Nigeria has a huge market for sale of baby products
ranging from diapers, to baby clothing to baby shoes, baby toys and other
products that can be associated with children under 18 months of age – those
that can reasonably be breast fed or still growing little teeth.
Socially Nigerians tend to celebrate with their family member, friend, colleague, church member or neighbor who just put to bed. Guess how they choose to celebrate with them – by buying baby products as gifts presented to the parents as a way of showing their love for the new child. It is a very common
The Opportunity in Selling Baby Products in Nigeria
There are many opportunities in Nigeria to sell baby products in Nigeria. Let us start with the population of new born babies. In 2016 an estimated 5.2 million babies were born in Nigeria with over 2 million of them born to parents who reside in many Nigerian towns and cities. The main customers of baby products reside in the towns and cities of which an estimated 40% of Nigerians are resident in. The big towns and cities include state capitals, transit such as towns, trading towns and other densely populated commercial areas etc
Nigeria’s Population is growing very fast
Nigeria’s population is growing at an
alarming 3.2% per annum which would make Nigeria the 3rd largest
country in the world - by population - by the year 2050 when our population would
reach 400 million. This is because family planning is not widespread in
Nigeria. Most homes have at least 4 children even among educated middleclass
families. There is also the issue of early marriages. In Nigeria women get
married as early as 21. Combine that with our high fertility rate of 5.7% -
this means most Nigerian women between the ages of 19-39 will bare at least 5
children which is the 10th highest in the world. Nigeria will keep
producing millions of babies every year.
Huge
Pool of Customers in Nigeria
There is a huge market pool of over 38
million customers to consider (parents with children less than 2 years). About
15.2 million of them reside in state capitals and cities such as; Lagos, Port
Harcourt, Abuja, Benin, Jos, Kano, Ibadan, Ilorin to mention a few. This
population keeps increasing year after year meaning that by next year we should
be expecting a higher population of parents with children less than 2 years of
age.
Products are
affordable to the Nigerian Middle Class
Thirdly baby products are relatively
affordable for the middle class who are 23-30% of total population according to
the World Bank. In Nigeria middle class families consist on average two parents
and 4 children with gross household income of N120,000 and above. Most middle
class families can afford to buy this range of products and they reside mostly
in the urban centers.
There are few
Specialist Baby Product Shops
There are a lot of shops that sell baby
product but very few of them are specialist stores. This means they can only
stock their shops with the most common baby products i.e diapers and baby food
but not on baby clothes. Most people buy their baby products from corner shops
and Supermarkets
in Nigeria. Secondly they are not likely to source quality baby wares and
products at the best available price.
Family
Planning is not widespread
Nigeria is one of the least compliant
countries in the world when it comes to the use of contraceptives and other
family planning methods. Our cultural, religious and social practices encourage
larger families compared to European and Asian households.
Low
Marketing Costs
Being a retail product that cuts across
many social and economic divides, the cost of reaching potential customers is
relatively low compared to many other products. There are marketing strategies
that can achieve good results in a short time with a small budget that fits
into this business. This offers a chance for investors to realize quicker sales
if the marketing approach used is cost effective
High
Profit Margins
Baby products also carry a higher profit
margin than many fast moving consumer products. Some baby products such as
diapers can attract 10% or more in sales margin compared with other kinds of
consumer items.
The Challenges
There are many things that could affect your business negatively or prevent you from achieving your business goals. In Nigeria I have identified at least 9 for baby product range of businesses but I will only explain 3 in this article;
Counterfeiting of Baby Products
One thing common in the Nigerian landscape is how soon a fast moving product is counterfeited or produced using substandard ingredients in order to make a quick buck. It cuts across drinks, to clothing to bags, shoes and a lot more and certainly baby products are not excluded. The unfortunate thing is that consumers often don’t know better. This can actually discourage some people from buying from your store.
Strategic Shop locations are expensive
To have a strategic location to drive sales to your business is very hard to come by because the available spots are usually very expensive and can contribute to your already high operating cost
Stiff Competition
A lot of people already know about this business and there is no way they will sit back and allow others profit from it. Since there are many alternatives to the products you will be selling you will likely lose some potential customers so long as people can order for the same product from someone else. But this shouldn’t discourage you as aggressive marketing works well when there is stiff competition
There are at least 15 different ways I know you can find new customers for your business. There is word of mouth, targeted internet marketing, social media marketing, use of a strategic shop location, online shopping malls among other methods many of which are low budget and effective.
Startup Requirements for Baby Products Retail Store in Nigeria
- 2 years’ Shop Rent – 1,200,000
- Inventory – 3,000,000
- Adverts and Marketing – 600,000
- Working Capital – 600,000
- 3 months salaries – 300,000
- Contingency – 600,000
- Total – 6,300,000
1st Year Financial Summary
- Gross sales = 18,000,000
- Gross Profit = 5,400,000
- Net profit before tax = 3,240,000
- Taxation = 972,000
- Net Profit after Tax = 2,268,000
- Return on Investment = 36%
- Breakeven period = 9th or 10th month if sales target is met
- Payback period = 3rd year
Do you wish to setup a baby/children’s store in Nigeria and need a professionally written business plan for it? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com to get one prepared professionally for you.
No comments:
Post a Comment