time - You will need to decide how to handle you inventory, and 2 methods readily comes to mind.

Inventory Led - You will need storage space for this method. The size of the space depends on the physical size of your inventory. The advantage of this method is that you always have your products available and can delivery within hours, thereby reducing Lead time. Also, there are no undue pressures on you, since all you need to do is get to your storage location and send order to the buyer. Having inventory also protects you from increasing prices in the market.

The downside to this is that it is capital intensive, and not meant for those who have smaller purses. Also, prices of products may fall, declining demand for the products, or loss of appeal of such products mean that sales will be adversely affected.

Just In Time - This is suitable for those will smaller war chests. Those who do not have 'enough' money to either import large quantities, or buy in bulk for storage. The advantages are that it requires less start up capital, it's a more flexible method as you can comfortably respond to changing buying patterns. You can also introduce new products quickly into the market.

This also comes with disadvantages. You have to be constantly on the move from when orders are placed to buying the products, processing the orders, and shipping to buyers. There is the fear of unavailable products when you need them to fulfill orders. Prices usually are at an upward trend, and there are systems in place to hedge this.

- Importing VS Buying From Importers, Wholesalers - How will you get your products? You either decide to import yurself, or buy from other importers and wholesalers. Importing yourself means that you'll get the best prices since you buy directly from producers or manufacturers. And you usually have large quantities to last you for some time.

Importing requires good capital, and there are risks of delay in getting your products, risks of theft or damage of products while in transit. Cases of seizure by custom agents abound.

Buying from importers and wholesalers means that you get your products faster, you can buy in lesser quantities and more variants. And the time to have your products delivered to you takes anything from a couple of hours to a few days. It requires lesser capital outlay.

This method means that you don't get the best available prices, since your seller will sell with profit.

These are the activities that readily come to mind, but will be updated as more come to light.

Questions are welcome

Uploading Your Products

After sourcing your products, they have to go online for display. This stage is a walkover as we have lots of computer savvy online retailers.

While uploading your products there are somethings to note, which would improve your chances of sale.

1. Use Good Descriptive and Keyword Rich Terms for Title. Some stores automatically attach the brand of the products when displayed. If yours isn't the case, make sure you add the name of the brand, especially if it's a well known brand. You can also attach terms that are synonymous with your particular market segment. I once used this title for a power bank 'FIL 4000mAh White Fashion Power Bank for Mobile Phones, MP3, MP4, Cameras'. Searches on any of the terms used and my power bank will appear.

2. Use Professionally taken pictures. You would find lots of products' pictures online. If your product is new, or not available online, it is advisable to have the pictures taken by a professional photographer in the studio. The lighting givs a good effect, and well taken pictures make your products more attractive.

3. Detailed Descriptions and Highlights. The internet makes this easy as most products information can be found only. When writing benefits, which usually occupy first sentence of the description, tell the buyer the primary value they get from using your product. For highlights, you state the features and this is mostly found on the packaging of the product.

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Order Processing

Order processing is the stage that occurs between when you receive an order, and when you ship it.

Activities involved are communication with buyer, drop off, packaging or repackaging, sorting, and scheduling. This stage tests your efficiency, and if not properly done, you get cancelled orders, undelivered orders etc. And on the part of the customer you get lots of complaints.

Lead Time is the time spent from the initiation of a process to its completion. In retail logistics, it's the total time spent from when an order is placed to when it is received by the consumer. Online commerce, considered one of the fastest growing retail sectors, views an excellent lead time to be between 0 to 3 hours. And anything beyond 3 days as utterly unacceptable.

The efficiency of your ordering process should be designed in such a way so as to reduce Lead time as much as possible. Online shoppers usually have lots of options, and are not particularly patient with late deliveries.

For those using the Just in Time delivery method, You'll have to up your game. Proximity to your source is a big advantage.

Delivery

Most online stores have their logistics operations already cut out. So there's very little a merchant can do to modify them.

Some operate drop off centres situated around major cities and states, with warehouses at strategic locations. In some cases, the orders are picked up from the seller's location for delivery. While others allow for self-fulfillment.

For those with no provision for self-fulfillment, you would have to make sure your order gets to the drop off location as quickly as possible. With respect to lead time in my earlier post, quick shipment improves your chances of faster delivery and reduces cancellation caused by delayed shipping.

There are lots of benefits with self-fulfillment. Especially for those orders that are CoD (Cash on Delivery). Using this method, you ship directly to the buyer and receive the payment. This guarantees that you get paid immediately instead of waiting for 7 days return policy and the x amount of days it takes for payout request to hit your bank account.

The downside to this is that you must have network reach far enough to cover major cities and states in the country.

Payment

This is perhaps the most appealing part to the seller. When do I get paid?

Most online market places pay for order delivered within 9 - 14 working days (at least 7 days return policy, and anything from 2 days higher to have the money hit your account after payout request).

This is a crucial decision because this to a large extent determines how much profit you can make. Yes! I said how much profit.

Let's say you deliver with the online store's logistics provider, and your money isn't paid into your account until 14 days. That means your Cash Conversion Cycle (CCC) is 14 days. The CCC is the period it takes to convert your product into cash. It simply states the time taken from the time your product is shipped from you to the buyer, and when the money paid for the product is available to you.

If you deliver the item yourself, or engage your an independent logistics outfit, you get payment same day or next. Some might take 48 hours, but it can't be compared to the 14 days that the online store holds on to your money. So you have the opportunity to turn over the money as many times as possible.

That's why your choice of online marketplace is strategic. Since they have different delivery and payment systems in place. However, choosing wisely can make the difference in hitting your financial target.

op, your head is very there.

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The Strategy?

From my earlier posts, some salient points that will guarantee above average profits, to the tune of 100% are outlined below

1. Adequate start up Capital - Consider starting with at least N100,000 for online selling. This will guarantee you do not begin with too much money, and also you have enough capital to cover your expenses and turn out profit. Any amount less than this might not give you enough profit to cover your cost.

2. Research is an ongoing event, and sourcing should be carried out at least twice weekly, though once a week is recommended.

3. When choosing category of products to sell in, focus on electronics, mobile phone accessories, fashion, and home appliances.

4. Get as many products as possible, especially those that appeal to a greater market segment.

5. Just in Time method for handling logistics is your best option. Though there are times when you'll have to adopt a hybrid approach, and choose the best option where suitable.

6. Make sure your Lead time doesn't exceed 24 hours. Also work on between 3 to 6 hours so as to reduce possibility of cancelled orders.

7. Buying from importers and wholesalers is your best choice. Apart from the flexibility it offers, you have a wide variety of products to sell.

8. Take uploading of your products seriously. If you're not computer savvy, engage the services of someone who can do a very good job for you.

9. Build relationship with your customers. You will enjoy repeat businesses and referrals from them.

10. As much as the x days return policy is designed to protect the buyer, seek for ways to reduce the Cash Conversion Cycle (CCC) through reducing or eliminating the delay caused by return back policy.

11. Sell your products/services on your own platform. You either own the online store, or sell directly to customers through social media.

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