If you are here to learn how to start an e-commerce business in Nigeria, you’ve taken a step in the right direction. Obviously, the e-commerce business is one of the most popular and trending businesses of the 21st century.
While some business owners who have started this business have in-depth knowledge of the business, most people don’t. Before we dive in, have you ever considered why several countries want to set up a business in Nigeria? We have the population; we have the buying crowd!
Nigeria has over 180 million residents. The fundamental question you should ask yourself as an entrepreneur is; what value can I offer a fraction of this number that they will be willing to pay for.
Starting a brick and mortar business is not the cool thing to do these days as a good number of the buying crowd is online. You need to catch them online, hence e-commerce is truly the way to go.
Furthermore, starting an e-commerce business does not mean you have to start out as Konga or Jumia. The good part of this business is that you can start small and grow steadily.
Moving forward, let’s define e-commerce.
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In simple terms, e-commerce is the buying and selling of goods and services using the internet. In other words, e-commerce or electronic commerce is a business transaction that happens online. Since the turn of the 21st century, e-commerce has proven to be a huge source of economic growth in Europe, America, and parts of Asia.
In recent times, the e-commerce business is now witnessing tremendous growth in Nigeria and Africa as a whole. Actually, the business began as far back as 1960 when businesses began to embrace electronic data. Thereafter, Amazon and eBay contributed immensely to the wide acceptance of e-commerce.
To better understand e-commerce business and its importance, businesses should learn about the various types of e-commerce.
Types Of E-commerce Business
a. Business-To-Consumer (B2C)
This business transaction is conducted directly between businesses and consumers who are the end-users of the products or services. Thus, companies that sell directly to consumers are called B2C companies. B2C is a commonly practiced type of e-commerce business.
b. Business-To-Business (B2B)
As the name implies, B2B refers to the type of sales a business transact with other businesses rather than to individual consumers.
c. Consumer-To-Consumer (C2C)
Here is another type of e-commerce business model whereby customers trade directly with each other. This is how it works: A customer purchases goods from another consumer using a third party platform online. An example of such is eBay, Etsy, and Craiglist
d. Consumer-To-Business (C2B)
This is the opposite of the popular B2C business model. C2B model is where consumers sell their products or offer their services to businesses online. A good example of such is freelancers.
e. Business-To-Administration (B2A)
This is also referred to as B2G (Business to Government). B2A is an e-commerce business where a business provides an online service to the government through a website.
f. Customer-To-Administration (C2A)
C2A is quite similar to the B2A explained above. This is where a consumer provides a service to government or public administration.
Other Terms To Know
1. Mobile Commerce (M-commerce)
We can call M-commerce another type of e-commerce because many B2C transactions are carried out on the phone. For example, a B2C purchase that takes place on a mobile device is called both B2C and M-commerce.
Overtime, M-commerce has emerged as a leader in e-commerce, making up to 34.5% of all e-commerce sales in 2017. Therefore, it is important that all e-commerce businesses build a mobile-friendly website to stay ahead of the competition.
2. Facebook Commerce (F-commerce)
This was developed considering the number of users registered on the platform and the daily activities happening on it. Needless to say, Facebook is the largest social media site. Hence, F-commerce is also used to refer to any type of e-commerce business done on any social media platform.
Just like M-commerce, F-commerce can involve different types of e-commerce sales such as B2B or B2C. Therefore, any sale that takes place on Facebook via a mobile device can be called M-commerce or F-commerce.
Statistics of E-commerce Business
E-commerce statistics states that 40% of worldwide internet users have bought products or goods online on a desktop, mobile, tablet or other online devices. This amounts to more than 1 billion online buyers and the growth has been steady. On average, millennials now make 54% of purchases online versus 49% of non-millennials.
List Of Businesses That Can Be Done As E-commerce Business
- Mini importation business
- Course Development/Training
- Freelancing (Graphic designing, Content writing, CV writing, etc)
- Social Media Manager
- Fashion Designing/Clothing line
- Business Consulting
- Event Planning
- Food Business
- Public Speaking/Life Coaching
- Mobile Accessories Online Store
- Beauty/Skincare Business
- Sales of Gift Items
- Travel Accessories
- Financial Coaching
- Human Resource Services
- Software Development/Sales of Software Applications
- Makeup Artistry
- Health care products/services
- Sales of shoes, bags and hair products
- Domain Name Brokerage
- eBook Publishing
As a matter of fact, the advent of information technology has made us understand that there is no limitation to the type business that can thrive online. If you can package your offerings to suit the online market, you are good to go.
Why You Should Start An E-commerce Business
- E-commerce helps you overcome geographical limitations. With e-commerce, your products or services can be enjoyed at locations you’ve never visited. You have access to a large market across Nigeria and beyond. Interestingly, you don’t need to incur travel time or cost to achieve that.
- It is cost-effective. With a low capital budget, you can set up an e-commerce business and grow it into an international brand.
- You can run an e-commerce business as a side hustle while maintaining your full-time job.
- With e-commerce, you can save money on rent, utilities, and other running cost associated with a physical store
- Communication is easy because you can easily keep a tab on your customers when running an e-commerce business
Steps To Starting An E-commerce Business In Nigeria
Step 1: Register Your Business Name
Once you conceive a name for your business, the first thing to do is to register it with CAC. You never can tell, the name may have been registered by someone else. If you go ahead with branding, it’ll be a big shock when you discover that you are building on someone else’s name. More than that, you would have wasted money.
In choosing a name, it is always good to choose a name that expressly explains what your business is about. So that, with just a glance, your prospective clients can tell the product you sell or the services you offer.
Importantly, always bear in mind that no customer wants to pay into a private account when transacting with you. A learned client will only pay into your corporate account considering the online scam rate. And, there’s no way you can open a corporate account without tendering your business registration certificate.
More than that, registering your business makes your business credible and trusted before your customers. Also, the only way to confirm your business name is not already in use is by running a search on CAC’s portal.
So, what does it take to register your business?
It doesn’t cost an arm or a leg to do that. Actually, you can register it yourself on CAC’s portal but a number of aspiring entrepreneurs find it difficult to get it done themselves. This is why it is better to get a legal firm to do it for you. ReDahlia is a highly recommended firm that helps businesses register their business within a short duration. With as low as N20,000, you can get your business registered as a business name.
Step 2: Develop A Detailed Business Plan
A business plan is a document stating your business’s future objectives and strategies for achieving them. The mistake most people make is that they think an online business does not need a business plan. Actually, every business needs a business plan, including an e-commerce business. A business plan will give you direction on what to do at every stage of your business.
A business plan will help in directing your business affairs so you wouldn’t deviate from your long term objectives. There is so much distraction online that can make you forget your vision.
Hence, a business plan will always help you redirect your focus. More so, a business plan can help you raise funds from investors or apply for grants. You can draft one yourself or pay someone to do it for you.
Here are the basic information that your business plan should contain:
- Executive Summary
- Company description
- Market Analysis
- Organisation and Management
- Service or Product line
- Marketing and Sales
- Financial Projections
Step 3: Create Your Online Store
An online store is a major requirement if you want to start an e-commerce business. Because you need an online space where customers can transact with you. If you cannot afford the price of a web developer, you can begin with a WordPress free site, then as time goes by, you can upgrade to a paid version.
In addition, there are other platforms like WooCommerce and Shopify that helps you set up an online store without you having prior knowledge of web designing. So, you can equally start with them.
Also, established e-commerce marketplaces like Konga, Jumia, Kara are also good places to start your store. These platforms give you access to everything you need to get started including marketing and other logistics.
Another important factor to consider is your domain name. You can secure your domain name while gathering up the cash needed to pay for hosting
and setting up your website. Namecheap.com is a good place to search for available domain names. There are several extensions to pick from, they range from dot.com, dot.org, dot.ng, etc.
If you are ready to build your e-commerce website, there’s no better time to start than now. You can either build your website yourself or hire someone to do it for you.
Step 4: Payment Integration
The next step is to get a secured payment gateway your customers can pay through. If you are considering a global online presence, a payment gateway is a necessity.
It is important you choose a secured platform that will keep your customers’ details safe. Some of the popular and reliable ones include Paypal, Paystack and Paga. Apart from the platforms listed here, you can check out other payment gateways that are still secured.
Step 5: Make Your Products Available
If you are selling physical goods, your items needs to be displayed on your online store with perfect descriptions and price. Prospective customers can click on the items of their choice, check out and make payment through the payment gateway.
In the same vein, if you are offering a service, you can put up graphic designs stating the different services you offer. That way, it will be easy for clients to select the service of their choice.
In addition, if you are starting big, you may need a store or an office space to keep your products. However, if you have space in your house where they can be kept, I’ll suggest you hold on getting a space for now. As you grow and understand the business better, you will be able to determine if you really need an office space.
In recent times, one major challenge confronting online sellers is that customers want to be sure they have a physical address before committing their money to them. Hence, a virtual office address should help you conquer that challenge. Many co-working spaces offer virtual office address package you can plug into.
Basically, virtual office address allows you to use the workspaces’ address on your business card, website and other correspondences. And, whenever you need to have a meeting with any of your clients, you can book their meeting or boardroom. A typical example of a workspace that offers such service is ReDahlia Workspaces, located at 43B, Emina Crescent, off Toyin Street, Ikeja, Lagos.
Step 6: Set Up Means Of Delivery
One advantage of the e-commerce business is that you can sell to different people at different locations at the same time. However, this can only be possible if you have a good delivery system in place.
Your delivery system goes a long way to determine the credibility of your business. The speed of delivery will encourage clients to give you good reviews which will, in turn, draw more customers to you.
So, it’s important that you choose a good means of delivery. One of the options is to get your own delivery bikes and employ people that will ride them. Alternatively, you can partner with an established logistics company. This method is more cost effective as they will help you deliver the product and receive payment on your behalf if you are running a payment on delivery system.
Here are some of the popular logistics companies in Nigeria you can consider:
- FedEx Nigeria
- GIG Logistics
- AGS Movers Lagos
- Courier Plus Services Limited
Step 7: Market Your E-commerce Business
This is one of the lifeblood of your business because nobody will know about your business until you advertise it to them. Bear in mind that there’s nothing like too much marketing. As a matter of fact, even established businesses promote their business often to remain top of mind.
There are several ways to market your business to your target audience. First, create an account for your business across all social media platforms and start posting content that relates to your offerings. This way, you will attract organic followers who you can convert to customers.
Below are other ways to promote your e-commerce business depending on your budget:
- Use social media influencers
- Running Instagram, Facebook and Google adverts
- Share handbills, flyers, and posters
- Run newspaper, TV or radio advert
- Get listed on relevant directories
- Word of mouth
- Offer freebies
- Attend relevant events and network
- Organise Competitions
Drawbacks Of E-commerce Business
Actually, there is no business without challenges. But it’s good that a business owner is aware of the pros and cons involved in a particulate business before venturing into it.
Below are some of the challenges an e-commerce business owner is likely to face.
1. Some Customers Still Prefer Physical Stores
As much as the world is going online, it will interest you to know that some people still prefer the brick and mortar shops. Hence, if you encounter such people, they may not be comfortable making payments online. Obviously, this is a result of internet fraud and scam rates.
For such individuals, it is advisable that an e-commerce business owner be flexible with payment plans. In this case, you could allow cash on delivery method.
2. E-commerce Business Is Highly Competitive
Many people are investing in e-commerce and this has made the business highly competitive. Hence, an aspiring e-commerce business owner should research the best niche market to play in.
Another point is that the more competitive a niche is, the more expensive ads for that niche are. So, when starting out, you must research your competitions very well to develop a good strategy to get your product across to your target audience. If you discover the ads are expensive, you can employ other marketing tactics like content marketing through your blog.
3. Logistics Issues
A good road network is still a challenge in Nigeria and this affects the logistic and delivery companies. Some areas in Nigeria are not accessible which makes it difficult for products to be delivered to those areas. Usually, logistics companies charge more if the road they are to deliver to is bad or not motorable.
There you go! A comprehensive guide on how to start a successful e-commerce business delivered.
The best way to learn any business is to start it on a small scale. In the process, you will learn the pros and cons of the business and how you can position yourself for success.
Do you currently run an e-commerce business? What have been the challenges in running the business? Are you planning to start your e-commerce store? What’s holding you back? We will like to hear your thoughts in the comments.
We wish you all the best.
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