Although logistics business in Nigeria has been around for a long time, it became more popular during the covid-19 pandemic.
Since movement is usually restricted in most parts of the country during that time, the only option for people to send stuff from one place to another is through shipment, which in turn makes a lot of logistics companies a lot of money.
In fact, I know of a person who started the business in Lokoja right before the pandemic and made his first million during the pandemic as he’s getting more and more orders daily.
Now that the pandemic is gone, you may be wondering if this business is still worth it! Of course, it does as a lot of people especially those into the ecommerce business in Nigeria now have the opportunity to get their goods delivered to clients faster and easier.
And that makes the logistic business in Nigeria even more lucrative these days. If you’re looking to start the business, there’s no better time than now, as it is still relatively new in some states.
That is why we’ve come up with this post to show you exactly how to go about starting a profitable logistics business in Nigeria, the cost of starting, and how profitable it is.
Without further ado, let’s get started!
What is a Logistic Business?
Logistics business is a type of business where you start a company responsible for the provision of storage and controlling of movement of goods within a supply chain.
That means as a logistics company, you’re to move goods securely from one point (origin) to another (usually final consumer) for exchange of payment.
Logistics Business in Nigeria
Logistics business is also known as delivery business in Nigeria. In fact, some people refer to it as waybill. Regardless of what you know it as, it all means the same thing.
The rise of ecommerce in Nigeria has rapidly increased the demand for logistics companies, thereby increasing sales, and in turn, making the companies a lot of money. This means, as long as ecommerce business keeps growing in Nigeria, the logistics business will still be relevant and profitable.
In Nigeria, there are lots of ways to get into this business. From using bikes as a mode of operation to the use of buses and even trucks, this business has a lot of fulfillment options which makes it more flexible.
As of now, the main industry that goes with the logistic business in Nigeria is ecommerce. As a logistics company, you’re more likely to deal with the delivery of clothing materials, jewelry, electronics, shoes, and even phones.
More so, food sellers also use logistics companies (especially those operating with bikes) to fulfill orders in Nigeria. Therefore, there are a lot of businesses that need your services as a logistics company in Nigeria.
Most logistics companies in Nigeria are based in Lagos, Abuja, and Port-Harcourt, and this is because it is where the business is most profitable. Some logistics companies in Nigeria include GIG Logistics, AGS Movers Lagos, Courier Plus Services Limited, Creseada International Limited, Ocenj Logistics, AXPD Resources Ltd, etc.
How Much Do You Need to Start a Logistics Business in Nigeria
Although there’s a lot of money to be made as a logistics company in Nigeria, how much is required to start it up?
This is a common question I do get from a lot of young entrepreneurs looking to venture into the business in Nigeria. However, the cost of starting a logistics business in Nigeria depends on your mode of operation.
You can decide to start with a bike, bus, or truck, and for each mode of operation, the amount needed as capital defers. Also, regardless of your mode of operation logistic business in Nigeria is capital-intensive.
To start a logistics business operating with bikes, you’ll need at least 1 million naira to start with. Operating with a bus, you’ll need at least 10 million naira to start, and with a truck, you should budget capital of about 50 million naira.
How Profitable is Logistics Business in Nigeria
While the logistics business is capital intensive, seeing how much it costs to start the business often prompts questions like – is logistics business profitable in Nigeria?
Of course, it is! A lot of logistics businesses make lots of money, in fact, millions monthly from the business. Although, once again, the profits to expect depend on your mode of operation.
In the logistics business, payments are charged per delivery, and it is a business that attracts loyal customers. For example, if you have a customer running an ecommerce store you can work with them for years.
Therefore, the profitability of this business depends not only on your mode of operation but also the amount of customers you have. Imagine how much you could make from 100 ecommerce clients with thousands of shipments and deliveries every month! Millions, right? That’s how profitable the business is.
How to Start a Logistics Business in Nigeria
Now that you’ve known the cost of starting this business and how profitable it is, let’s see how to start a logistics business in Nigeria.
1. Start with an In-depth Market Research
The first step in starting a logistics business is understanding the business. You need to start with market research and know what type of business you’re getting into.
As part of your market research, you need to make findings on the best approach to the business, what works, the best marketing channel, requirements to start the business, as well as laws guiding logistics business in Nigeria.
To get the best result, it will be great to meet entrepreneurs already into the business in your area, and make findings on every aspect of the business.
2. Decide on Your Mode of Operation
After completely carrying out thorough market research, you should have known the best mode of operation to go with based on businesses in your area.
There are majorly three modes of operation a logistics business can use. Firstly, is the use of motorcycles for delivery. Here, you’ll be working mainly with supermarkets and cook-on-demand restaurants.
Secondly, you can operate on buses as a logistics company in Nigeria. This mode of operation means you’ll be dealing with the delivery of heavy goods such as electronics. Here, you’ll be involved in long-distance delivery like inter-state.
The third mode of operation for logistics companies in Nigeria is the use of trucks. This is usually B2B delivery, as you’ll be dealing with huge and heavy goods which cannot be transported by buses. Using trucks for logistics is also referred to as haulage transportation business.
More so, other uncommon modes of operation for logistics companies include the transportation of goods by air and water.
3. Come Up with a Strategic Business Plan
After picking a mode of operation, based on what you wish to go with, come up with a realistic and detailed business plan.
In your plan, you need to point out your objectives and target. Also, you need to point out your marketing plan, financial projection, operation plan, and overall strategy including competitor analysis.
With a well drafted business plan, even starting small it won’t take long before you become a major player in the logistics industry.
4. Arrange for Funding
Like I said earlier, the logistics business is capital-intensive. In fact, realistically, you need nothing less than a million naira to start the business reasonably in Nigeria, which means you need a plan for raising capital to start.
There are lots of ways to fund this startup. Although you may have some money already from your personal savings, you can also consider alternative funding such as loans, venture capitalists, and partnerships.
5. Get an Office Space and Warehouse
Now is the time to start getting into the real work gradually in building a successful logistics business. Of course one of the things you need is a warehouse where goods will be stored before shipping out to the owners. Although this is not ideal for those operating with bikes, as mostly what they’ll be dealing with is fresh goods that must be delivered within a day.
Whether you start as an online logistics company or offline, to work with some big brands, you need to have an office place where you’ll meet and work with clients.
Your office or warehouse as a logistics company won’t only serve as a meeting place or storage facility, but also where your vehicles and bikes will be parked after the daily job.
6. Arrange for the Needed Equipment
One of the things that make a logistics business capital intensive is the equipment needed to start. From the cost of the automobile to use to dispatch boxes, there are lots of materials you need to purchase before starting, including:
- Dispatch Box
- Computer System
- Mobile Phone
- Accounting and other Software
7. Register Your Business and Obtain the Necessary Licenses
Although a lot of businesses can be started in Nigeria with any registration whatsoever. However, no one takes unregistered businesses seriously.
As a logistics company, you are more likely to work with big brands, and to get them as customers, you must make sure that your business is legally registered.
To start with, you can register your business with CAC, and also as an LLC. However, as a small business, CAC is enough. Then, proceed to acquire other necessary licenses.
The licenses needed may differ based on location, but if your market research is well done, you should have found out about what is required in your area, state, and even the country at large.
8. Create an Online Presence
It is hard to find a successful logistics company in Nigeria without at least a website.
A logistics business must have a website that will serve as an intermediary between you and your customers. Potential clients are more likely to search online for delivery agents in their area than spend their time doing offline research. Without a website, how do you expect to be found? No way, right?
Although, you may need a mobile app later and social media accounts, why a website is the most essential is that with SEO, you can generate a lot of leads without even spending money on advertisement.
9. Hire Staff
Unless you want to become a dispatch rider, you won’t need to get a rider/driver. As a logistics company, it is a must to hire staff who will serve as helping hands.
Of course, it is easy to start all alone by yourself, but as the business thrives and gets tougher, you’ll realize the need for staff that will help with the packaging of goods, as well as drivers who will be in charge of delivery.
Like I said earlier, what is more, critical is drivers and/or riders. There are lots of good drivers looking for jobs whom you may hire. However, as a logistics business in Nigeria, in terms of trustworthiness, you need to be very careful while hiring one.
You must make sure the riders/drivers you are will be able to work with your strategy, and also prioritize customers even over their boss. This is because keeping customers loyal is a major key to success as a logistics company.
10. Get Started and Get Working
Everything is set, all ready to work. Now is the time to get the real business off the ground by first trying out some marketing tactics.
Getting started with a logistic business in Nigeria deals mainly with getting clients, and to get one, you must market your business, and create brand awareness.
Mainly, the best way to get customers is by leveraging the internet. There are lots of ecommerce stores out there on the internet, send them a mail one after the other advertising your business to them.
Online, you can also run ads such as Google ads, as it is the best for this nature of business. Have you ever tried searching the term – logistics company in Nigeria, or dispatch riders near me? If you do, you’ll see that the top results are advertisements, which means this type of advert pays off.
You can also market your logistics business offline by finding and visiting restaurants (cook-on-demand especially), or frozen food sellers, and convincing them to try your service.
Lastly, branding really matters in this business. Have you ever seen a logistics company without a logo on their bikes and vehicles? No, right!
That means you need to have a custom brand kit from logo to color for your logistics business in Nigeria to make it a success.
Delivery Business – FAQs
What are the challenges of logistics business in Nigeria?
One of the challenges of logistics business in Nigeria includes not picking up calls or replying to messages by receivers at the point of delivery, and the issue of returns.
Is there money in logistics?
Yes, there’s a lot of money to be made from logistics especially if you work with ecommerce stores or top brands.
How do logistics companies make money?
Logistics companies make money per delivery. That is when a particular item is successfully delivered to the receiver, you get paid. The more customers you have the more you earn.
How do logistics companies get clients?
Logistics companies do get clients by directly messaging companies that need their service such as ecommerce stores, and also run ads to get clients.
Can I start a logistics company without money?
No, you cannot start a logistics company without money. As a matter of fact, you need a lot of money to venture into this business.
With the increase in demand for fast, easy, and secure delivery of items in Nigeria, there’s been a high demand for logistics companies. Therefore, if you’re looking to start a logistics business in Nigeria, there’s no better time than now.