How To Start Dropshipping in Nigeria: The Full Guide

With the emergence of dropshipping in Nigeria, more people are running businesses without worrying about inventory management. Starting a dropshipping business in Nigeria empowers you to earn massively with a low capital, making it lucrative.

Although not Nigerian, Sebastian Ghiorghiu is one of the wealthiest dropshippers who went from $1000 to $8M in 6 years. This shows the earning potential when you start a dropshipping business in Nigeria, mainly if you sell to a foreign audience. This article is all you need on how to start dropshipping in Nigeria.

Understanding the Concept of Dropshipping – Why It’s a Popular Business Model in Nigeria

Do headlines like ‘Earn a million naira per month while working 1 hour daily’ still grab your attention? If it does, it is no secret that an opportunity like dropshipping in Nigeria is a hot topic.

Who doesn’t wish to earn from the comfort of their homes these days? Even better, won’t you love to sell when you don’t need to worry about the products’ logistics?

The diagram below shows how the dropshipping model works in Nigeria. Firstly, you need to get a traffic source. Once a customer orders from your store, you need to forward the order to your supplier. Your supplier ships to customers from the wholesale product you paid for.

Therefore, the product’s first wholesale cost is the significant capital involved in your dropshipping business. All you have to do is purchase from a third party and sell to customers. The good news is that you can start with ten products for some suppliers. If you want to start a dropshipping business right now, keep reading!

Identifying Profitable Niches and Products To Sell

The beauty of starting dropshipping is that you can choose to sell to an audience outside Nigeria. You should identify the most profitable niches before learning how to start a dropshipping business in Nigeria. 

Also, you should consider products that don’t expire quickly or are not perishable, as you will not be in contact with the product. An excellent dropshipping product you want to sell should be cheap, valuable, rare, trendy, or premium (for life improvement). Let’s see a list of comprehensive ideas below.

Home and Kitchen Items

Everyone wants a roof over their head, meaning most people, especially newlyweds, wish to keep their house running. It is why real estate will remain a highly profitable venture. Home accessories under $10 are helpful to Nigerian households.

Some valuable household items include key holders, microwave cleaners, kitchen dish towel washcloths, bedsheets, rechargeable lamps, fans, cleaning tools, wipes, and brushes. Essential kitchen items include electric kettles, non-sticky frypans, pots, trays, and electric kitchen scales.

Student Materials

If you want to sell as a student, you can use your network to bring in sales and get your finances in order. The best time to start a business is when you are in school so that once you graduate, it becomes easier.

Examples of items that work in Nigerian schools include study tables, rechargeable fans, stationery, notes, and calculators.

Apparel

Everyday apparel is an example of good products to sell in Nigeria – for instance, underwear, nightwear, sweaters, lab coats, etc.

Some everyday beauty products to sell via your online store include Vaseline, baby care, hair care, lip gloss, mascara, lip liner, lip balm, etc.

Researching and Selecting Reliable Dropshipping Suppliers

You can dropship products to sell locally or internationally depending on your target and the right product.

Let’s review some places from which you can find products to sell as a dropshipper.

It will be easier to find a local supplier if you sell snacks or cheaper products in your locality. Examples of products you can dropship locally include plantain chips, wigs, frontals, handmade items, etc. 

In this case, you can start without a store and send your packaging to your supplier. Once you receive an order for your product, you have to inform your supplier and leave the logistics to your supplier to handle.

If you are looking for a product to sell internationally, you can choose among the below marketplaces for your dropshipping business.

AliExpress

Aliexpress is a leading international wholesale and dropshipping platform in China that connects suppliers to merchants. One of its perks is it allows customers to communicate directly with suppliers and allows for free product browsing. This is a fantastic opportunity to discuss your dropshipping idea with suppliers. 

Aliexpress also allows shipping to over 220 countries, empowering you to sell to a broader audience. Ali Express will enable you to choose from millions of products, including skincare, jewelry, furniture, and vehicles. If you want products delivered faster, you may need to pay a higher fee.

Alibaba

Alibaba is another leading B2B marketplace that connects suppliers and merchants. The platforms typically sell products to wholesalers, enabling drop shipping. It will take some research to ensure you are partnering with the right supplier.

Also, delivery can take up to 6 weeks, so agreeing with a trustworthy supplier is best. Alibaba provides millions of products in 5,900 categories.

Creating a Business Plan for Your Nigerian Dropshipping Venture

Creating a dropshipping business plan is unique since you are not the manufacturer of the products.

Below, we will discuss what should be included in your business plan.

Executive Summary

An executive summary includes your dropshipping business introduction, mission statement, competitive advantage, Financial projections, and company goals overview.

It means you have performed extensive market research.

Describe Your Business

In this place, you describe the vision statement and purpose. You should also discuss your supplier, what they do, and what they will supply.

Also, discuss their customer base and the countries they deliver to.

Detail Your Products and Services

At this stage, talking extensively about the products you will supply to consumers is essential. You should buy them to test them out and ensure they are quality.

See an example below of how you should describe your product:

• Product Features: For example, our product contains only organic materials.

• Product benefits: For instance, our product can last 24 hours and cure blackheads.

• Product selling point: For example, we offer a product line that does not bleach or blemish the skin and reduces signs of aging.

• Pricing: Our competitors don’t offer customers payment installments, but we do. Also, how much profit will you be adding to the products?

You should also highlight the e-commerce platform you want to use, the marketing strategy, the operations plan, and the financial plan.

Registering Your Business With the Corporate Affairs Commission (CAC) in Nigeria

Thanks to technology, you don’t need to wait for days or long queues to register your business. You can now register your business on your own through the CAC website.

Registering your business within 28 days of operations is also a must.

The following are the steps to register your dropshipping business in Nigeria:

• Identify your business structure: You will likely be a Private Limited Company (LTD) where the shares are privately owned.

• Decide and reserve your business name through the CAC website: You should first find out if your business name has been taken before you try to secure it. It costs N500 to reserve a name. See more in our guide on registering a business in Nigeria.

Also, gather the essential documents and register your business. Some of these documents include your National Identification Number (NIN), International Passport, Birth Certificate, and Passport Photograph. You should also be prepared to pay a registration fee of ₦10,000.

Choosing the Right Ecommerce Platform for Your Website

Establishing an e-commerce website for your dropshipping business is advisable when you receive too many orders simultaneously. It’s best to select an e-commerce store that allows an automated system to notify suppliers immediately once there is a new order.

Platforms like NEXT BASKET are designed to empower sellers to create and manage online shops easily. It also possesses over 125 ecommerce and marketing services and integrations to aid online selling. 

Moreover, NEXT BASKET allows dropshippers full control over their store’s inventory management and payment and shipping information, making it a proper store for a serious dropshipper.

Setting Up an Ecommerce Website and Optimizing It for Conversions

Different e-commerce sites require various creation steps, so below are tips to setup and optimize yours.

When setting up your store with copywriting, it’s essential to personalize your message to your audience.

Also, consider the following when optimizing your ecommerce website:

• Make your CTAs obvious using buttons or links to prompt visitors to take a specific action. Clear CTAs give customers a wholesome experience and make it easy for them to take action.
• Increase your site speed. Site speed can make the difference between a conversion and no sales. Choosing a good e-commerce store and using quality but small images is essential. Google recently reported that 53% of visitors will leave a website if it takes more than three seconds to load.

Last but not least, optimize your site for search engines. Klarna declared that 44% of online shoppers use a search engine. Optimizing for search makes it easier to convert customers and increase your profits.

Building a Brand Identity

Building a brand with dropshipping may be challenging since the products don’t go through you, but the following are trips to help.

Choose a memorable brand name and logo. Use a name that is easy to remember and preferably without numbers. Also, use a name related to your niche. Create unique content to stand out.

The best way to market your business now is to create content.

Developing a Marketing Strategy

Your marketing strategy will go a long way in determining your numbers, so it is essential to sit down and compose a great one.

Below are some are some marketing strategies for your dropshipping business:

• Select Your Digital Marketing Strategies: Firstly, you must choose digital marketing strategies before further breaking down your strategy. The most popular are content marketing, email marketing, SEM (Search Engine Marketing), and Paid advertising.

• Aggressively use Testimonials: Let your brand shine with testimonials. Initially, you will manually ask customers what they think of your product. The more positive reviews, the better. Incorporate the study into your store, social media, and even content.

In addition to those, select channels for marketing. How do you want to be found? Are your customers more active on Instagram than on Twitter? Will a YouTube channel take your brand to new heights? It’s essential to ask and answer these questions.

Managing Customer Service and Returns

One of the challenges of running a dropshipping business is customer dissatisfaction with the product. On the one hand, it is not your fault your supplier delivers a bad product. On the other hand, if the product is good, you take full credit, so the same applies to bad customer reviews.

You should have a return or refund policy to counter customer complaints. In any case, it is best to partner with suppliers who have return policies. It allows you to run the dropshipping business confidently and without being burdened by the cost of the returns.

A return policy also has the power to drive sales. How? When you offer a refund policy to customers, they know that they can return the product and get a refund in the worst-case scenario. It’s a win-win situation for customers. Reportedly, 95 percent of shoppers will buy again from a business that ensures a smooth return process.

Having a 30-day refund policy in place is a great idea. Still, to prevent a constant loss, have an aggressive growth tactic in place and choose a supplier that offers a refund to wholesalers. Once a customer wants a refund, you can still ensure that you land future purchases by refunding them and collecting their emails.

Instead of refunding customers, you can also send them a product in its place. Of course, you need them to send a picture of the previous bad product before sending a new product. This way, you don’t have to refund them.

Understanding the Legal and Tax Requirements for Running a Dropshipping Business in Nigeria

Since dropshipping works in Nigeria, there are substantial legal and tax requirements to consider, like every other business.

The following are some you should have in mind:

• Business Name Registration: Earlier, we discussed some steps in reserving and registering your business name. It’s essential to stay compliant and prove to people that you are not a scam. Your certificate will serve as proof of this.

• Tax: Businesses must pay taxes to the government, and dropshipping is not exempt. If you are running your business in Nigeria alone, it would be easier to sort out taxes, but running your business in multiple countries would require a new level of requirement. You must acquire a Tax Identification Number (TIN) to pay tax.

• The FIRS’s (Federal Inland Revenue Service’s) job is to issue unique TINs to businesses or individuals. The TIN is necessary to open a bank account in Nigeria and receive a loan.

• Terms & Conditions: A terms and conditions agreement is a document that spells out the rights and responsibilities of drop shippers and customers. It covers essential matters such as warranties, return policies, and user agreements to prevent legal issues.

• Disclaimers: Disclaimers can be a big turn-off to customers if worded wrongly. Therefore, you must think of a creative way to tell customers what you won’t be responsible for. This way, you don’t turn off customers and protect your business from liability.

• Shipping Terms: Customers should know how long it will take to receive their orders before ordering to avoid taking the blame for late delivery. If it takes a week, ensure they know to avoid disappointment. 

Don’t forget the refund policy. Your refund policy should clearly state the conditions for which you will be making a refund for purchase. You can refund with a new product or pay it back in full. It’s up to you which costs less.

Monitoring and Analyzing Your Performance Using Analytics Tools

Your ecommerce store should possess an analytics tool for tracking customer reviews, website traffic, conversion rates, and sales volumes, which will be helpful when making decisions for the business.

Consider the following:

• Traffic and Performance: You can tell how well your business is performing from the analytics tool. If you gain high traffic but have few sales, your store needs to be optimized more. You need to work on your traffic source if your store has little traffic but gets maximum sales.

• Conversion Rate: Your conversion rate will help you understand your market better. If you have optimized your store and are still waiting for more sales or leads, you must survey to understand your customer needs. Conversion rate = (Conversions / Total Visitors) * 100%.

• Profit Margin: Although starting a dropshipping business with low capital is possible, you must consider new means to acquire customers. One of these is paid advertising.

Aside from your packaging materials, you must also pay for the ads, where customer acquisition costs come in. After spending money to acquire customers, would your business still be profitable as you only add a little profit to sell the products (based on the niche)?

Scaling Your Dropshipping Business by Expanding Your Product Line and Targeting New Markets

When scaling a dropshipping business, the following are factors to consider: The product line and the market.

You can expand your product line by adding more products from another sub-niche or offering a premium product in the same niche. When starting a dropshipping business, it is essential to think long-term; hence, you should select your supplier(s) carefully.

If your supplier only sells a specific product, such as makeup kits, satisfying a customer who wants both makeup and lighting products in the long run would be challenging. A good option is to have multiple trusted suppliers for different purposes.
You can segregate customers by country and needs. If you want to sell to another country, consider their regulations, tax laws, and if your supplier is active there. But if you are entering a new market where your customers also want content creation materials, you may need to find another supplier.