Cement Business is very lucrative there are different ways of doing this business. You can be a distributor, sub-distributor or retailer. Distributors earn their income from monthly commission they get from the number of trailers they sell per month. There are secrets in every business but then you should be smart too. And because income is from commission for distributors they sometimes sell cheaper than factory price in other to meet up with their monthly expectations. This happens towards the end of the month, once you cross the threshold you will get paid and the commission ranges between #100,000-#150,000. Once you reach company sets monthly target for distributors, once you reach your target, commission is guaranteed. As a beginner you need to start as a retailer to gain experience and gather enough customers before going into distributorship.
In this post you will learn how to start cement business as a retailer and distributor too.
Cement Business as a Retailer
You can start with as low as 100 bags even without a shop but having a shop is ideal but your shop should be mobilr. Because you can’t continue staying in a place that has been fully developed with only a few persons patronizing your business maybe for renovation. So you may not necessarily need a shop just get pallets and tampoline then get a supplier that supplies directly from the company, instead of a sub-distributor.
Position your business in areas that are just developing where there are lots of construction works. Arrange for mobility; wheelbarrow, van etc. Customers most likely leave the transportation of the cement to sellers and if you don’t deliver, they will move to another trader who is ready to take the advantage. .
On the other hand if you have 2 million and a good site to position your business, especially along the road and in a place were people know you then you will sell.
Dangote factories are located in; Gboko (Benue State), Ibese (Lagos state), Obajana (Kogi state)
How Distributors Sell Less Amount
As are retailer if you are honest with a high turn over, the distributor can sell cements for you on credit or allow you to pay small amount. This will be after a period of long relationship and trust. A distributor does this because he wants to supply as many trucks as possible in other to obtain a fat monthly commission.
For instance, if the company sells to distributors at #2,300,000, they will in turn sell to retailers at #2,250,000 for 900 bags, including transportation. Retailers sell at #2,400 per bag. Distributors make up for their profits at the end of the month after calculating the number of trailers sold in a month. The company for instance, Dangote sell a trailer of cement higher than the selling price, the distributor then apply for rebate after selling.
This is how it works, assuming Dangote sells a bag of cement to a distributor at the rate of #2,300 per bag. He then give them a target of 500 trucks (900×500=45000 bags) every month to qualify for rebate, such as #100 per bag. To meet this target and earn rebate a distributor can sell a bag #2250 to have high turn over rate.
The rebate commission is enough to make up for the #50 loss and still give him good profit. Take a look; #2300 initial sell-#2250 resell=#50. Since target of rebate is #100 per bag then #100-#50 loos=#50. So #50×45000=#2,250,000
For you to have a rebate to use in the coming month you must be able to get at least 95% of the target that is given to you, about 100 trucks for a small distributor.
Profitability in Cement Business
There is good profit in cement distribution business. We are going to look at the profits using Dangote cement as case study.
A bag of Dangote cement from factory cost between #2600 and the price fluctuates almost every week and if you are not delivering by yourself you will pay #2700. Company sells 900 bags for a full truck but distributors will sell 600 bags for you.
A truck from the factory is #900,000. If you supply the 900 bags at a retail of #2800 then 2800-2700=100. Therefore, 900×100=#90,000 from a single trip. When you remove the cost of transportation it may reduce to #80,000. This is without much stress or extra expenses. If you can supply up to 10 trip/trailer a month you will make a whooping sum of #800,000. There are days of promo during that time you will make more profit.
How to become a Dangote or Elephant Cement Distributor
Getting Dangote’s approval as a distributor is very easy but there are requirements in other to get registered. You must have a registered business name this is because when presenting your application letter your will have to submit it along. And a bank registered reference letter which should be obtained from your bank where you opened a cooperate account. Before you open a cooperate account with a bank you have to present Tax identification number (TIN).
Registration Requirement
- You have to provide a soft copy of the following documents before applying as a distributor
- Certificate of company registration from CAC
- Application letter to become a distributor
- Scanned copy of the reference letter
- Passport photograph of the company’s Owner
- Passport photograph of the company’s representative.
- This is with a guaranteed period of 48 hours registration.
- No application or registration deposit is required
- You must have the financial capacity to buy 3-5 trucks
Note
The price you sell in your state is determined by the distance from the factory. For instance the price of cement sold at Cross River maybe cheaper than Akwa Ibom State although it can be said to be negligible. The price you get your trailer loads depends on who you buy from.
Marketing
Sell more than one product because some bricklayers consider certain brand for pestering and another for moulding.
Approach block industries, contractors, builders, agencies etc. for marketing. Make sure you have more than one supplier to avoid disappointment. Don’t cheat by refilling or re-bagging a bag in other to have more gains.
Types of Cement in Nigeria
- BUA
- Reagan
- Adana white
- Eagle
- Portland
Current Price of Cement
Lafarge Elephant price is 2480 per bag, you resell at 2600. Dangote 2550 and you resell at #2700.
This is interesting. I will use what I read here to teach my Students Entrepreneurship. Keep up
Udeme Usanga
That is very interesting, am already doing that business. Thanks for the complementary information
Hello i am interested in this business,howis it going for you so far?
Is a nice business especially when established in a new site where buildings are upcoming
Great insight, found the post very helpful for a research I am working on.
But please, to complete my enquiries, I’d want to know if there are differences in cement prices between the hinterlands and the townships and what are the possible causes. My paper I am working on is looking at the cost of distribution of cement to remote locations.
Thank you.
Wow…I really love your writings…
Keep it up!
Thanks@Lucy
I will be glad to connect with you if you don’t mind! Thanks for the article!