Effects of Sales and Distribution Expenses on Organizational Performance in Nigeria’s Consumer Goods Sector

Abstract

The end goal of any organization is to deliver value to the consumers. This can be achieved by ensuring quality products get to the consumer through efficient sales and distribution channels. There are several costs associated with sales and distribution, including costs relating to the moment production is complete to the point it gets to the consumer and everything in between, including the cost associated with making the products attractive or desirable to consumers. These costs related to sales and distribution have the potential to impact some metrics of organizational performance. This study examines the impact of such costs on revenue, return on assets, and return on equity and gross margin in the Nigeria consumer goods sector from 2013 to 2021 in 14 companies. The results revealed that sales and distribution cost has (a) moderate to high positive association to revenue; (b) very high positive association to gross margin (c) and no established relationship with Return on Asset and Return on Equity. The study also revealed that alcoholic beverage companies spend comparatively more on sales and distribution costs. Ultimately, this results from this study when combined with future studies can help identify points of maximum efficiency in the sales and distribution cost, i.e. the point where maximum returns in terms of revenue and profit is reached before equilibrium or decline happens for every sales and distribution expense.