Every month, thousands of businesses are registered in Nigeria. In 2020, new registrations were over 95,000.1 Yet, according to SME experts, only a handful of that number will still be running after five years.
FMCG distribution business has proven from all indications, will be relevant for years to come. It is one enterprise that can stand the test of time. From the agency model to the distribution and retailing aspect, fast-moving goods have been proven to yield good investment returns.
If you dream of starting your own distribution business in Nigeria, here are some reasons why you might just be on the right path.
The current population of Nigeria is 217.5 million as of September 2022 and is estimated to reach 263 million by 2030.2 This teeming number provides an ever-increasing market size and share for any business that can be favoured by numbers. FMCG business is one such business. As people increase, they will need food and beverages. They will also need personal care and home care products. If you notice, every year, new FMCG products spring up in the country, it is because Nigeria has the numbers.
Consumer goods feature in everyday life. For instance, just today alone, you must have used a brand of toothpaste and possibly drank tea or a beverage. You also might have used a cologne or body lotion. FMCG products have become essential to a normal existence and so the demand for them will always be there.
FMCG business is rewarding. The model is one that distributes gain along the entire value chain, and everyone who is involved in the business, profits. The business is profitable even with varying demand cycles for the different product categories. As long as producers are able to maintain efficient stock turnover and fulfill promotional obligations, demand will continue to rise.
There is a growing need for FMCG businesses. Two things that contribute to the efficiency of distribution networks in Nigeria would be our large population and the innate entrepreneurial nature of the people. Nigerians are always willing to trade despite prevailing conditions. These factors offer great potential for the distribution model as they are always entrepreneurs open to taking up opportunities to bring essential products to their area.
As an entrepreneur planning to start an FMCG distribution business, you have a wide range of products to choose from. In Nigeria, there are hundreds of companies that produce different types of consumer goods. In addition to manufacturers in Nigeria, there are many importers of foreign products which are also high in demand.
The future of FMCG distribution in Nigeria is bright and exciting. You never know how far you can go until you start. With the above five reasons, you can be certain to succeed with proper planning and preparations. However, commencing, it is important that you assess several factors.
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