The phone business is one of the most lucrative ventures to start in Nigeria. This is coupled with the constant need for the latest phone model, especially among the millennials and the fancy for electrical gadgets.
Though Nigerians are known for their love for phones, the market is still unsaturated as about 40 million people have access to smartphones out of the over 217 million in Nigeria. Smartphone users are projected to increase to 140 million by 2025.
With millions of people expected to acquire smartphones in Nigeria, the market has returns on investment (R.O.I.) for prospective entrepreneurs considering starting their phone business in Nigeria.
Determine the type of phone business and area you want to start in Nigeria
The Nigerian mobile phone market is divided into different parts. Some sell new phones, used UK or American phones, second-hand phones, and phone accessories. You can also combine them all if you have the capital. Anyone you select is profitable as there will always be a market for phones.
You can specialise in three areas as a phone seller. You can be a direct dealer, sub-dealer, and retailer.
The dealer buys directly from the manufacturer or imports the phones. Though capital intensive, it allows you to buy your phones at a reasonable price and generate more profits.
You can register and enquire about being a dealer on the product’s website or go to their head office. For every phone brand in Nigeria, there are representatives. Register to be one of their distributors.
You can also use eCommerce platforms like Alibaba and AliExpress to buy and directly import your phones from China. You can also buy from businesses with franchises for a phone brand you want to sell.
These people buy in bulk from dealers and resell them to the retailers. Though they don’t transact with manufacturers, being a wholesaler is also capital intensive. You can conduct market research to determine the best dealer to buy from.
These are the popular phone vendors all around. For instance, phone vendors in computer village, Ikeja. They serve as the final point to the consumers. Compared to the dealers and sub-dealers, being a retailer is capital friendly but has a small profit margin compared to being a dealer and sub-dealer.
The dealers and sub-dealers deal directly with the manufacturer, purchasing the products in large quantities and at factory prices. Hence, they make more profit than the retailer, where profit is based on a retailer-consumer basis.
Steps to starting a phone business in Nigeria
The available capital will determine whether you will be a phone dealer, sub-dealer, retailer, or function in all the areas.
If you do not have the needed capital to start, you can source it through different platforms such as crowdfunding, grants, family and friends, foundations, and loans.
The capital you have raised will help determine the market feasibility of your business. Although you can conduct market research for the three areas. This will keep you abreast of what is happing in the Nigerian phone market.
This is important for every business. It provides you with relevant data to structure your business plan. This way, you are exposed to the different phone brands and customers’ preferences for each brand in the country.
It will also serve as a pointer to the best brand selling in the area you want to start your phone business. For instance, it will be a loss for you if you sell expensive brands such as iPhones in a rural areas where people cannot afford them.
Have a well-structured business plan. This will be tailored to the type of business you want to start, whether new phones, U.K. or American phones, or second-hand phones. It will also be structured according to the three areas (dealer, sub-dealer or retailer).
One good thing about a business plan is that it is flexible. Since the business plan is about phones, you can easily adjust it in the future when you want to pivot to another type of phone business or combine the lots.
The available capital and the data from the feasibility study must be considered when drafting the business plan. Your plan must also include strategies that will be used to market and promote your business venture.
As a retailer, you have two options. You can sell from the comfort of your home by leveraging social media platforms.
Just as dealers and sub-dealers will need space for their business, you can also decide to get a space for your business. Make sure it is a location with easy access for doing business.