How Nigerian supermarkets make money from importation and retailing

Posted by Chidinma on Wednesday April 1, 2015 at 12:19:30:

Supermarkets are now common in Nigeria unlike back then when it was considered as a rare luxury to shop in a supermarket; it is generally a place where people can shop for major house hold items without having to visit various shops. Most items are sold cheaper in a Supermarket then retail stores, because Supermarket owners import the products at a cheaper cost from manufacturers outside the country and sale at a slightly cheaper cost than what retail stores sale.

Let’s look at how Nigerian Supermarkets make money from Importation and retailing;
To make money, it means that they have to purchase the product at very cheap rate, so that after they add other logistics like cost of transportation of the item into the country, they can still make profit from sales. Most Supermarkets owners source for products from China because they are very cheap due to the cheap labour available in China. They either travel to china themselves to order for the product from manufacturers or they order in bulk from sites such as Alibaba.

Some Manufacturers offer a free delivery to these buyers to encourage purchase more, and they still have to clear the product from the wharf when it arrives into the country. Due to the fact that these Supermarkets buy in bulk quantities, they are able to recover their capital and still make tangible profits. Others in order to maximize profits pool in capital with other Supermarket owners to make purchase in very large quantities which they share among themselves once it is shipped down to Nigeria.

How they really make their money is by sourcing for retail products from manufacturing countries at a good price, import and clear them at the ports and then set a retail price for it locally after calculating the cost of purchasing, transporting, clearing and warehousing them in Nigeria.