Essential Tips for Running an E-commerce Business in Nigeria

By DIY Law | 2 min read
19th June 2019
Essential Tips for Running an E-commerce Business in Nigeria

It is no longer news that the e-commerce sector is one of the fastest growing businesses all over the world. Brands such as Jumia, Konga, and of course global brands like AliExpress and Amazon have become household names. This is enough motivation to venture into the space either as an aspiring business owner or one looking at expanding your business.

E-commerce simply means the activity of buying and selling either goods or services online.

Before you start that online store, here are some essential tips to note.

  1. Business Structure

Before starting your e-commerce business, you need to first have a registered business. Having a registered business means that you would need to register your business with the Corporate Affairs Commission (CAC).  You can learn more about this here.

 2. Regulatory Licences

After registering your business with the CAC, you also need to ensure that you get the necessary regulatory licenses that apply to your business even though you will be selling online. This is to ensure that you are legally running your business. If you are going to sell food, drugs or cosmetics, you need to get a NAFDAC licence. If you are going to sell financial services, you would need to get a licence from the Central Bank of Nigeria (CBN).

 3. Online Platform

The next point of consideration is the online platform which you want to use to sell your products or services. On this, there are two things you can do - a) you can either sell your products on an already established site like Jumia, GTB MarketHub and Amazon) or you can set up your own website and sell there. To sell on a pre-existing platform, you may need to register as a vendor and conform to their terms and conditions but the good thing is that they take care of all the web development for you.

However, if you decide to set up your own website, you should work with a web developer when creating your website and consider using platforms like Wordpress to ease the work to be done. Ensure that you get a unique domain name i.e one that is not being used by another person. You should also get the login details to your website from the web developer and ensure that the web developer signs an Intellectual Property Assignment Agreement so as to prevent the web developer from laying claims to being the owner of your website.

 4. Payment Gateway

The fact that you are selling online doesn't mean that it's for free, so, you will need a secured payment gateway for your customers to pay for the goods or services they purchase on your website. Some popular payment gateway providers in Nigeria which you can use include Flutterwave and Paystack.

 5. Terms & Conditions and Privacy Policy  

You must also create two important legal documents for your website namely Terms and Conditions (T&Cs), and a Privacy Policy. This is because you want your customers to know what you expect from them and you want them to know that any information they provide on your website is safe. T&Cs are the terms on which you are offering your goods and services which your customers have to read and agree to be bound by them. Privacy Policy simply tells them how you will use and protect any personal information they provide you with.

 6. Tax

Now, there's the issue of tax. Every business is obligated to pay tax. The type of taxes you will be required to pay will depend on your business structure. However, if you are going to run an e-commerce business, you will need to pay VAT. VAT is a tax imposed on the supply of goods and services. The tax is charged in Nigeria at 5% of the value of the taxable goods and services. You will need to ensure that your invoices to your customers are inclusive of this tax and after collecting this tax, ensure that you remit it to the FIRS.

Let's wrap this up by saying that the 'hustle' needed in growing a business offline is the same required to grow your e-commerce business so as it is popularly said, 'double your hustle'.

DIY Law
Legal, Simplified. | Winners of Innovating Justice Awards 2015. | Creating access to legal for African entrepreneurs. Posts are not legal advice.
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