Nigeria's mobile phone handset sector (both new and used phones) is booming as investors take more cognisance of the huge opportunities there. So, let it not shock you if you run into someone at Ikeja, Lagos, asking for the cost of a used phone released three months ago in Europe.
This would have been unthinkable 12 years ago (2001) when Nigeria had just 400,000 lines and investment in the telecoms sector was not more than 50 million dollars.
However, the telecoms revolution is here for good and Nigeria is now a telephony powerhouse, regarded as Africa’s most vibrant, competitive and fastest-growing telecoms market.
According to Wikipedia, the online free encyclopaedia, there were 88 million mobile phones in Nigeria as at October 2011. From the June 2012 data released by Nigerian Communications Commission (NCC) on its website, Nigeria had 133,715,146 connected mobiles, out of which 101,855,094 or 76.17 percent are active.
As at 2010, private investment in the sector was put at over $25bn and experts say that annual investment in the country’s telecoms industry was in excess of $2bn.
It is well known that the smart phone market share in Nigeria is largely driven by second-hand purchases. Many people own more than one handset, out of which one is likely to be a used phone.
Handsets are also replaced at the expiration of their lifespan or after they are stolen, and many who need to replace their handsets also go for used phones. It is estimated that one out of every four Nigerians who has been on a mobile network for up to six months, would have lost at least one handset to thieves.
Usually, retailers import used or refurbished handset units from the United States, United Arab Emirate or the United Kingdom for sale in Nigeria. This article takes you into the world of used phones. You get to learn what the driving force of this thriving business is and everything you need to know to go into it and make a nice pile of profit.
Where are the used phones imported from?
Mr. Kakue Gbenegbara, Managing Director, Trimas Business Concepts, Port Harcourt, Rivers State, says, “For now UK and USA seem to be the two places to get quality used Phones.”
Prince Charles Nwosu, MD, Buyme Integrated Resources Limited, Computer Village, Ikeja, Lagos, says he imports from UK and Russia. Mr. Gabriel David, CEO, Divine Treasure Tech Limited, Computer village, Ikeja, Lagos, says he doesn’t import phones but buys from people that import from the UK. Mr. Evans Obayi, Director of Operations, Elso Phones Ltd, Computer Village, Ikeja, Lagos, says, “We get our phones from USA and UK. Anything outside that, I wouldn’t know where they get them from.”
Why UK/USA used phones?
Gbenegbara says, “UK/US used phones are of high quality - very strong and durable. They are very cheap too. For Instance, Grade A Blackberry Bold 5 can be bought for 200 dollars (N32, 000) in the US while the same phone goes for 45,000 in the Nigerian Market”.
Nwosu says, “UK phones have two years warranty and their quality is very high. Also, most of the new phones you see are Malaysia phones, so importers that bring new phones to the country go for cheaper phones that have lesser quality; but as for the UK, you cannot package a low quality phone for their citizens. Anybody that does that will face the wrath of their law. So if you watch the rate at which people buy phones, very little pick up new phones”.
Egenaonu says, “Actually, a lot of the used phones in the market are produced mostly from Finland, Hungary and Romania and they are known for their durability. Even the Nokia used phone is stronger than the warranty phones sent to us. However, I still prefer the UK/USA used phones to the new ones.”
David says, “There is no special advantage used phones have over the new ones of the same model from the same manufacturers, other than the fact that due to their lower prices people can still get high quality and expensive phones for a lower price.”
Obayi says, “Just like you have Tokunbo cars in Nigeria – the ones that have not been used in Nigeria are more expensive and durable than the ones that have been used in Nigeria because of maintenance culture. The phones from UK/USA are better maintained and they are more durable.”
What is the minimum start-up capital?
Nwosu says, “If you do not want to have a big outlet, you can start with aluminum glass to display your phones. Also, you must look out for a well secured place because in phone business we deal with raw cash. If all these are gotten, N300,000 to N500, 000 can be enough as working capital to start the business on a low scale.”
Egenaonu says, “There is no money too big or small to start with, but the point is that you have to go to the right place, because if you are not careful enough you might end up buying refurbished phones instead of original used phones from the UK or USA. With original UK/USA used phones, you can make a substantial amount of money. This is made possible because as customers buy, they tell others where they get good phones.”
David says, “To start a used phones business, especially BlackBerry phones you should have between N500,000 and N2 million as working capital. This is after getting a shop. With such amount of money, you can buy a wide variety of phones to meet the different tastes and interests of many customers and you can make very good profit. For example, BlackBerry phones have different models you can buy and sell. Therefore, the more the varieties of phones you can buy the more profit you can make. However, if you want to start on a low scale, you can begin with N100,000. This amount can only enable you to trade in old model Blackberry phones which are still selling.”
Obayi says, “This depends on the sizing – like here at the Computer Village, Ikeja, you need to start budgeting N3million to N5million for shop before talking about the capital to procure the phones. So, you are looking at about N6 to N7 million. Therefore, I suggest that if you want to start small, you’ll need to find where you can rent a cheap shop to display your phones. That was exactly how I started”.
What types of phone are hot selling in Nigeria?
Gbenegbara says, “The hot selling Phones in Nigeria as at today are BlackBerry Phones, Samsung, HTC, I-phones and Nokia. Used BlackBerry is the hottest one”.
Nwosu says, “Nokia is hot in the market but basically, Blackberry phones are still selling; but Samsung, HTC, I-phones, I-pads are also moving very fast in the market”.
Egenaonu says, “If you talk about UK/USA used phones, you should be talking about BlackBerry phones”.
David says, “BlackBerry phones that are hot selling in Nigeria now are BlackBerry Q10 and Z10. So if you are selling BlackBerry used phones and you don’t have these two phones, then you have not started. Others are android phones such as HTC, Samsung, and so on”. Obayi says, “I will say, for now, it is BlackBerry and Nokia phones”.
Who are the buyers and how fast can the used phones be sold?
Gbenegbara says, “The buyers of these phones are medium to low income earners and also students. The used phones sell very fast because they are always cheaper than the new ones. And sometimes you cannot differentiate the new from the used ones.”
Nwosu says, “The buyers are people you are seeing in the outlet now, and UK used phones sell very fast because people believe that UK phones are rugged.”
Egenaonu says, “I will say it should be everybody, but I would still add that it depends on one’s marketing ability. When your customers come around and you tell them the importance of UK/USA used phones you have in stock, they can decide to go for it. Also, I will categorically say the phones really sell fast.”
Obayi says, “The phones are bought by Nigerians and mostly youths, as they surf through the Internet and do other things at a go.”
What are the cheapest means of bringing the used phones down to Nigeria?
Gbenegbara says, “I buy them online from a reputable site in the USA and UK. DHL is the company that brings my goods most of the time. I also bring my goods into the country via a shipping company in Texas, USA cheaply.”
Nwosu says, “I bring my phones through cargo because phones are trending and they must come at the time they are needed.”
Egenaonu says, “I buy from the importer directly. There are importers here we buy from, as retailers, so as to sell to the end users.”
Obayi says, “There are companies over there in the UK and U.S. that you can contact and talk to on what they have in stock. If they have good phones with better prices, you can order them and they will send the goods to you here. If you are buoyant enough, you can travel, but if not, you can contact them from here.”
How can someone in Nigeria do the business without travelling?
Gbenegbara says, “This business is done basically online. One will need to have a virtual address in the USA or UK where his goods will be sent to first before coming into the country. This is because most of the USA/UK merchants do not ship goods outside the USA or UK. The address I use in the USA costs $7 (N1,050) monthly, and you can find many businesses offering virtual USA and UK addresses on the Internet by doing a google search.”
Nwosu says, “People I buy phones from, I hardly see them face to face. What I do is to go to the Internet to do my business. The sellers online show me what they have and how much it costs. Also, I pay online and they send my goods to me.”
How lucrative is the business?
Gbenegbara says, “This business is very lucrative compared with other online businesses. Since I started this business I do not think of any other online business again. This is one business that you can make from 20-50 percent profit on one item alone.”
Nwosu says, “It is a business in which money must change hands everyday, so to the glory of God it is a good business that will bring food to your table.”
Egenaonu says, “It is really lucrative, but it depends on getting a good product to sell to people; they will surely come back and patronize you.”
David says, “The business is lucrative but how far you can go in the business will be determined by where your shop is located - for instance, you can’t compare someone that sells used phones in Ikeja to someone selling in Oshodi because some buyers believe that if they have not gotten to Ikeja, they have not gotten to where they will get their phone. So your location determines how lucrative the business will be for you. Also, your type of customer will determine the success or otherwise of this business, because they may introduce you to other customers or even sell off the one they bought from you and come for another one.”
Challenges and Solutions.
Gbenegbara says, “For me, importation business has very limited challenges if you have got the technical know-how. Some people go into this business without being equipped with the basics and the full details on how to go about it. The only challenge I faced in my early days was how to pay for my goods with PayPal and US MasterCard. I was able to overcome this by using a service in the US, which I got on the Internet to pay for all I want.”
Nwosu says, “One of the challenges is when one orders a phone and it gets cracked during the transportation process. In this case, you need to know that you must fix it with your money before you can sell it.”
Egenaonu says, “For me, the major challenge is when you are unable to get correct phones, because sometimes people bring the refurbished ones and sell it as UK/USA used phones - they take it to China to produce a refurbished one. In this case, customers will run away from you. Should they know you are selling refurbished phones, they will not come back. So, my advice is that those just coming into the business should be careful and go to the right dealers that bring in the phones from UK, America or Europe, as the case may be. There might not be challenge with finance for those starting small, because they may not be able to change up to 6,000 or 2,000 Euros per week. They don't need to send money abroad, but buy from importers here.”
David says, “No particular problem is associated with UK phone, just that I will advise the person not to buy Nigerian-used BlackBerry phones - or someone comes to swap his or her phone with you, even if the phone the person is bringing is superior to yours don’t do it, because you may not know the problem of the phone the person is selling.”
Obayi says, “Challenges here are just like in any other business, as there is no business without its short-comings. Sometimes, we deal with the challenge of the phones developing problems and the customers returning them. So, to maintain a high level of relationship with your customers, you may take part in the repair of the phones.”
What are your success secrets?
Gbenegbara says, “My success secret is to search for sellers that sell cheaply and also deliver on their promises. All sellers are not the same, some sellers sell at good prices while others sell at high prices.”
Obayi says, “Well, there is no secret beyond the fact that I devote my time, my struggle and everything to trying to make a change and carry this business to the next level by seeing that everything is done the way it ought to be done. Among the list of things I do are, coming early, attending to my customers warmly, attending to their complaints and needs so that they can come back another time – this is because without them, you can’t move forward.”
Techniques adopted in getting the phones cheaper?
Gbenegbara says, “My technique is to search for sellers that have good products and sell cheaply”.
Nwosu says, “What we do is we buy in bulk so as to reduce the price”.
David says, “The technique to get a cheap phone is to compare prices from different dealers. That is the best way to get phones at cheaper prices”.
Risks involved in the business?
Gbenegbara says, “The only risk is for you to pay for a particular product and get something else. This would only happen when you buy from a seller or site that is not recognized.”
Nwosu says, “Any business has risks but what I mostly think of the risk is, when we are transferring money to the companies. One is always frightened because you do not know whether it was given to the wrong person. Though I have not fallen into wrong hands before; it is one of those risks you have to take.”
Egenaonu says, “The only risk is when you buy UK/US used phones and you get to know that they are refurbished ones – this is where you get into problems. Apart from that, if you buy the original used phones, you will make sales.”
Obayi says, “For now, we have not observed this. Though, it has a certain risk when you are not getting yours directly. So, we don’t have any risk involved.”
Rank the different brands of used phones on how fast they sell.
Gbenegbara says, “BlackBerry sells faster, followed by Samsung, HTC and Nokia.”
Nwosu says, “Nokia, Samsung HTC, I-phones, especially HTC phones are much in the market these days.”
Egenaonu says, “I will say it is in order of: HTC, Galaxy Tabs, Nokia, BlackBerry and the rest”.
David says, “The hottest selling phone in Nigeria now is still BlackBerry though people are embracing android. Still, BlackBerry still leads because of the instant messaging application. So, people can add fairly used android phones like HTC and Samsung LG to their businesses, because this is what will be the future of used phones.”
Obayi says, “Well, we have this ranging from: BlackBerry Bold 5, BlackBerry Bold 2, BlackBerry Bold 4, BlackBerry Bold 6, BlackBerry Curve 2, BlackBerry Curve 3, BlackBerry Curve 4, BlackBerry Curve 7 and BlackBerry Curve 5.”
Advice to new entrants
Gbenegbara says, “As a new person who wants to go into this business, my advice is make sure you learn everything about this business from somebody that is doing it already before going into it. Don’t just read one article somewhere and assume you can do it. You can lose your hard earned money if you are not directed by somebody who is into importation business.”
Nwosu says, ‘They should cherish the business, appreciate the business; not that they should open a business and not have passion for it.”
Egenaonu says, “They should be very careful and buy from the right dealer. They should buy the real product, so that customers will recommend them.”
David says, “Someone that is new in this business should have a dealer he or she deals with and he should not swap dealers anyhow, because swapping dealers will not help his business. Also, the person should be able to write down the pin of the phones and the serial numbers so as to take it back when there are complaints about the phones. Also, make sure you get the receipt of any phone you buy.”
Obayi says, “My advice to them is that they should be honest to those who patronize them. When any of the phones bought from you has problem, don’t sell it to customers but make sure you send it back to get another one. This will lead to lesser complaints; and when this occurs, people will keep patronizing you.”
Without UK/USA Visa Card, what can one do to still get into the business?
Gbenegbara says, “Not having a UK/US Visa Card is not a problem. Personally I do not have any of those cards. I use my GTB Naira MasterCard to buy online. I do not use my card directly; I have a company in the US that uses their card on my behalf and later deducts the equivalent from my naira MasterCard.”
Nwosu says, “If we know anybody that just wants to start the business we direct them on what to do and how they can go about it in order not to get their fingers burnt. We do the business through Internet chat with the manufacturers. We wire the money and we are good to go.”
Egenaonu says, “It is not an easy thing and that is why you need to get your business registered as a limited liability company, and gather money to do it on a large scale. But if you are not buoyant enough, you can start small, as I did.”
Obayi says, “As I have earlier said, the business is all about money, because phones are expensive in this part of the world and the cost of getting them in varieties will definitely entail large capital. But when that kind of amount is not on ground, you can start with half of the amount – that means you have to change your location to somewhere not too expensive like Ikeja.
“Lastly, without wasting time, our products do not disappoint, we have a number of weeks to issue out as warranty – 2 week warranty. So, such things give buyers confidence in what we are selling. Here, our customers get good satisfaction for the money they pay.”
Is it better to contact buyers before the phones are brought in?
Gbenegbara says, “I create the awareness using social media and flyers. I also supply to those selling in an open market in my locality.”
Nwosu says, “We don’t contact the buyers; what we do is to look out for the latest technology in town, then we bring it in; or when two or more people call to ask you for the same brand and model of phones, then you need to know that this must be the trend and you must stock your shop with such products.”
Egenaonu says, “You just need to bring the phones in and when the buyers come in, you have to introduce it to them and if they are interested, they go for it.”
David says, “No, I don’t need to contact them: since they know my shop whenever they need any model of BlackBerry, they will come to my shop. I get new customers every day.”
Obayi says, “I will say it is a rotational thing. You keep getting people to buy day-by-day, as we don’t need to exhaust ourselves because of this – some may be here, we get some on the road, while some have already known us. Meanwhile, sometimes we have to advertise to get more customers.”
How easy is getting contacts of buyers here in Nigeria?
Gbenegbara says, “Getting buyers is not a problem. As far as your products are of good quality you will always get buyers for your imported items - since your product will be cheaper than the ones in the open market.”
How can one guard against possible exploitation from buyers?
Gbenegbara says, “Simple, do not give out your product on credit. Some people would just want to ruin your business”.
Nwosu says, “As I am now buyers cannot exploit me but, for someone who is just coming into the business, he needs to go closer to people who have been into the business for a long time to help him out so as not to get into wrong hands; he needs to be safeguarded from shylock dealers.”
Egenaonu says, “What I know is that the buyers over there are not as dubious as we Nigerians - they are a little bit trustworthy compared to Nigerians.”
David says, “Have a regular dealer you buy from, so that when there is price drop or price increase he will let you know. You also have to put your ears down to know what is happening in the market, so that you won’t buy a phone that is higher in price and sell at a lower price.”
Obayi says, “To be candid, there are already existing companies over there; somehow we get their contacts. So, I would say they are not as fraudulent as Nigerians – their words are their bond”.
What minimum quantity can one buy to remain profitable?
Egenaonu says, “You can buy up to 10 or 20 pieces and profit is sure.”
Gbenegbara says, “I will suggest that the person can start with 5 to 10 phones.”
Obayi says, “For a start, you can start with 10 or 20 phones. Also, with this, you can start with varieties of what buyers would be asking for – that is why we are looking at that number.”
For someone who wants to take importation of used phones as a sole business, how can he/she go about it in terms of cutting costs and being profitable?
Gbenegbara says, “In this business, the more phones you buy the more profit you are going to make at the end of the day. Try to buy in large quantity so as to make enough profit on each purchase."
Egenaonu says, “Well, whatever you are doing must be done to perfection. You have to be intelligent, know the kind of goods you buy, and you must be very hard-working. Also, you have to concentrate on the business.”
David says, “It depends on the amount of money you have in your pocket, but no matter what you have, I will advise anybody who wants to go into the business to start with at least twenty pieces of phones in order to make enough profit that will make him be in the business.”
Obayi says, “There are certain levels you can’t go beyond – you need to be buying from updated and authentic dealers that are known for original phones so as not to disappoint your customers. The most important thing is that if they are good and you don’t disappoint your customers, they will keep coming, because you give them warranty to cover their trust and attention to you.”
Source: SuccessDigest
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