How to Start a Wholesale Distribution Business in Nigeria

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Sometimes, selling products in small pieces may not be for you. Instead, you want to get large quantities of whatever you want to sell directly, and then sell these large quantities to business owners who want to sell in pieces.

Basically, what you want to be is a wholesaler. And this business model is fantastic for so many reasons.

So then, where do you start from? In this guide, we’ll explain how to start a wholesale distribution business in Nigeria, whether online or offline, and everything else to know about the wholesale business model, including how to launch your wholesale business in Nigeria with the Bumpa app.

What is wholesale, and the difference between it and retail?

Wholesale is a business model where goods are bought in large quantities from manufacturers or distributors at a discounted price and then sold in bulk to retailers or other businesses for resale.

Wholesalers act as intermediaries between manufacturers and retailers, helping to distribute products efficiently across the supply chain. They typically sell products in large quantities, offering discounted prices per unit compared to retail prices.

Wholesalers play an important role in the distribution process by aggregating goods from various suppliers and distributing them to retailers or businesses that sell directly to consumers.

In essence, wholesale involves buying goods in bulk at lower prices and selling them in larger quantities to other businesses, contributing to the effective flow of goods in the market.

What are the different types of wholesalers?

Becoming a wholesale distributor also means understanding the types of wholesales there are, the different roles they play in the distribution chain and which one would best suit you.

1. Merchant Wholesalers: These wholesalers buy goods directly from manufacturers in bulk, store them in warehouses, and then sell them to retailers, other businesses, or institutional customers. They take ownership of the products they sell.

2. Retail or Store Wholesalers: Retail wholesalers operate in a specific industry, such as electronics or clothing. They typically sell to retailers or directly to consumers at wholesale prices, bypassing traditional distribution channels.

3. Agents and Brokers: These wholesalers do not take ownership of the products but facilitate transactions between buyers and sellers. They earn a commission for connecting manufacturers with retailers or businesses.

4. Dropshippers: Dropshipping wholesalers partner with manufacturers or distributors to fulfil orders on behalf of retailers. They do not keep inventory but arrange for products to be shipped directly to customers.

5. Cash and Carry Wholesalers: Cash and carry wholesalers sell goods in bulk to small businesses or retailers who pay in cash and carry the products themselves. They do not offer delivery services.

6. Specialty Wholesalers: These wholesalers focus on specific product categories or industries, such as food, electronics, or automotive parts. They have expertise in niche markets and cater to specialised customer needs.

How much does it cost to start a wholesale business in Nigeria?

Starting a wholesale business in Nigeria can range from hundreds of thousands to millions of naira, depending on the specific industry and what you sell, your requirements and your business goals. For example, becoming a wholesaler for dresses and bags will not cost as much as becoming one for electronics. It’s important to create a detailed business plan to estimate your costs before you even start, and you can also consider cheaper models like dropshipping, where you don’t have to worry about warehouse or shipping costs for example.

How do you profit from wholesale?

In a nutshell, here are 3 ways you can profit from selling wholesale.

1. Buy in bulk at lower prices.

2. Sell products at a markup.

3. Negotiate deals with suppliers.

You can profit by buying products in bulk at a discounted price from manufacturers or distributors and selling them to retailers or businesses for a higher price. The key to profitability lies in the price difference between what you pay for the products and what you sell them for. By negotiating better deals with suppliers and managing operating costs effectively, you can increase your profit margins in the wholesale business.

How to Start a Wholesale Business

Starting a wholesale business from scratch can seem daunting, and you may wonder where to even begin, but we’ll break down what you need to do in this segment.

1. Do your research and decide on what to sell

Before starting any business, it’s very important to know what the market wants. This is where market research comes in and here are a few things you can consider when deciding what to sell.

• Start by figuring out what products are hot in Nigeria right now. What are people looking for in bulk?

• Get to know your potential buyers. Who will be interested in your wholesale products? Retailers, businesses, or others?

• Think about different groups who might be interested in your products. Are there specific industries or regions that would benefit most?

• Check out what other wholesale distributors are offering. How can you stand out from the competition?

When you take these factors into account, you can get a solid grasp on what to sell and how to position your wholesale business for success, especially in the Nigerian market. Remember, it’s all about meeting the demand and giving your customers what they’re looking for.

2. Research suppliers and pick the ones that best fit

You'll need to research and find quality products that align with your business model and target market. Building strong relationships with reliable suppliers is key to securing consistent inventory, favorable pricing, and potential cooperative growth opportunities, and also ensuring you serve your customers top quality and they keep coming back.

3. Get your legal requirements

Starting a business also means formalising your business entity and establishing its legal existence and this means you need to also register your business with the Corporate Affairs Commission (CAC).

Next, you should obtain all the required licenses and permits for wholesale distribution, as this will authorise you to engage in wholesale activities.

Lastly, familiarise yourself with applicable taxes, such as VAT and corporate income tax, and fulfil your tax responsibilities promptly to avoid penalties.

Read here: Getting Started with Corporate Taxes as a Nigerian Business Owner

4. Set up your e-commerce website with Bumpa

Bumpa is the easiest and fastest way to set up your business website and start selling wholesale products to retailers. With an easy interface to use, multiple payment options and the ability to collect international payments, you can easily set up and start selling immediately.

Here are some features you’ll love as a wholesaler.

1. MOQ/MaxXQ

The Minimum Order Quantity (MOQ) and Maximum Order Quantity (MaxOQ) feature enables merchants to set minimum and maximum quantities that customers must purchase for specific products.

MOQ is the smallest quantity of a product that a merchant is willing to sell in a single order. For instance, if the MOQ for a product is set to 5, customers must purchase at least 5 units of that product in one order. MaxOQ is the largest quantity of a product that a merchant is willing to sell in a single order. So if the MaxOQ for a product is set to 100, customers cannot purchase more than 100 units of that product in one order

You can decide to set either the MOQ, the MaxOQ or both.

2. Multi-currency Transactions

Your website makes it easy to collect payments in currencies other than the naira, like USD, and this means you can open your business up to international markets and make more sales.

3. Inventory Management

You can add and manage your products, bulk edit products and variations and export your product data at any time. The Bumpa app makes it easy for you to track the level of your inventory and know when items are running out of stock, and you can also see product history for all your inventory.

Many amazing features on the Bumpa make running a wholesale business super easy. Download the app to get started, sign up in a few steps and you’re ready to launch!

5. Start marketing

As a wholesaler, your bigger focus for marketing should be on retailers and not the end consumers. That means that your marketing strategies may have to be a little different from the way a retailer would go about it. Some of the best ones include:

1. Build strong relationships with retailers and leverage digital tools.

2. Create personalised communications and tailored discounts to attract and retain customers.

3. Create informative content such as product guides or industry insights to showcase your expertise and also offer value.

4. Take advantage of your e-commerce platform like Bumpa and also social media to expand your reach and engagement.

5. Participate in trade shows and industry events for networking opportunities.

6. Optimise SEO for your website and invest in targeted advertising to drive traffic and increase your conversions.

6. Scale and expand

As you start to gain ground, you need to keep an eye on how well your business is doing and make changes if needed. Look for chances to make your business bigger and better. To do this, you need to keep records of your business performance.

The Bumpa app provides you with the ability to do this with ease. You can see details about your business performance within a range, or since the start of your business. You can also manage and track expenses, orders, inventory and more. The data provided can help you make decisions to scale and expand.

It's important to grow your wholesale business in a way that can be kept up over time. By watching how your business is doing, finding ways to grow, and making sure your growth is steady, you can make your wholesale business even more successful!

Read also: A Guide on Expanding Your Business

Wholesale Items to Consider Selling in Nigeria

The options of items to sell are endless and before you venture into starting your business, it is always advisable to perform market research and get enough data to influence what you want to sell. But if you need some help, here are some items you can consider selling as a wholesaler!

1. Phone Accessories

2. Baby clothes

3. Men's and women’s clothing

4. Electronics

5. Cosmetics and skincare

6. Groceries

7. Kitchen Appliances

8. Kids’ toys

9. Men's and women’s shoes

10. Gym wear

Starting your Wholesale Business with Bumpa

Once you’ve decided on what to sell and gotten all the requirements, you need to put systems in place for your website, inventory, orders and more. And that’s where the Bumpa app comes in.

You can record your orders from all your sales channels whether online or offline, track your inventory, manage your staff, share invoices, receipts and shipping slips, send emails and SMS to your customers and so much more.

To sign up, visit the app store or Play Store, download the app, sign up with your correct business details, upload your products and share your website link to start selling!

Conclusion

Starting a wholesale business in Nigeria can seem daunting but by following the right processes, you reduce your risk of failure and also the stress it takes to launch a business in Nigeria. Once you have your business idea and set up everything as stated above, you can focus your time on sourcing the right customers and growing your business. Good luck!

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