After doing E-Commerce for 7 years, I know what works and things do not work when we talk about how to start a profitable E-Commerce Business in Nigeria.
If you read only 50% of this post, you are well on your way to gaining a sound knowledge of how E-Commerce Business works in Nigeria.
You see, Nigeria is a key factor here because other parts of the world, like tier-one countries, have a different approach to how E-Commerce is done.
This is largely because they have better technology and financial resources compared to us here.
So, we have a different approach to making this work.
While in some parts of the world, you can have a fully automated E-Commerce Business system, this system will struggle to do well here in Nigeria because of some factors.
So, now, the main questions are.
Is E-Commerce profitable in Nigeria?
How to do E-Commerce in Nigeria?
But First, What is E-Commerce?
E-Commerce is a business model that involves the buying and selling of physical goods or services through electronic means.
So, you have a physical product or service, but you get customers or clients through the use of electronic means, you are then said to be doing E-Commerce.
Although Commerce is man’s oldest and most reliable way of doing business, E-Commerce is an arm that has seen rapid growth since the social media boom.
This means, with just a few social media profiles, you can start a business that is worth millions of naira from the comfort of your house. This business is E-Commerce.
Who can do E-Commerce in Nigeria?
You see, back in the day, when you talk about the traditional way of buying and selling, it is immediately understood that for one to be successful, you must have a sizable amount of capital, a physical office or shop, a team of sales reps, and a lot of patience and time.
This idea still holds, but things have rapidly changed.
Today, basically anybody can become a vendor.
Anybody can do E-Commerce these days.
Because you do not need a lot of start-up capital, a team, or even a variety of products.
Is E-Commerce Profitable in Nigeria?
As of 2020, Nigeria has over 206.1 Million citizens according to World Bank.
Also, according to Trade.gov, the current e-commerce spending in Nigeria is estimated at $12 billion and is projected to reach $75 billion in revenues per annum by 2025.
This is a lot of money flying about.
Things are bought and sold every second in Nigeria.
E-Commerce is in Nigeria is rapidly growing by the fast-growing youth population, expanding consumer power, and increasing smartphone penetration
Also, according to Statista, The number of online buyers in Nigeria is 76.7 Million as of 2020. This figure is rapidly growing every day.
Today, people barely want to go to the market to shop for things. Even traditional sellers are vying to come online to leverage massive opportunities.
So, again, you ask, is E-Commerce Profitable in Nigeria?
Simple Answer… Yes!
E-Commerce is incredibly profitable in Nigeria.
How to Start a Profitable E-Commerce Business in Nigeria.
Like every other thing in life, some are successful while others just clutch at straws. So, you would be right to want to know how to make your E-Commerce Business Profitable in Nigeria.
As an E-Commerce Guy who has sold different types of E-Commerce products across the country, I have outlined the 5 steps you must meet to have a profitable E-Commerce Business in Nigeria.
- Find a Niche.
- Find a Hot Product.
- Find a Traffic Source
- Build a Sales Process.
- Build a Distribution system.
Find a Niche.
It is of utmost importance to find a niche to focus on if you want to run a profitable E-Commerce Business in Nigeria.
The E-Commerce Space is an overwhelming one… and people have continuously switched from one niche to niche to another without great success.
Here’s why, Every time you switch, you learn the process anew because different niches have different marketing strategies.
The best practice is to find a specific broad niche and then narrow it to a sub or micro-niche.
Again, finding a niche is key because you can focus on one thing at a time while building the authority and audience that will trust to buy from you.
It is better to be a known shoe vendor, than a jack of all trades.
This is not to say you can’t sell a lot of things at the same time or even cover multiple niches at the same time, you can, but it is always better to start small and focused.
How to find a Niche.
Finding a niche falls largely on 3 variables. These 3 things will help you narrow down your niche search and help you find products for your customers.
- Size of the Audience.
- The passion of the Audience.
- Spending Ability of the Audience.
1. Size of the Audience.
E-Commerce is a Game of numbers… So, it is important to look at the potential audience size of your niche or product. If the number isn’t big enough, it will be difficult to scale the niche.
2. Passion of Audience.
It is important to know how passionate enough the audience is about your niche. If your niche provides a solution to a problem they are passionate about a lot for?
This is important because people will only buy what they want to buy. Or only the things they consider important.
3. Spending Ability of the Audience.
This is the key thing because we are selling products. We need people who have the financial strength to make a purchase. Those who are in the position to pay for these products.
For what use is a passionate huge audience if they can’t afford to pay for the product?
Everybody can be passionate about owning luxury cars but not a lot can afford them, so the manufacturers rightly should focus on those who can afford them.
Some Hot and Profitable E-Commerce Niches in Nigeria.
Here are some profitable niches for E-Commerce in Nigeria. The best approach is narrow this down since you don’t have the capital to scale at a broad level.
If you pick a particular niche above, these are broad niches, you have to dig deep to find sub-niches and Micro-Niches to focus on.
- Technology.
- Security.
- Home Decor.
- Automobile.
- Health.
- Sexuality and Wellness.
- Fashion.
- Household Improvement.
- Beauty.
- Fitness.
Find Hot Products.
The key thing with E-Commerce is the exchange of physical products for cash… So, it is very important to find hot products.
Hot Products are products that are people readily interested in buying.
Hot products help solve big problems or perceived big problems for the buyers.
Finding hot products may appear to be a big task but in fact, it is not.
It is really simple to find these types of products if you already know what people want.
People buy things for two reasons. Pain and pleasure.
So, focus on finding the pain points and the pleasure points… Products that offer these are termed hot products.
Find a Traffic Source.
A traffic source is a way to reach your prospective audience. The audience is, in fact, the traffic.
Because we are doing E-Commerce, our source of traffic will chiefly be from the Internet and electronic means.
We are now talking about social media platforms. These platforms will make it easy for us to reach our target audience base.
You can do this across various platforms but social media platforms have since become leaders in the industry.
To be successful, you need to have a social media platform.
- A Facebook Business Page.
- An Instagram Business Profile.
- A Tiktok Business Account.
- A Classified Ads Site Account.
And a lot more.
However, these platforms will not automatically generate traffic for you because the social media space is competitive these days.
To stand out and get a lot of eyes on your profile, and consequently, your products, you need to run sponsored posts.
To Sponsor, a post or several posts, means you have to pay a certain amount of money to get your products to reach a wider audience faster. This is by far the most common and effective way to be profitable with E-Commerce Businesses in Nigeria.
Although this process can be tricky from the start, a proper understanding of how to create Facebook Adverts and Instagram Adverts will go a long way in guaranteeing you success in doing E-Commerce.
Classified Ads Sites are different from social media traffic sources, and even though you can largely list your products for free on these platforms, the sales can be slow.
Also, these Classified Ads sites allow you to sponsor posts but their algorithm isn’t as great as that of Facebook and Instagram, so targeting options are greatly limited, hence sales can be slow.
List of the Free Classified Ads Websites in Nigeria.
Build a Sales Funnel.
Building a sales process is practically the most important thing to do in E-Commerce. This is because your sales process covers an integral part of your customer behaviour.
Your sales process includes creating a funnel that carries people from one stage to the other, down to the point of making a purchase.
Your sales process includes the offer you are making, how you are making them, your tonality, sales message, offers, etc.
Your sales process is your store online.
If done properly, this will help you increase your sales greatly.
It will save you a lot of advertising costs, reach a more refined and precise audience, etc.
To build a sales process, you have to create a business website. This website does not have to be anything complex, but it must be a website capable enough to capture data and integrations.
These days, it is really simple to create websites.
All you need is a domain name and a reliable hosting company.
Then, a few blocks drag and drop.
Set Up a Distribution System.
The distribution system is how people get the product they want from you.
You know how easy it is for you to complete a purchase online, that is how easy it should be for your customers to get their products.
Here’s the thing, if people can’t get the product fast, they won’t buy it, and you don’t make any money.
People tend to change their minds with delays… They start to see other options, better options. This reduces your chances of getting the sale completed.
The distribution system is the logistics of your products.
Most of the sales are completed online in Nigeria, and the most payment method used by online buyers in Nigeria is Payment On Delivery.
This means that buyers have to see these products first before paying.
To do this successfully, you need to have a good relationship with many logistics companies in the country.
Better still you have to use the self-delivery agent method.
Self Delivery Agents are freelance delivery persons. They help you deliver fast across the country by helping you warehouse your products in their different cities and then help you deliver to your customers when the order comes.
They can equally help you collect the payment from your customers in their city, or you can receive the payment from the customer yourself upon confirmation of the delivery.
The downside of this system is that there are some trust issues involved, and some of these guys have stolen and are still stealing sellers’ products and money.
The best approach is to find trusted people who have been in the business for a while with a reputation to protect.
After several years in the business, I have seen both sides of the coin… The good guys, and the bad guys.
I have created a list of all my trusted self-delivery guys across the country, you can find this list here.
Conclusion
Yes. E-Commerce is profitable, and it will continue to be profitable.
But for you to tap into this honeypot, you must have the complete steps in place, to help you to hit 6-7 Figures monthly, doing E-Commerce in Nigeria.
I hope this post has helped you gain insight or two on how to start a profitable E-Commerce Business in Nigeria.
Thank you for reading.
Until next time.
Good Nuel.
Your Friend.