Nigeria is a rich nation and a fashion center. That's fine for the large international brands. But what about the local entrepreneur who sees a market for modestly priced perfume among those who are not ready to spend it all for famous brands? Is there room for indie brands and entrepreneurs?
While I suspect that local brands can and will emerge (and are perhaps emerging now), they will find materials and resources more difficult to obtain than would the casual U.S. perfumer.
I have had several opportunities to examine the "problem" of a low cost, "made in the U.S.A" fragrance being exported to Nigeria. My latest chance was from a Nigerian entry to our "Marketer Most Likely To Sell The Most Perfume" contest.
The "entry form" for this contest was a simple marketing plan demonstrating how you might sell a fragrance with your own brand name on it -- if you had a fragrance to sell. The prize was a "starter kit" of six bottles of perfume with the label reflecting the winner's brand. Once these were sold by the contest winner, additional bottles would be available to the winner at $10 per bottle as long as my own costs remained stable.
The problem for Nigeria was the gap between what could be charged for a non-famous brand and the $10 per bottle cost from the U.S.A. Shipping costs and customs duties add another layer of prohibitive expense. Perfume, with its high alcohol content, is classified as a hazardous material and thus shipping restrictions apply. Many popular carriers will not accept perfume shipments for Nigeria, an additional problem. So the real squeeze for the Nigerian indie perfumer is getting quality materials into the country at a low enough cost so that the assembled product will still enjoy a comfortable margin.
In the proposal submitted for our contest the marketing goal was to sell 200 bottles of perfume at 2,000 naira (NGN) each for gross sales of 400,000 naira. Selling and administrative expenses were calculated at 40,000 naira leaving 360,000 naira before the cost of the bottles.
But assuming a $10 per bottle cost for the "made in the U.S.A" product, even deducting the six free bottles that would have been given to a contest winner, I calculated the cost of 194 bottles at about 329,200 naira.
Now comes shipping, if you can find a carrier who will transport 200 bottles of perfume to Nigeria. If such a carrier can be found, it is reasonable to expect the cost will be no less than $200 US which would come to about 34,040 naira, wiping out all profit. And this is before customs duty has been assessed.
For the Nigerian entrepreneur, what is the solution? Most likely the best approach would be to buy materials -- bottles, pumps, and fragrance compound or fragrance raw materials from a Chinese, Indian, or other Asian source -- and then assemble the product in Nigeria using a high quality but locally sourced perfume grade alcohol.
All this would require a good deal of enterprise and risk as ultimately the brand and scent would have to be acceptable in the marketplace.
But it does seem likely to me that at some point, someone is going to do it -- successfully.
I welcome your comments.
