If you live in Nigeria, you probably know one or two things about diaper business. It’s becoming like bread these days, the way everyone wants to go into diaper business. Everyone, I mean anyone wants to join the diaper business, and no matter what you say, their eyes are just on the heap of money pile there’s to make from it.
Of course, the huge revenue potential of baby diapers would make anyone beg for a share of it. Well, I want to clarify much of what’s going on in Nigeria when it comes to diaper business. It may be different in your country, but if you hope to do diaper business in Nigeria, you might have to follow my lead on this one.
The two main diaper competitors are Molfix and Pampers. Both are leaders in the market in their rights. Molfix is owned by Hayat Kimya Nigeria Limited, while Pampers is owned by Procter and Gamble. However, Molfix leads the diaper business in terms of retail volume, and Pampers is leading in the retail value.
Both leading brands enjoys huge market share of 81.6 percent, leaving just 18.4 percent for the rest of the brands to share. Huggies leads among the remaining brands in the 18.4 Percent market share, that puts the brand in the third leading diaper brand in Nigeria.
The Diaper Distribution Channel
If you are planning on starting your own diaper business, it’s important you understand how others who started the business before you are doing. I have classified the different value chain in the diaper distribution business.
Most diapers in Nigeria come from twos major countries, Turkey and China. In fact, Turkey has positioned itself as a major manufacturer for diaper brands in Nigeria. Any expert you ask about the best country to bring in diaper would recommend Turkey. Yet, China seems cheaper but lacks the trust to maintain quality after the first production.
All the classes of distribution are themselves important in the value chain. Your role as a diaper business owner helps to integrate all these values together for your success. Another thing you would learn from these value chain is where you can possibly start the business from.
I strongly recommend that you take the market one at a time. For example, wanting to cover the whole nigeria with your diaper brand is not a problem, but winning one state at a time could help you focus your marketing efforts to achieve market share in one state at a time. Being the third market leader in Ogun state is better than not leading in any market across Nigeria.
The Diaper Manufacturers
Manufacturing diapers in the country comes with so many advantages, but the most relevant is retail price control and regularly supply of products to markets. The diaper companies that manufactures locally are also leading the market share with over 80 percent of the market.
Although, it’s not the easiest option to manufacture locally due to the infrastructural issues in the country, but it’s the best choice against increasing exchange rates and irregular product supply. If you are regularly found in the market, your customers would keep making alternative choices, and that’s not good for your brand.
The only diaper brands that are manufacturing in Nigeria is Molfix, Pampers and Dr. Brown diapers owned by Wemy Industries. The rest for now are all importing from Europe or China. However, starting a diaper manufacturing plant doesn’t come cheap.
These brands mentioned above all have the financial muscle to support a local manufacturing outfit for their brands. For a startup, it may be a huge undertaking to start manufacturing a product that doesn’t have market acceptability yet. Starting as a manufacturer is not for startup diaper businesses who doesn’t have the right financial backing.
The Diaper Importers
This group of diaper business owners are in different categories. Some are diaper brand owners, who have built a brand for their diaper business but still manufacture them outside the country. Majority of the diaper brands in Nigeria falls within this category of importers. They own the brand but outsource the Manufacturing to factories in Europe or China.
Another group are those who buy large quantities of existing brands from America, UK and Germany to sell in Nigeria. This category of importers usually buy clearance sales at major supermarkets abroad at lower prices. Their main target are customer who used to live abroad that prefers those foreign brands.
The third category are the unbranded Chinese diapers. They mostly come in transparent nylon packs. Some are branded but not registered brands in the country. I have explained more on this Chinese brands below to give you more clarity on the Chinese manufacturers encroachment into the diaper business in Nigeria.
However, diaper importers are faced with serious issues that are hampering their brand market share. They are not able to import regularly or meet up with demand before stock dries out in the market. These delays helps the locally manufactured diapers to gain more market shares. That’s why Molfix and Pampers are the strongest brands because they are constantly available.
Another problem is the dollar exchange rate. It keeps going higher and affecting regular market price for the diapers. There’s no end in sight that the Nigerian import market would ever win in this dollar exchange war. So we expect dollar to keep rising and prices of imported products, including imported diapers to keep rising. This inconsistency in retail price discourages consumers from being loyal to their preferred brand.
Chinese Diaper Business Imports
There’s so much increase in the number of Chinese diaper brands flooding the Nigerian market in the last one year. In the past, most marketers have ignored them, but I think you shouldn’t ignore them anymore. The brands are growing, with over 50 of them counted, and many more still to come into the market without government regulatory approval. Their market share is also increasing by the day, which is one reason they should not be ignored.
Interestingly, most of them are not NAFDAC approved. How they got into the markets is another thing, but they are really taking over, especially in the rural markets. According to some retailers I approached, they make more profit from selling the Chinese diapers, which are also cheaper than the branded ones. Also, they claim the customers are buying them now more than the brand diapers because they are cheaper. One of the retailers begged me if I could help her to import it that she really need to stock it more.
Nigeria has a large number of poorer population, and that’s what this Chinese brands seek to explore. However, there could be some challenges with these Chinese brands, and that may have somethings to do with the informal market being well flooded with diapers, and the fact that they possesses no brand advantage.
These are just calculated disadvantages, since these Chinese brands will have to still fight for market share without a brand to sustain their individual gains. So, anyone can bring in these Chinese diapers and compete with other Chinese importers too. It doesn’t enjoy market exclusivity and it’s also not sustaining.
Moreover, from the market view, these unbranded Chinese diapers are also considered unreliable. A retailer told me how they pick the average reliable ones, by checking if it has rubber on the sides. Generally, the only consideration for these Chinese diapers is their low prices for the consumers and higher profit margin for the retailers.
This category is an important piece in the whole diaper business value chain, but it’s mostly ignored and neglected. The marketers are the gold miners in the diaper business distribution value chain. For any brand to succeed in the diaper market, it must learn to utilize the power of good marketers.
Well, I’m going to give you the exact direction this kind of marketing takes, because my team and I have been involved in some successful diaper brand market insertions that worked very well. Showing that this kind of marketing works in Nigeria. However, finding the right marketer with experience in product insertion is not that simple. It’s not every marketer that does this well.
The real job of this kind of marketers is to build a solid distribution network for your diaper brand, which includes signing up distributors and retailers from each state or city, who has the capacity required to represent and maintain your brand availability in their respective markets.
This kind of marketing doesn’t come cheap but it’s the fastest and the best way to introduce a new diaper brand or even any other brand product into the Nigerian market, to start making sales immediately. Molfix used used sales representatives and gave them commission from sales. That seemed to work for them, but with so much difficulty and problems.
Here is again the benefits of using the marketer to build your diaper distribution network:
- They help to building strong distributors network
- Helping to network retailers to the approved distributors
- Helping to drive products deeper into the local markets
The Diaper Distributors
If you have signed up with an experienced marketer, then the job of finding distributors for your diaper business is made easier. The marketers are not only finding you distributors, they also find you money. The distributors are highly important to your diaper business.
The right distributors are those who understand the business, are passionate about it, and has the money to finance supply, with a chain of retailers to buy diapers off them. If you are trying to get such marketers through media advertising, you may not be lucky. It’s the job of your marketer to find you distributors in any city you want them.
I explained more about distributors in this post: How To Join Diaper Distributors In Nigeria. This will also give you insight on how to Franchise your distribution model as well. One thing to note about distributors is that you can’t do without them if you hope to build a strong diaper business in Nigeria. Even if you are a foreign diaper brand based outside Nigeria, you can tap into this distributors strategy to build your diaper business in Nigeria.
Although, there are limited number of distributors you can accept per state, based on the size of each market or structure of the cities. The best way to implement distributorship is to use the Franchise model of exclusivity. The power of exclusivity is the secret many traders will pour their money into a brand to secure their supply for your products.
The Diaper Retailers
When it comes to retailers it should be done aggressively. The number of retail points would greatly impact your sales figures. However, this should be strategically done to give your brand proper coverage in any given location.
However, this part of the distribution chain cannot be controlled. Many of them are in the business for the wrong reasons, which has little to do with the success of your brand, but you can’t do without them.
Imagine, you can have just one distributor in a location like a state or city, but you can have thousands of retailers without such exclusive restrictions. That’s how important the retails are to your diaper business. Also, the nature of Nigerian markets, which controls the highest percentage of diaper sales, about 70 percent of the total market sales volume, is not a sector to ignore.
The Local Retailer Networks
If your diaper brands don’t have a share of these local retailers you are not yet in the diaper business. They are the closest to your customers. How you handle this line of your distribution network would impact on your brand positively or negatively. There are many ways to handle this market. I would recommend you also read this post on How To Start Profitable Diaper Shop.
This group is also the easiest to deal with, because they don’t have much request than the usual commission per product. Although they won’t openly argue about the commission but they won’t hesitate to jump to another product that’s offering better commission.
Some smart diaper brands uses incentives to drive this segment of their value chain. This group loves incentives. If you could, they can be used to influence new customers to buy your diaper brand. Most customers are not really brand conscious, and can be influenced to move from one brand to another.
An effective use of local retail network can increase your turnover. Imagine how much ten thousand retail points can bring into your diaper business regularly. That’s the power of strong retail network.
Shoprite And Supermarket Retail Outlets
One other important channel of retail for diaper brands is supermarkets, of which Shoprite is leading the market with both national spread and volume. For a new brand, pushing your diapers through retail outlets like the supermarket could give you instant sales volume, and save you huge marketing cost as well.
However, there are things to consider helpful when considering retail outlets as supermarkets. The first one is quality diapers. The supermarkets have brand identity to protect, and they sell their brand promise through the quality of products they allow on their shelves, but you only going to get paid after they have sold your products.
The next thing is stock availability, which is even more critical to supermarkets over quality, because it creates a wrong impression on the minds of their customers. So, you have to have a proven record of product availability to gain the trust of supermarkets, especially Shoprite. In 2017, Shoprite threatened to take off Dr. Brown diapers from their shelf due to product availability issue.
Another key strategy when dealing with supermarket brands is price. These supermarkets love to use price as a selling point. If you can play this price point to your advantage they would like to stock your brand.
Hospitals Retail Partnership
Molfix diapers explores this strategy to its success, even though it was originally Pampers diaper business strategy that has worked so well for them. If these two major diaper brands are doing something it’s surely because it works so well.
According to recent statistics, an estimated 20 percent of total diaper market volume sales are generated through hospital partnerships. That’s a lot of market for any diaper brand to overlook. It’s opportunity to impress a brand upon mothers, and they might continue using it after they leave the hospital.
The huge selling point here is just lower prices. It’s done as promotional marketing, lower than market rates but a better way to sell your diaper brand to mothers using their doctors or nurses influence. It’s a type of influence marketing, and it has worked so well, generating about 20 percent of the total diaper market volume.
One major issue with this option of retail is that you have to risk a large percentage of your diaper stock, as you only get paid when sales are made. You don’t get upfront payment for the stock like with the local retailers.
Diaper business has proven to be a lucrative business. However, it’s not all success stories for all the diaper brands. Some have closed shop after losing market share due to certain challenges. Some others simply came to offload their shipment of diapers and disappeared after just one shipment.
The dominance of Molfix and Pampers with over 80 percent of the market is proof that there’s enough room for new entrants in the diaper market. The problem is that the majority of other diaper brands either don’t have the required financial muscle to fight for market share, or they don’t know or want to do what is required to gain substantial market share.
There are two ways you can use a marketer to build your diaper distribution network. You could either hire them and pay them for their services, which is good but requires huge capital outlay if you want to do it faster. The other option is to sign them up on a commission based service. You can sign them up for the next two years or more depending on the commission type agreed with them.
The major advantage of the hospital retail partnership is the power to win you new customers. Nigerian like recommendations from qualified people. They take their advice seriously, and would do as told. That’s why you should have a hospital partnership for your brand if you hope to build new customers. How you do this is important. It’s one good reason you need to hire an experienced marketer for your diaper business.