Whether it is for industrial or domestic use, engine oil is one of the most consumed products in any given part of the world. Although it has attracted a lot of investors, the opportunity to invest in the business is still beckoning. Apart from the fact that lubricants are FMCG (Fast Moving Consumer Goods), they don’t get spoilt. When it is properly packaged, they do not even soil the cartons or the floor of your warehouse.
Types of Lubricant to Invest in
Are you interested in investing in this engine oil and lubricants business? Before dwelling on the requirements, let us highlight the products and the market.
Motor Engine Oil
This is one of the most consumed lubricants. Depending on the manufacturer and the treatment given, they either come as 5W 30 or 5W 40. Depending on the city you are, the demand is high that sometimes, the supplier find it difficult to meet up, in some other cities however, it is highly competitive. Whatever the case, everyone using a motor vehicle or other things must patronize you, either as individuals or as mechanics.
Since there’s always a schedule by car manufacturers for owners to service their cars consistently, they must change the engine oil when carrying out such services.
Automatic Transmission Fluid
Most cars have gone automatic with their gearing system. Hence the need keeps increasing for them to use automatic transmission oil. Depending on the manufacturer, the specification of the oil is Dexron, Mercon, DW (ZF), etc. This oil is changed too according to the mileage that the manufacturer has specified.
Although changing of the transmission oil is not as frequent as changing of engine oil, the number of cars that come to the mechanic workshop are so numerous that you will get patronage on a daily basis if you are strategically positioned.
Break and Clutch Fluid
The same manufacturer specification is often used for break and clutch fluid. Most times, they come as Dot 3 and 4, for cars that use manual gearing system. Like the oil mentioned above, the need for individuals and mechanics to buy them is high.
Diesel Engine Oil
Like its petrol counterpart, diesel engine oil is in high demand. Sometimes the demand for diesel engine oil gets more than that of gasoline oil. This is owing to the fact that the engines that use it is not just motor vehicles, but other heavy machines used in the manufacturing sector. Diesel engines usually come with the specifications 15W 40. It is usually thicker because of the heat generated by the engine using it.
Grease is a type of lubricant that has a very high demand. Individuals, industries and mechanical engineers are always in need of it. It does not matter whether an engine is using fuel or diesel, there is always the need to prevent rust, hence the demand for grease. The most known specification for grease intended for machine is SAE J310.
This cannot be categorized as lubricant, but it is often used by mechanical engineers and individuals after they have used engine oil, especially gasoline engines. It is believed that oil treatment helps in cleaning the engine and reduces heat that would have been generated without it. It is okay if you add it to your stock as you start your lubricant business.
Requirements to Start Engine Oil Business
After having a brief knowledge about each of the product, the followings are the other basic requirements for someone willing to invest in sales of lubricants:
1. Get a Warehouse
Depending on the quantity you are willing to buy for a starter, you may need to rent a space secured enough to house your products. This can be compartmentalized so that you can easily reach the specific product or brand that you need. It is important that you secure it physically so that thieves do not cart away your property.
Although most lubricants are in a plastic container, manufacturers put this containers in cartons. Ensure that your warehouse is not susceptible to rain fall. This may damage the cartons, thereby slowing down the sales. The heat generated by the sunlight too should be avoided as this may melt your grease and encourage leakage.
Be sure to install fire-alarms as you also provide fire extinguishers. A warehouse of lubricants is a no-smoking zone. Ensure that the sign is bold enough and see to its strict compliance on the part of your staff.
2. Survey the Opinion of your Potential Customers
At this stage, it is important that you go to your prospective customers so as to determine what they demand more. This includes automobile mechanics, manufacturing industries using diesel, retailers and even individuals who change their car oil while carrying out the service on their own. The location or the type of vehicle used most will determine the type of lubricants that people demand more.
3. Get Supplying Companies
Oil and gas companies dealing in lubricants are numerous, so the one you will be patronizing is not one. To get the best bargain, it is crucial you go to as many of them as possible. It is difficult for them to give you a ripoff rate as they know that you can detect the next minute thereby making them lose a customer.
4. Get a Truck
Irrespective of the size, a truck will help you in conveying your goods from the factory of the manufacturer to your warehouse and from the warehouse to your various retailers. So it is a necessity for your oil business to succeed. Get a driver who is accountable enough to combine the work of a driver with that of a sales man. This does not rule out the need for one or two sales boys.
5. Create Awareness
The same group of people you went to for survey will constitute your market. They are automobile mechanics, manufacturing industries using diesel, retailers and individuals. Penetrate the market by slightly reducing the rate even if the profit recorded is not commensurate with what is obtainable locally. Eventually, you can increase the price as you gain their loyalty.
Prospects, Profit in Engine Oil Supply
Lubricant is a profitable business. This is because it is a fast moving consumer goods. On the average, depending on your economy, you can reap 10% profit of the amount invested. So when you invest N8,000,000, you can expect to get N500,000 – N1,000,000 as profit.
Since this is an FMCG business, it is possible to turn over N500,000 two times before the month runs out. This can get better, the longer you stay in the business, the aggressive your marketers are, the higher your turnover.
- Initial investment on stock – N2,250,000
- Warehouse ( Guesstimate depending on your locality) N1,700,000
- Fairly Used Mini Truck – N2,500,000
- Initial Salary for 5 staff – N500,00
- Awareness and Survey – N400,000
- Miscellaneous – N400,000
- Total N8,000,000