Why brands default to in-house
Most Nigerian FMCG brands default to building their own distribution capability because it feels like the most controllable option. Your own team, your own vehicles, your own relationships. No margin shared with a distribution partner. Full visibility into every account.
This logic is correct in principle but misleading in practice, because it ignores the full cost of what "your own team" actually requires. The capability needed to manage 100 modern trade accounts at a field visit frequency sufficient to maintain good on-shelf availability includes field representatives, a logistics coordinator, vehicles and fuel, a warehouse and stock management system, a sales manager, and an accounts team to manage receivables from each supermarket. The cost of that capability is much higher than the gross margin shared with a distribution partner.
Side-by-side cost comparison
| Cost Item | In-House (100 stores) | DALA Partner (100 stores) |
|---|---|---|
| Field representatives (5 FTE) | ₦7.2M/yr | Included |
| Sales / account manager (1 FTE) | ₦3.6M/yr | Included |
| Vehicle and logistics cost | ₦4.8M/yr | Included |
| Warehouse and stock handling | ₦2.4M/yr | Included |
| Working capital financing cost | ₦5–7M/yr | ~₦2M/yr |
| HR and management overhead | ₦2–3M/yr | — |
| Total estimated annual cost | ₦25–28M/yr | Margin + ~₦2M/yr capital |
Illustrative figures based on Lagos market rates 2025. In-house assumes 5 field reps, 3 vehicles, shared warehouse.
The capability gap and ramp time
Beyond pure cost, in-house distribution has a capability ramp time that is often underestimated. Building a team of 5 well-trained field representatives who understand retail execution, manage buyer relationships effectively, and use reporting tools to generate useful data takes 12–18 months. In the interim, the brand is paying the cost of the team but not yet getting full value from it.
A distribution partner with an established field network can onboard a brand into operational execution within 30–60 days, deploying experienced field staff who already have relationships with the target accounts. The first three months of execution are immediately at a quality level that would take an in-house build 12 months to achieve.
When in-house makes sense
In-house distribution makes economic sense when a brand has reached the scale at which the fixed cost of the internal capability is amortised over a large enough revenue base. At annual modern trade revenue of ₦500M and above, the cost of a dedicated field and distribution team is typically justified by the scale of the operation and the benefit of full control.
Below that revenue threshold, and especially in the ₦50M to ₦300M range where most Nigerian FMCG brands are growing, the economics of a distribution partnership typically outperform in-house. The decision should be modelled explicitly, not assumed.
