Read this if you plan to start a dropshipping business in Nigeria— 8 out of 10 Nigerians dream of more ways to attain financial stability; you are probably one of them.
Dropshipping is fast becoming one of the most popular ways Nigerians make money online. Take Samaila Hyelhirra of Hera’s Closet, who made over 70 million naira in 2023 catering to female fashion needs for her audience using dropshipping as her primary mode of sourcing.
As opposed to the traditional business model, dropshipping allows you to own a stocked up shop without having to spend a dime in purchasing these goods.
Dropshipping is a lucrative entrepreneurial business model if you are not looking to invest any money in inventory. It is a great way to establish an e-commerce store in Nigeria,
But what is drop-shipping? Let’s find out.
What is Drop-shipping?
As a dropshipper, you are essentially a middleman who buys products from manufacturers or suppliers at wholesale prices and resells those products on your website with little or medium markup.
The seller (you) only pays the manufacturer when the product sells.
When a customer places an order on your store, you pass the order details to the supplier, who then ships the product directly to the customer’s doorstep.
This allows you to focus on the more exciting aspects of running a business, like marketing and engaging with customers.
Dropshipping operates exclusively on the internet, providing a digital business framework that allows both sellers and buyers to engage entirely through the web while delivering the same level of satisfaction as conventional brick-and-mortar transactions.
But how is this different from affiliate marketing, which some people might get mixed up with dropshipping? Let’s look at how dropshipping stands out from affiliate marketing.
Dropshipping vs Affiliate Marketing
While dropshipping and affiliate marketing share similarities as online business models, they differ significantly in roles, inventory management, customer service, product control, and profit margins.
Roles:
Affiliate Marketing: Affiliates act as middlemen, promoting products through unique links and earning commissions on sales.
Dropshipping: Dropshippers act as sellers, listing products they don’t physically own and handling sales directly.
Inventory Management:
Affiliate Marketing: Affiliates don’t deal with inventory. The product owners manage all aspects of the inventory.
Dropshipping: Dropshippers manage their online store’s catalogue, updating product listings even though they don’t hold physical stock.
Customer Service:
Affiliate Marketing: Customer service responsibilities fall on the product owners. Affiliates focus solely on promotion.
Dropshipping: Dropshippers handle customer queries, orders, and complaints, playing a direct role in customer service.
Product Control:
Affiliate Marketing: Affiliates have no control over the products, merely promoting existing items managed by the product owners.
Dropshipping: Dropshippers choose what to sell, giving them more control over their store’s offerings but still relying on suppliers for fulfillment.
Profit Margins:
Affiliate Marketing: Earnings are commission-based, usually lower and fixed by the product owners.
Dropshipping: Dropshippers set their own prices, offering potentially higher profit margins by marking up products.
The steps involved in dropshipping in Nigeria
Dropshipping requires careful planning and execution to make the most of it. Before you start your dropshipping business in Nigeria, here are some important factors to consider:
Your niche
The first step in dropshipping is finding a niche, which is a specific segment of the market that you want to target with your products. A niche should be profitable, meaning that there is enough demand and potential customers for your products and that you can sell them at a reasonable price and make a good profit margin.
A niche should also be competitive, meaning that there are not too many or too few competitors in the market, and that you can differentiate yourself from them with your unique value proposition. It should also be passionate, meaning that your customers are enthusiastic and loyal about your products, and that you can build a long-term relationship with them.
To find a niche, you need to do some research and analysis to provide you with data and insights on their profitability, competition, and demand. You can also use your own interests, hobbies, skills, or expertise to find a niche that you are passionate and knowledgeable about.
Some examples of profitable and popular niches for dropshipping in Nigeria are:
Fashion and accessories
Health and beauty
Electronics and gadgets
Home and garden
Sports and fitness
Pets and animals
Education and learning
Travel and adventure
Arts and crafts
Gaming and entertainment
Your Suppliers
One of the most important factors for a successful dropshipping business is finding reliable and trustworthy suppliers who can provide quality products at competitive prices and deliver them on time to the customers.
In Nigeria, you have two primary choices for sourcing dropshipping suppliers: local and international.
Local suppliers operate within Nigeria or have storage facilities or representatives in the country. Their benefits include quicker shipping times, reduced shipping fees, smoother communication, and superior customer support. On the downside, they might offer a narrower selection of products, charge more for their products, and have varying levels of product quality. Examples of local suppliers serving Nigerian dropshippers include Cart Deals, Jumia and Konga.
On the other hand, international suppliers, such as those from Alibaba, are based abroad, commonly in China, the US, or Europe. They provide a broader array of products, more competitive pricing, and generally higher quality goods. The trade-offs include longer shipping durations, increased shipping fees, potential customs charges, and possible challenges in communication.
To find the best suppliers for your dropshipping niche, you need to do some research and compare different options based on factors such as product quality, product price, shipping time, shipping cost, customer reviews, customer service, and return policy.
Your Marketing Strategy
Another key factor for a successful dropshipping business in Nigeria is attracting customers to your online store and convincing them to buy your products. There are many marketing strategies that you can use to promote your dropship store and increase your sales, such as:
- Creating a professional and user-friendly website that showcases your products, brand, and value proposition. You can use platforms such as Shopify, Bumpa, or WordPress to build your online store easily and affordably.
- Optimizing your website for search engines (SEO) to rank higher on Google and other search engines and drive organic traffic to your store.
- Using social media platforms such as Facebook, Instagram, Twitter, and TikTok to build your brand awareness, engage with your audience, and showcase your products.
- Running paid advertising campaigns on these platforms to target your ideal customers and drive them to your store.
- Creating valuable and engaging content such as blog posts, videos, carousels to educate your audience, establish your authority, and generate leads.
- Using ConvertKit to build an email list or creating a Telegram community for regular promotions can enhance customer loyalty and boost conversions.
Your Payment & Logistics
The final key factor for a successful dropshipping business is handling payment and logistics for your customers. You need to ensure that you can accept payments from your customers securely and conveniently and that you can deliver the products to them safely and quickly.
There are some challenges and opportunities that you need to consider when dealing with payment and logistics in Nigeria, such as:
- Payment processing: Handling payments is crucial for dropshipping in Nigeria, especially since many customers may not use banks much and might prefer paying with cash or mobile money over credit cards or online banking.
To meet your customers’ preferences, it’s essential to provide a variety of payment methods, including bank transfers, mobile money, cash on delivery, and payment gateways. Cedar Money, Paystack, and Flutterwave are excellent options for your business, offering secure, convenient, and cost-effective transactions.
Cedar Money stands out by allowing you to send or receive money anytime, anywhere, across any device. Plus, you can easily track your transactions and receive real-time updates.
For instance, Cedar Money has significantly benefited Nigerian businesses like Plus Computer in Abuja, which needed to make payments to suppliers in China. By simply starting the process on Cedar Money’s website and providing their business details.
- Logistics: Nigeria has a complex and inefficient logistics system, which can cause delays, damages, and losses of products during transit.
This means that you need to choose reliable and reputable logistics partners for your dropshipping business, such as courier companies, postal services, or third-party logistics providers.
Some of the logistics partners that cater to Nigerian dropshippers are DHL, FedEx, UPS, and GIG Logistics.
Benefits and Challenges of Dropshipping
Embarking on a dropshipping venture in Nigeria offers several benefits and challenges for entrepreneurs aiming to start the business model.
Some of the benefits include:
Minimal Initial Investment: With dropshipping, there’s no need to spend on stock, storage, or shipping logistics, significantly cutting down start-up and running costs.
Flexibility: This model grants the freedom to explore a wide range of products, enter new markets, and expand your business swiftly and efficiently.
Operational Ease: It eliminates the complexities of stock management, packaging, dispatch, and customer support, freeing up your time and reducing effort.
However, the business model also faces several challenges:
High Competition: The dropshipping market is saturated, with numerous vendors selling identical or similar items at competitive rates. Standing out requires a compelling, unique selling proposition, solid branding, and effective marketing strategies.
Quality control: Depending on third-party suppliers means you may encounter issues with product quality, accurate product descriptions, or timely deliveries. It’s crucial to partner with dependable suppliers and consistently check their performance and customer feedback.
Customer Experience: The indirect control over product quality, shipping speed, and after-sales service can influence customer satisfaction negatively. Maintaining an open communication with your customers or swiftly addressing any concerns or complaints is essential for success.
Conclusion
As the demand for the demand for online shopping increases in Nigeria, with the right tools, skills, and mindset, you can join the dropshipping revolution and achieve your business goals. By following the tips and strategies discussed in this article, you can overcome the challenges and seize the opportunities of dropshipping in Nigeria.
