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|DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 1:18pm On Jan 13, 2020|
It’s a brand new year and also the beginning of a brand new decade.
The unending search for fulfillment continues unabated. Our desires increase and the requirements for launch and take-off of our preferred models become more difficult to acquire.
This thread is conceived to help interested Nigerians who wish to develop and sustain an interest in fast Moving Consumer Goods Distribution as a business model.
Suffice to state here that I have sojourned in this area of business for a respectable number of years and I am willing to share my experiences with interested readers free of cost. I emphasize that this will be an exercise that I hope can be considered as my own contribution to the development of future stars in Fast Moving Consumer Goods (FMCG) Distribution which is a hugely untapped segment of our economy.
Most people have no idea of how large this segments is. As a matter of fact there is so much untapped potential here that whatever I know is just the very tip of a very gargantuan iceberg.
I expect that there will be contributions here from other veterans that will enrich the thread and keep it alive for as long as it is deemed useful. Please put up questions as much as possible. I will attempt to respond to all questions here for the benefit of all. I will however solicit your understanding where there are lapses or delays in my responses of write-ups as the hustle is still real for me.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 7:08am On Jan 15, 2020|
The prevalent thinking among the larger population is that for one to become a Distributor, he needs to have some significant capital to invest.
It is expected that the capital will be used to acquire (rent or buy) a warehousing facility, procure a delivery van(s), hire staff, register with the preferred company and deposit for the goods/inventory.
Depending on the size, history and brand value of the company and her products, the initial outlay required could be in the Multi Millions. As a matter of fact sometimes with all your money intact, you may still be denied a distributorship be these some of these large and well established companies.
There is however a way out that will enable you launch out as a distributor and then grow your business exponentially such that sooner or later you can establish your name as the 'Go to' Distributor that even those very large Multi-National companies will come after you seeking a partnership.
I have seen this happening time and time again in the course of my career. The how is what I wish to share here and thereby debunk the concept of capital being the most important requirement for setting up a distributorship. That is my self appointed mission.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by EaRtHgUy(m): 7:23am On Jan 15, 2020|
Thanks Boss. This is a timely thread and I can't wait for you to continue.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by adedapodvirus001(m): 7:27am On Jan 15, 2020|
Following your thread with keen interest. God bless you.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by ASPIREX: 10:42am On Jan 15, 2020|
For all it's worth so far, this is going to be an interesting experience. Please update regularly.
I am following you bumber to bumper.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 3:37pm On Jan 15, 2020|
Thanks for the encouragement. Good to know
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 5:02pm On Jan 15, 2020|
You can chose to play at different levels of the Distributorship field. You could be a sub-Distributor, Regular Distributor or a Major Distributor.
You could also distinguish yourself as a Distributor for many companies and different products or you could chose to play as a Mono Distributor which implies concentrating on only one company and in the extreme of cases some Mono products only concentrate on a single product.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 5:07pm On Jan 15, 2020|
Whichever level you chose to adopt you could also be identified as a Market based distributor or a Non-Market based distributor. I am sure the terms define these distributor types effectively.
A third dimension gathering a lot of momentum recently is the Mobile Distribution phenomenon. (Everything has gone mobile).
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 5:16pm On Jan 15, 2020|
As can be explicitly drawn from the description, the term defines an attempt at carrying out distribution with or without a fixed shop/warehouse/office/location. It involves the aggressive distribution of fast Moving Consumer Goods within a definite Sales territory. In other words the Distributor does not wait for the retailers in his location as is the traditional practice but he/she seeks out the potential customer where he is.
This is a more recent approach and has brought about significant adjustments, modifications and repositioning within the FMCG distribution ecosystem. It is very appealing to the majority and its results are quite impressive such that even distributors with fixed locations are now subscribing to this model.
May also quickly add here that this approach is very appropriate and quite friendly for those just making an entrance into the distribution business and as such I will be emphasizing more on it especially as I expect that in the course of developing this thread some readers may immediately seriously consider a trial experience. This is indeed the way to go.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by olatunyemi(m): 6:18pm On Jan 15, 2020|
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 6:43pm On Jan 15, 2020|
It may suffice for me to insert an inspiring story here.
I met a middle aged gentleman at a restaurant during lunch one week day.....sometime in 2019.
His name is Fred. I don't think he will read this but if someone runs into him he should be made to understand that he is an inspiration.
Anyway, we had a discussion which started with the politics of the day and eventually landed on the economy and of course the gory tales by other customers who made their contributions to the discussion. I just noticed in the course of the discussion that 'Oga' Fred was quite upbeat and wouldn't allow the sad tales from other 'lunchers' dampen his enthusiasm. At some point decided to engage him personally and my mission then was to uncover what made him tick.
You will agree with me that in the midst of sorrowful tales and wailing about the economy, a sound and justifiable relief can be drawn from a contrasting view that is not only true but delivered convincingly.
So why does this simple man garbed in a modest clothing and exuding with confidence speak so convincingly of how the economy of Nigeria is relative and only appears the way you see it from your own angle or location on the prism.
I will tell his story here for emphasis. One or two people could draw some inspiration from his story.
I continue in my next post.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 8:48am On Jan 16, 2020|
Fred has lived in Lagos for over 30 years. He was brought from his Village as a teenager to learn about the cosmetics trade from his uncle. After completion of this training he was set up and ran his shop for about 6 years before a fire incident engulfed the market. He lost his goods to the inferno and had no means of starting again.
Unfortunately, he had no insurance and as such could only try to rise again by himself. His kinsmen in Lagos raised some money for him but it wasn’t enough for him to even rent a shop so he was at a loss. Luck shone on him through the intervention of one Alhaja who imports perfumes. She advised him to start with what he has and this kind lady went further to introduce him to another young man who was in the business of procuring perfumes and taking it to Kaduna to supply supermarkets. According to Fred, he even followed the man and spent one month with the gentleman in Kaduna and was able to glean the dynamics of this business model.
He then came back to Lagos. He then started the business of collecting perfumes on credit from the Alhaja and supplying to different supermarkets in Lagos. He has been doing this successfully for over 20 years and has so much to be thankful for.
This man is a very generous man and he volunteered the key drivers of this business.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 9:00am On Jan 16, 2020|
He has a very simple model in place. He identifies the fastest products in the market and then discusses with the different supermarket owners about the possibility of a supply. He gets the nod either via appropriate documentation and then he uses this to arrange the perfumes for the supermarket. What he does is that he gets the perfumes on a credit from the importers and then proceeds to supply to the supermarkets. Most Supermarkets pay after 21 - 30 days so what he does is that he has extended credit from his suppliers. As of today he has over 22 major supermarkets on his client base and over 100 mini-markets/convenience stores who do small volumes and of course less expensive brands.
The margins on these products are such that even if you took a bank loan to run it you would still make more than enough profit. One key index you need here is to ensure that you are discerning enough to identify the originals from the imitations that litter the market.
As a matter of fact he mentioned a particular well sought after brand that is sold in one popular mall in Victoria Island. This is his fastest moving product and the profit margin is way beyond 1000%.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 9:03am On Jan 16, 2020|
I hope the illustration above is moving us forward as we try to convince you on the profitability of FMCG distribution.
I will have to attend to my day job now and will post some more later today.
This will also allow other posters to make contributions.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by rolly44: 9:40am On Jan 16, 2020|
interesting and kennly following,....going by this, one can just start sourcing for a good product that sales very fast and be a sub distributor. But how will the profit margin be like, since u ar buying as wholeseller from the company and suppling as wholesale.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 11:33am On Jan 16, 2020|
@rolly44 your post is quite encouraging and motivates me into sharing more.
Your quest for a distributorship business can either be short or long term.
If it is a short term thing you are looking at then it can be described as a hustle.
If however you are looking long term then you have to take it rather slowly and steadily.
By this I mean that placing your profit margins first will not allow you to progress and experience your growth consciously.
Turnover or Sales Volume is the most important decimal in FMCG distributorship. Margins should not really be your emphasis unless you want a quick dash rather than a long haul. I suggest you adopt the following outline;
1. Concentrate on building an acceptance for the product or service in your predefined territory/neighbourhood.
2. Build massive awareness for the product through the evolution of a realistic marketing plan and its aggressive implementation.
3. Ensure repeat purchases and establish a predictable frequency among your buyers.
4. Deepen and expand the demand. (Vertical and Horizontal marketing)
5. Commit to providing regular and adequate customer support.
By the time all this is in place even if your margins are just 5% only I assure you that you will make a lot of money.
Please also note very well that FMCG is renowned for little margins. You may however be assured that it is a consistent, relatively low risk earning platform. Whether the investment is in Cement, Flour, Noodles, Carbonated drinks, Snacks, Bread or even packaged water, the operational model is the same; minimal risk, small but reasonable margins and high volumes.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by rolly44: 11:50am On Jan 16, 2020|
Ok, nice one. Copied, i'm highly inspired for a new vission and mission. Tanx alot.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 12:12pm On Jan 16, 2020|
Just to add clarity to the above, I would like to share an experience with you.
In 2013 I was working for a leading Multinational Sales Consultancy and I was seconded to medium sized Noodles distributor in Calabar, Cross River State. The owner had started as a small time distributor of noodles and had grown the business to some reasonable size.
My mandate was to help her create a formidable plan and build a structure to ensure that the plan was delivered to the letter.
At the time of my resumption in Calabar, she was selling from a mini-warehouse which was essentially two shops joined together on Chamley St. in the city Centre. At this point she was already selling one full 40ft container of noodles per week.
Six months after she was doing 3 containers of the same brand and three containers of a competitor’s product within the same 6 months. As a matter of fact she has three different offloading locations, her former place, a new location at Atu st./Goldie Roundabout and another one in Ikot Omin (outskirts of Calabar).
The whole purpose of recounting this is to show you that volume is key.
When she was selling 1 container she was making just a little from each carton; about 2% profit per carton. As her volumes increased her profits per carton reduced and this was attributable to the fact that she had developed sub-distributors in her territory. By the time she hit 3 containers per week, her profits were just about 1% per carton.
However, she was able to draw more benefits from her rebate provisioning such that the loss in margin was not so noticeable after all.
Turnover is the most important factor in the FMCG business.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 9:25am On Jan 17, 2020|
The very first step in starting an FMCG distribution business is to identify a launch product.
Which product and company should you adopt in starting out as a long term FCMG distributor?
Many people would naturally seek out already established products because this is the easy way out. This is just normal for the majority of people. It appears an easy way to launch out but I can tell you that it isn’t as easy as it appear. It has its own cons. It can actually be very challenging. Many people have invested in becoming distributors of exceptionally well known brands and lost out completely.
One recent incident comes to mind;
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 9:44am On Jan 17, 2020|
A recent civil service retiree in Agege area of Lagos decided and battled seriously to get herself a distributorship with a multinational milk brand.
This took several months and when she eventually was given the approval, she invested Tens of Millions of Naira as was demanded by the company and was provided the goods. It didn’t go well at all.
Eventually, she had to sell off the goods at a terrible price. Many factors led to this. One of them being that there were already quite a few well established distributors of this same company in the Agege axis already.
They formed a cartel against her and sold at prices lower than what the company was supplying thus forcing her to keep her stock or sell below their own prices.
They could afford to do this because they knew that they will ultimately return to status quo ante where they would be the only ones selling within that territory.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 10:24am On Jan 17, 2020|
Our Madam retiree initially decided that she wouldn’t compete with them but after several months of inactivity and zero inflows and of course with the expiration creeping in on her she decided to sell at their reduced price.
The cartel found out and further reduced the prices.
At this point she became really desperate and decided to again compete with them.
It was a retailer’s carnival and the customers were the biggest beneficiaries. This particular Milk brand already renowned for its niche was now available at a cheaper rate than its competition. It was actually being hawked around the Pen Cinema axis for unbelievable prices. Something was also evident here, when the prices really went down, Madam retiree had her sales going through the roof. At least she was getting her investment back. Little did she know that some of her major purchases were being routed directly to the warehouse of her competing distributors.
She eventually was able to offload her entire stock but her losses were colossal.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 10:29am On Jan 17, 2020|
As would be expected, immediately her stocks were completely exhausted, the retail prices stabilized and the jamboree was over.
This example was only brought in here to show you that even for established brands one could still get it wrong if one does not tread advisedly.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by babaoloola(m): 10:48am On Jan 17, 2020|
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 2:44pm On Jan 18, 2020|
Do I detect a sign of resignation when you typed the bolded?
Many people who live outside Lagos usually feel shortchanged in terms of available business/trading opportunities.
This may not be the case. As a matter of fact this is often not the case as experience has shown over and over again.
There are great advantages for the very discerning business person who lives far away from Lagos. Whether you reside in Lafia (Nassarawa State),
Jalingo (Taraba State) or in Ikom (Cross River State) you can still do great in distributorship. You could even do better than those located in lagos if you are serious and have proper insights provided by a mentor or a guide.
The following may shock you but it is the truth. For over 3 years the biggest distributor for one of the more popular beefroll brands was not lagos or kano based as all indicators would presuppose. He was on the contrary located in a state that could qualify as a backwater state; Abakaliki; Ebonyi State. . This came as a surprise to many when it was announced at a distributors gathering held in Benin several years ago.
All you need to do is to seek out the best product for the market yo have found yourself in and you will be amazed at the results you will experience right there.
Perhaps a few illustrations from my experience may be appropriate here. I could also make some suggestions if there are people who may be interested.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by babaoloola(m): 4:11pm On Jan 18, 2020|
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by goke4all(m): 10:30pm On Jan 19, 2020|
Thank you poster for this, this is helpful. From an experience from someone close to me, the idea of starting with known brand is dicey. Please how can one know new products launch and best way to go about this distributorship business without having ones hand burnt.
Please provide guidance for someone that just started with known brand carbonated drinks and not seeing sales as expected because the company launched promo after she stocked.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 1:35am On Jan 20, 2020|
I hope you have not misconstrued my intentions here. I am approaching this discourse with a very general perspective and this is deliberate.
Again, the purpose of this thread is to unveil the dynamics, intrigues and of course the inherent opportunities in FMCG distribution.
My expectations are that you would tap into my own experience and then hit the field and corroborate my position and if it suits you make incremental investments in this business taking care to ensure that you chose your products and company carefully..
I can only be a remote guide in this instance.
A lot of readers have already sent me messages requesting for recommendations of which products and companies they should start out with. While I understand their anxiety I have responded to all of them to requesting for time so that whatever I recommend will be based on an objective appraisal of their age/experience, location, risk tolerance, capital outlay, mobility considerations and other variables.
In your own case, please check your mail and respond to the questions I have advanced to you. Please note that the sincerity of your responses will go a long way in helping me proffer the best advice for you.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 2:17am On Jan 20, 2020|
Thanks for raising this matter.
Many readers will definitely learn from this. Investing heavily in a known brand and thus becoming a major distributor requires some tact. In the majority of cases you get your fingers burnt. The bigger the company, the more attractive it appears to be a distributor with them. There are however very serious cons too. The market has a limited elasticity, you can only stretch it to a particular limit.
Lets paint a scenario here. You have a new shop in the new Ogba retail market and as at the time you were paying for the shop you had no idea of what to use it for but you nonetheless rented the space. Typically, you begin to conduct a search for what to sell in the shop and in the process you listen to many different opinions. The ones that make the greatest sense are those rooting for you becoming a major distributor for a major brand and they back this up with the weather beaten excuse of being well established and by extension requiring very little marketing and advertising.
This does not work. At least in most cases. Before you registered as a distributor there were others already selling that same product in that vicinity and enjoying some measure of customer loyalty that could be very difficult to swing in your favour.
My thoughts on the lady that bought carbonated drinks is that she is a victim of a very aggressive Salesman who took advantage of her vulnerability to offload a lot of inventory on the poor lady. Sales promotions do not take place on a whim. They are carefully planned and orchestrated with inputs from different departments and role players thus requiring extended timing which will in turn assure of a leakage to the distributors and other stakeholders.
Another thing about entry into the market is to understand the seasons that decide the demand curve of any product. We have Peak seasons and Off peak seasons. This will go a long way in helping you plot a decent, inexpensive and reasonably profitable entry.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 8:23am On Jan 20, 2020|
One very profitable format that I have also seen work for beginners is where a niche territory is created. How this plays out is very important. On identifying a product (usually a new and not so well known product), an interested distributor will create a totally new territory for the product usually far away from the point/town of production.
Several examples can be drawn up here but the one that readily comes to mind is a bread distribution mechanism that I found quite interesting.
Onitsha, Anambra State is renowned for a peculiar type of bread more commonly known as 'bread cake'. The bread is a heavy loaf with quite a dense consistency and usually produced with some type of food colouring that makes it appear as a bread with two colours. It is very common place in Onitsha and especially at the Upper Iweka axis where enroute travellers patronise this quite a lot.
It was therefore surprising for me to see it in major supermarkets in faraway Uyo when I was on secondment there for . It tickled me into observing the trend and one day I found the man who brings it all the way from Onitsha. The bread was ordered by an Uyo based Federal Civil Servant (Arinze). It was then produced, loaded by the baker and dispatched to Uyo through this bus driver who arrives Uyo before 5.30am. deliveries commence immediately and by 7.00am the bus is already empty and on its way back to Onitsha.
This happened twice a week. And the entire exercise did not exceed 2 hours. Before you get me wrong please understand that it couldn't have been a two hour activity when they started out. It probably was more because of the intense marketing that was involved. However some variables supported this format one of them being the fact that the Arinze man was a monopolist. The product was also very good and the prices were far higher than the competition that was available from Uyo bakeries. I am sure that this was the case in many Eastern South South States.
Please note that there is no lack of opportunity. What we need to do at all times is to keep viewing what appears as an opportunity from different angles until we see it as a profitable venture.
Even in Lagos here, there was a particular popular brand of bread that was produced in Isheri and sold as far as Ore, Ondo State. Other cases abound. I may as well mention here that there is this particular brand of bread that is currently only produced in 3 locations in Lagos; Omole, Isolo and Abule Egba that has quite a high demand. They do not as yet have an outlet in Ikorodu and Lekiki. Someone could consider working out something by way of a franchise with them and ensure that their breads are distributed in the mentioned territories.
Nothing is new about this. Some people are already doing it for some of the major bakeries. One very popular supermarket chain has a bread that a lot people find appealing. Some smart guys approached them and had it produced for them at distributor prices and they are picked up from their Surulere branch.
Another amazing product and marketing phenomenon is a particular bread made by a major producer of biscuits in Ibadan. That may just be the highest selling bread in this country now. In my estimate they must be producing and selling about 5 Million loaves of bread daily from one location. This bread is sold at 100,00.00, beautifully packaged and distributed far and wide.
So much for bread.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 11:47am On Jan 23, 2020|
Another way to venture into distributorship is to consider niche distribution.
Several niches could be created and harnessed. One of the most untapped resources is the schools niche. We actually underestimate the potential that schools have as regards purchasing power.
I recall designing a sales strategy for lady distributor in Ilorin many years ago and the entire business was targeted at the school system. All she needed to do was to service shops located in the vicinity of large schools and sometimes school vendors. It may surprise you to know that her turnover was in excess of 2 Million Naira per week after just one term.
Please note that you must be very discerning in your choice of schools and the products that are sold there.
But it works like magic. All you need to do is to discover a unique product that is appealing to students and then you have them lining up for it.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 12:07pm On Jan 23, 2020|
Recently, I have been deeply engrossed in designing this plan for Lagos Schools. And I hope that it will be ready soon.
This is really a bomb. And it can change the dynamics permanently. There are over 700 public secondary schools in Lagos. This translates to over 1 Million students in these schools.
Just imagine that we have only 100,000 students in that population buying something you distribute at least once a week. This is very conservative but do understand that it will most definitely be more than this figure. If all you make is 2.00 per product that means you go home with 200,000.00 per week.
|Re: DISTRIBUTORSHIP IN NIGERIA - A PRACTICAL GUIDE FOR BEGINNERS. by Allstrasse: 1:04pm On Jan 23, 2020|
And the above is only for just public schools alone.
We have not mentioned private schools yet. There are even more private schools than public schools. There however a few tricks in the business especially as it concerns schools distributorship but I assure you it is one of the more rewarding enterprises you can easily embark on.
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