Electronic commerce (e-commerce) is a hot new trend in Nigeria and Africa. Multiple e-commerce businesses spring up everyday, with several selling items from different categories. While there are already big players in the Nigerian and African e-commerce industry, there are thousands of observers trying to get accurate financial information on the costs and how to start an e-commerce business in Nigeria or Africa.
Many blogs and financial websites write about the e-commerce industry, but the cost implications are never clear, and as a result, a lot of people trying to start an e-commerce business in Nigeria lose a lot of money because they were misinformed.
Here, I’ll be breaking down the total setup and running costs for anyone who needs information on how to start an e-commerce business in Nigeria. This will help you better plan and adjust your budget before you take the big step.
These costings are based on an exchange rate of 300 Naira to a Dollar in Nigeria.
Here’s a detailed cost estimate on how to start an e-commerce business in Nigeria:
1). Website Setup: 200,000 Naira ($666.67)
2). Payment Integration: Free (Use Paga, Paystack, or Flutterwave! There’s no point spending money on integration fees when there’s a reliable free solution).
3). Domain And Website Hosting: 4,500 Naira ($15). This is a monthly expenditure.
4). Website Logo With Three Initial Banner Designs: 35,000 Naira ($116.67). Find an affordable and creative designer. He/she would work around a price like this or lesser for you.
5). Small Office Space: Free (Start your e-commerce business from your apartment. Don’t rent an office space. You are very likely to regret it if you rent an office. Hardly will any customer visit your office. As your eCommerce business grows, you can expand and move out).
6). Four Office Chairs And A Table: 65,000 Naira ($216.67).
7). Two refurbished Laptop Computers: 150,000 Naira ($500). If you already have computers, even better. Remember, the goal is to totally cut costs.
8). Electricity Generator: 35,000 Naira ($116.67).
9). Generator Fuel: 20,000 Naira ($66.67). This is a monthly expense.
10). Internet Modem: 12,500 Naira ($41.67).
11) Internet Monthly Subscription: 16,000 Naira ($53.34).
12). Delivery Courier Deposit: 17,500 Naira ($58.34). This amount varies per courier. One of the lowest is 17,500 Naira and the courier that offers this is ACE. They’d handle all you deliveries nationwide, and also collect cash on your behalf.
13). Two Delivery Bikes Plus Branding And Helment: 600,000 Naira ($2000). You can’t depend on the couriers for everything. You’d need to handle most of your Lagos or wherever state you’re located’s local deliveries yourself to cut cost and better build a good reputation for really fast deliveries.
14). One Contract Staff: The salary here depends on how you negotiate.
15). One Dispatch Rider: 30,000 Naira ($100). The salary here depends on the salary both you and the staff negotiate. You could pay him as much as 100,000 and even lower. It’s up to you.
16). Company Registration: 85,000 Naira ($283.34)
17). Stationery, Letter Head, & More: 55,000 Naira ($183.34)
18). Advert Budget: 90,000 Naira ($300). This is a monthly expenditure This calculation assumes you intend to spend a maximum of $10 a day on ad spend. $10 a day would produce very little sales daily. Maybe one or two items sold. So the higher your ad budget, the higher the sales from that stream.
19). Miscellaneous Expenses: 20,000 Naira ($66.67).
Total Expenditure Summing Up To The First Month: 1,435,500 Naira ($4,785).
These amounts could vary. They could be slightly lower or multiple times higher, depending on the e-commerce business plan and budget.
NOTE: This e-commerce budget plan does not contain the cost of getting products to sell, photography costs and a lot more. All these combined, could run into several millions of Naira.
These costs are just a tip of the iceberg. Over time, you’d experience a lot of unexpected expenses, your ad spend would exponentially rise, and your general expenditure would sky rocket. How you handle these factors would determine how successful you’ll be.
Now, you know how much it really costs and how to start an e-commerce business in Nigeria.
Source: Start-Up Tips Daily