I was playing around with one of my friends recently over the achievement of successive governments in Nigeria and one thorny issue we later agreed on was the amazing achievement of President Olusegun Obasanjo whose administration ensured the deregulation of the Telecommunication industry in 2001.
The deregulation resulted in the birth of the Global System for Mobile Communication (GSM) and the further influx of investors like MTN, Glo, Etisalat and the newly rebranded 9mobile into the lucrative market. As it stands, the Nigeria telecom industry generates more than $10b annually and contributes more than 2% to the nation’s Gross Domestic Product (GDP).
It is an ever growing industry, with the present subscriber base of over 50 million people in Nigeria having access to mobile phones and an average usage of N3, 000 monthly on GSM calls and data. What this translates into, is that averagely, Nigerians spend over N300 billion monthly on recharge cards. These figures are not for the records, but for the intuitive minds to start thinking about how to tap into this billion dollar industry within the shortest possible time.
Nigerian Recharge card business
There is huge boom in the telecommunication industry, as millions of Nigerians love buying recharge cards to call families, friends and business associates. They can go the extra miles of purchasing recharge cards at night in cases of emergency. The Network providers are not left out of this booming business as they allow customers to borrow credit using their mobile phone. Service fee of 15 percent usually apply and the amount is deducted from the total recharge amount borrowed.
The recharge card business can be started anywhere in Nigeria as long as there is network coverage for the major GSM providers. There are three levels of entry into the Recharge card business. If you have enough funds as high as N20 million and above, you can start from the top as a dealer. Alternatively, you can start from the middle as a Wholesaler if you have up to N150,000 funds to spare. At the minimum, you can start from the bottom as a retailer if you have up to N50, 000 funds in your account.
The profit margin is high at the top, because the competition is less based on the fact that less people can cough up the startup capital to register as a dealer. As a dealer you will be issued card product licenses by the GSM service providers and maintain direct correspondence with them via email. The profit margin at the level of dealership is more than N250, 000 and above. The basic things you need to put in place before you can become a recharge card dealer, is to first get a reliable dealer within your vicinity. Registration with any dealer is absolutely free of charge.
Sub-Dealers or wholesalers usually pay a specific amount of money to dealers and they then put in place equipment like a POS Machine for printing pin. At present, a standard POS Machine for printing pin cost at least N45, 000. Your recharge card dealer usually helps with market trends and logistics in case there’s problem with some of the pins. Once the POS Machine has been purchased and the link for activating the software sent, all you do is make payment for the volume of pins needed and the dealer then sends the required number of pins at a discounted rate. The pins are usually encrypted and the software you’ve downloaded will de-encrypt the pins before printing.
At the lower level, which is the retailer level, the market is so saturated, as the funds needed for startup is minimal. Retailers of GSM recharge cards are found in virtually every street in the country. Most traders with provision stores usually combine the sale of GSM recharge cards to their line of business. Retailers buy already printed pins from Sub- Dealers. The profit margin at this level is so minimal, as they make just N5 per recharge card sold.
With the telecom industry expanding in leaps and bounds, it is important that the savvy entrepreneur utilize the amazing opportunity been provided by most GSM Providers and major dealers. The most important aspect of keying into the recharge card business is to decide at what level one should enter. The top is where the money is, but you will need bulk capital to join the big boys at the top.
If the funds are not readily available to start at the top, my candid advice is to join the ever expanding group of Sub- Dealers. There is enough profit to go round at the middle level compared to the meager profit available at the retailer level.
Why some fail in recharge card business in Nigeria
I’ve often wondered why some people who invested so much in the GSM recharge card business soon gave up and didn’t make enough profit to keep the business afloat. What did they do wrong? How can one avoid the same potholes that befell them? Like we all know, every business that must thrive needs some bit of marketing. The GSM Recharge card business is not exempted from this, as most Sub –Dealers have retailers they go to daily to distribute recharge cards to.
It is therefore important to go out personally to get new clients or recruit marketers who will help in the distribution of the Recharge cards daily to boost daily sales. Give as much discount as you can afford by attracting enough customers to yourself and keeping them permanently once they start patronizing you. Travel far and wide to distribute your cards at affordable price and start seeing your customer base grow daily.
Add value to your recharge card business, by selling online via a dedicated website that also contains your physical address and mobile phone contacts. This will also create another channel for expanding your customer base as lots of Nigerians are currently connected to the internet.
The beautiful aspect of the Recharge card business is that the product is non perishable. Nigerians buy recharge card on per minute basis, and the volume keeps expanding daily. The patronage is unlimited and profit is guaranteed as long as you deploy the basic business ethics. On a very funny note, my friend who is into frozen chicken business experienced huge losses recently when there was total blackout for straight three days. All her 34 cartons of frozen chicken with market value of N408, 000 almost got bad as she was forced to take them to a cold room in town where she paid an extra N6, 000 for the three days of storage. I then jokingly told her she should join the Recharge card business bandwagon, because the product can stay days without getting spoilt light or no light!