Selling packaged foods might sound common, but this industry sells a lot of products to Nigerian consumers daily.

Since most of these products are imported, the major sources of these products are Wholesalers in ported states like Lagos, Rivers and Calabar ports.

These products are bought in bulk by distributors in each state who sell at a higher price to retailers selling directly to consumers.

Most of these products are dry and have a long shelve life, so haulage isn't really complicated so it's a fantastic way to enter the market distributing to retailers who sell these foods.

Now the only way to actually become a distributor is buying a large order of these foods from Wholesalers in Lagos for instance, moving it down to your depot state, storing it and finally distributing to retailers.

Regular cash-flow business.

But I believe businesses like these can be scaled to reduce your dependence on managing inventory with your own cash, if you bulk purchase orders from retailers weekly.

Here's the idea

1. Retailers pay for a shipment of packaged foods during the week (Sun - Wed)
2. You bulk purchase on Friday and store
3. Then deliver to each retailer on Weekends (Or have them come to the store to collect their order)

During my research, I found that retailers restock once every week/month from distributors near them so those orders can be bulk processed across various retailers in a vicinity.

Now, there are 2 ways to execute this idea depending on if you:

1. Already distribute packaged foods and you're looking to scale your operation to other locations.
2. Or you want to start distributing to retailers at scale using this business model.

Both cases require the same setup although if you distribute packaged foods already to retailers, it would be easier to implement since you are a trusted distributor.

You can setup an operation that enables retailers purchase their desired packaged foods during weekdays, then you can bulk purchase those products using their money and deliver to them at a much better price than the competition during the weekends.

Plus, you don't need to manage the inventory using your own resources, you manage it using the profit made from each batch order.

Technically the retailer is buying from the wholesaler directly by joining a pool of other retailers doing the same thing so buying this way would be cheaper for them and lucrative for you as the distributor if you scale it.

Let's use this yummy biscuit called Fab as an example

This product has slowly become popular in my university, and most local retailers here have at least 2 boxes of it in their stores, and they sell out fast.

Here are the financials

1. The biscuit retails for #200 - #250 in retail stores
2. A carton consists of 24 biscuits and they are sold at #4500 per carton to retailers who buy between 2-3 cartons weekly from their local distributor
3. The distributor buys at #4000 per carton for 50 cartons from the Wholesaler in Lagos, costing #200,000 + (cost of shipping and storage)

If you distribute these products already, you'd need to buy them in bulk from the wholesaler (4000 x 50 cartons = 200k worth of products), ship it from Lagos to your warehouse in another state and sell it to retailers for #4500 pocketing a gross profit of #500 per carton, which is 25k per 50 cartons (includes operating expenses like delivery and storage space)

Now with the batched business model, things look differently

1. Your retailers buy a carton of this biscuit at #4400 per carton, for 50 cartons (discounted)
2. You pool their money together using your setup (automated for easy management)
3. Buy the product from the wholesaler in Lagos at 200k for 50 cartons
4. Have it shipped
5. Deliver to your retailers locally

At the end you'll pocket a gross profit of #400 per carton, which is 20k for each trip of 50 cartons delivered (with expenses).

Which is still a healthy margin despite not buying inventory upfront.

If you already distribute this product to your retailers, adopting this model will enable you to offer a cheaper alternative to retailers willing to order in batches and raise capital from them to fulfil their deliveries.

You can set this up easily using an online store to list products and collect payments digitally or your regular contact lines if you prefer a manual operation with employees. The scale is in the automation though.

Now, If you want to start distributing packaged foods like these using this business model, you'll first need to gain the trust of retailers who would be willing to give you their money to pre-order.

And unless your tongue is made of sugar, this will be hard to do.

So, my advice would be to source initial capital to buy goods and distribute to the local retailers to gain their trust first.

Then offer the batched service which is a win-win for both you and the retailer, since they raise the capital you'll use to order for the products for them.

You should also aim to build an online store to better manage your new business, because it's the scale that digital systems offer that allows this business model to work really well.

Once you've covered one location, expanding into newer locations will be easier since you've already built a reputation.

And if that doesn't convince your retailers, you can always order using your own capital to build trust in that location before dropping your valuable batched distribution service on them.

If you plan on starting/scaling your distribution business, I can help in setting up your online operations with website development and digital tools.

Get a Free consultation on WhatsApp today let's talk about your business goals and scaling strategy.

Thanks for reading, reach out to me if you have any questions.