FMCG Distribution Business : A Step-by-Step Guide for Beginners Who Want to Start

FMCG stands for Fast Moving Consumer Goods. To better explain FCMG, anything you consume daily falls into the category of FMCG. These are physical products that are daily necessities. There are thousands of FMCG products in Nigeria today. Most of them are produced in the country or imported.

A good example of these goods are toothpaste, food stuffs, baby diapers, etc. Before starting out in your FCMG business, there are some basic things you need to know.

You need to know about the requirements in terms of skills, profit margin, distribution facilities, and so many other things needed for you to be successful.

Just continue reading, you will gain a full understanding of the distribution business. You want to make money, right? You need to invest in right knowledge and essential skills. These are the steps you need to take: 

Pick the Right Product 

The right time to prepare for war is when you have peace. You don’t start when the war had started already. The proper thing to set your focus on first is the products you will be selling as a distributor.

There are numerous products today in the market.

Pick the right products that you have the knowledge about it. If you don’t have any product in mind, kindly research the market about it. Let me give you a little hint, food products are always in high demand but investigate before you invest.  

Register your Business with CAC and SMEDAN

Another step in the right direction is to register your business with the government regulatory bodies. CAC and SMEDAN are government agencies that you need to register with. They each come with their advantages.

CAC formulates policies for businesses while SMEDAN helps with accessing loans and other development facilities for small and medium businesses. Note SMEDAN doesn’t give loans but can help you get loans from government and financial companies like banks.

If you need to strengthen your skills in business management and other related skills, CAC, SMEDAN, MTN, Zenith Bank and German agency have some form of partnership that gives you free access to some skills. These include book-keeping records, Access to loans etc. There are over 30 free courses available, and some are equally paid courses. You can choose the one that suits you. 

Open Bank Account 

One thing you can’t do without as a distributor is the opening of a bank account. Daily sales income needs to be paid into the bank for both record purposes and security reasons.

Remember that you can’t open a bank account without the necessary documents from CAC and FIRS. Operating a business account sets you up for success because you need to separate your personal money from business money.

With the right account system, you would be able to track all your inflow and outflow. Don’t forget that cash is no longer king, but cashflow. I hope you get the difference? 

Set Up a Good Team

Another important step is to have a team of good staff. Good staff comes with good money, I must tell you. Employ the right people with the right set of skills. If you get this right, I bet you are in for success already if you get this right.

Hiring right is a good business strategy. Outsourcing your recruitment process is a good idea when you don’t know how to hire the right talent. But equally, it reduces the cost associated with operations. 

Buy Distribution Facilities and Standard Warehouse 

The distribution business requires that you have a form of mobility because you will be moving goods from one point to another. These facilities include vans and trucks for mass goods.

If you can’t afford all of these at once, you can buy one after another. Never rely on a single vehicle because you will be unable to meet demand if you are busy with different supplies.

From personal experience, some Toyota and Volkswagen products are good for Nigerian road networks. The choice is up to you, please. 

Consider getting a spacious standard warehouse in a strategic location. Preferably the one closest to your customers.

If you can’t afford a big warehouse, I suggest you contact those who have warehousing operations.

This will reduce costs for you as a lot of them have standard business procedures and already have members of staff. For this kind of model, you don’t need a warehouse team because all of these have been outsourced to a third party. 

Deploy Devices for Theft Prevention 

The distribution business comes with its own challenges. So, to minimise your risk, you need to deploy the necessary devices to prevent theft and any other forms of shrinkage. A CCTV camera will help you to capture both day and night activities of your inner and outer surroundings, so it is a necessary tool. Inventory management will have to be top notch.

You can either build or buy inventory management software from vendors. Always go for software that can be monitored both offline and online. There are lots of vendors out there in the market, but make sure to get the best.

This is an important part of your business processes that you can’t just neglect. The profit margin on any FMCG product is always small. So don’t expose your business to unnecessary risk you can prevent. 

Design Your Route to Market

Strategy and flawless execution can help you grow faster than planned. One thing you can’t overlook is how to reach your customers. Your route to market (RTM) should clearly states your objectives.

Are you going to selling directly to retail ends or to wholesale customers. You can engage in both trade routes to achieve numeric distribution and weighted distribution. E-commerce is now becoming the order of the day, don’t neglect this channel too. You can learn more about e-commerce business.

Final Note

FMCG distribution business is very lucrative when you sell in volume. It is a volume-gain business. Always look for fast-moving products before you finally launch into the market. Build a team that is experienced in the right work environment for your kind of business. It will help you grow fast.

Be right in your choice of the company’s product you determine to sell into the market. One important step is to take a critical look into the past performance of a company and the present situation of their products.

Don’t be emotional about it.Diversify! Don’t just sell one product. You increase your success rate by this simple decision of picking more than one product. Drop a comment if this help.