How can we scale distribution and sales networks that create opportunities at the BoP?

Expanding access to goods and services for the billions of people at the base of the pyramid (BoP) is not simply a growth opportunity – but a business necessity. However, reaching low-income markets often requires navigating fragmented - or in many cases, nonexistent - distribution and sales networks.

 

In recognition of this complexity and the challenges facing micro-enterprises in downstream value chains, a growing number of large companies are employing inclusive distribution network models that seek to empower low-income entrepreneurs and strengthen enterprises while helping companies increase sales and reach new markets. For the handful of these networks that have successfully reached scale, there are many more that have remained siloed CSR initiatives, morphed into non-profit entities, or simply faded away.

 

This online discussion is part of the Inclusive Distribution Challenge and coincides with the launch of a new discussion paper, which identifies three models of inclusive distribution and highlights eight emerging lessons on how to achieve scale. This online discussion aims to crowd-source more examples and input on business actions and partnerships and help prioritize Phase 2 of the Challenge focused on specific solutions to scale.

 

1. What are some examples of inclusive distribution networks, and how are they expanding opportunities at the BoP and creating value for businesses?

 

2. What are the most significant challenges to scale these models, and how do they vary across models, regions, and/or industries?

 

3. What are some emerging lessons and solutions on achieving scale, and where are there opportunities for more partnerships? 

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Client satisfaction, client satisfaction, client satisfaction - oh and word of mouth but that comes from client satisfaction. Here is another great graph that Hystra presented on our marketing webinar: http://www.inclusivebusinesshub.org/wp-content/uploads/2016/05/M4bo...

Hi Ashley

Mobile phone payment is a possibility as long as there's an established network and it's trusted by the entrepreneurs. In Haiti, mobile money is still extremely underdeveloped but we're looking for opportunities there and Colombia to lean forward with partners on mobile money as its definitely the right direction to go in vs. sitting on the sidelines waiting for it to establish itself.

Caroline Ashley said:

That's interesting Robert. Is there no opportunity for mobile phone payment?  I agree that if is cash based, that is a huge constraint on scale.

Robert Mooney said:

Hi Jessica

One of our major challenges to scale is technology. In order to be profitable, we need to operate at a very low cost. There is a scale point where we cannot handle the volume of transactions manually, therefore all invoicing/credit management and control/payment receipts, etc. need to be managed digitally in order for us to grow in a controlled manner. However, there aren't many technology solutions out there that are tailored for the environments we're operating in and the type of transactions. In addition, cash collection is extremely expensive - and high risk for our both our entrepreneurs and our staff.


Jessica Davis Pluess said:

Welcome Rob1 It would be interesting to hear more about the Chakipi model in Peru and Haiti and what you've found to be some of the key challenges to scale. 

Robert Mooney said:

Hi this is Rob Mooney. I am the Director of Global Operations for the Clinton Foundation's "Chakipi" ID businesses.

Very true. On partnerships, what role have partners played? Where do you think there needs to be more partnership for these models to really scale?

Beth Meadows said:

Partner with strong organizations both locally and globablly  so that you can use their brand - expertise and support.

Be creative - keeping the stores - and their clients to wonder what is coming next.

Success of any organization is its team -  build a strong one - empower them and help their passion grow for the organization.

Our mantra at Supply Hope is if it was easy then everyone would be doing it - so keep pushing through - platforms like this are great for helping us come together so hopefully one day it will be easy and everyone will be doing it - fighting poverty!!!

I was also hearing the other day that too much top line marketing can actually be damaging.  It takes energy away from keeping current clients happy and so can risk satisfaction levels. 

Here is the link to the webinar series on marketing at the BoP, which had 3 webinars and sets of slides, involving Hystra and various speakers:  how to viably market and distribute beneficial products at the BOP http://bit.ly/2geDLYf

And here is the link to Hystra's own site on Marketing for BoP http://hystra.com/m4bop-1/

Thanks, Elfid. Technology seems to be key but the upfront cost to develop it can be prohibitive for many companies. Do you think there are opportunities for partnerships here?

Elfid Torres said:

Economies of scale is by essence a good way to achieve scale. In our projects large companies ask us to do more with less and technology is the instrument that allow us to do so. Virtual platform, online capacity trainings and other electronic devices may permit, if they are well conceptualized, to double the number of beneficiaries. They need to be easy to use and reliable. It should hence be used as a complement, a leverage. 



Jessica Davis Pluess said:

It sounds like we are starting to identify some good lessons and solutions. On that point, let’s move to our last question:

Q3. What are some emerging lessons and solutions on achieving scale, and where are there opportunities for more partnerships?

We have partners like Unilever giving us training for the women  - signage and help with branding - and competitive prices.   I think we need to come together and share and learn from each other so we are not recreating the wheel

Jessica Davis Pluess said:

Very true. On partnerships, what role have partners played? Where do you think there needs to be more partnership for these models to really scale?

Beth Meadows said:

Partner with strong organizations both locally and globablly  so that you can use their brand - expertise and support.

Be creative - keeping the stores - and their clients to wonder what is coming next.

Success of any organization is its team -  build a strong one - empower them and help their passion grow for the organization.

Our mantra at Supply Hope is if it was easy then everyone would be doing it - so keep pushing through - platforms like this are great for helping us come together so hopefully one day it will be easy and everyone will be doing it - fighting poverty!!!

Hello, this is Greg, Innovation and Performance Manager for the Global WASH team at iDE. Robert, I'll second your thought on the importance of technology in achieving scale. We sell hygienic latrines through a direct-sales team in several countries. In Cambodia, where we've achieved the greatest scale, we've benefited from a Salesforce-based sales management and tracking system. Our Salesforce guru, Gordon Lau, gave a really nice presentation on the system at the annual DreamForce conference. You can see it here: https://youtu.be/BXOUuGyHjNs?t=1825.

To Caroline, we are experimenting now with mobile money payments in our sanitation marketing project in Ghana, which also relies on a direct sales model with production being handled by local entrepreneurs (typically existing masons and concrete producers). Still early days, but the promise of mobile phone payments in areas where that infrastructure exists is certainly exciting.

Caroline Ashley said:

That's interesting Robert. Is there no opportunity for mobile phone payment?  I agree that if is cash based, that is a huge constraint on scale.

Robert Mooney said:

Hi Jessica

One of our major challenges to scale is technology. In order to be profitable, we need to operate at a very low cost. There is a scale point where we cannot handle the volume of transactions manually, therefore all invoicing/credit management and control/payment receipts, etc. need to be managed digitally in order for us to grow in a controlled manner. However, there aren't many technology solutions out there that are tailored for the environments we're operating in and the type of transactions. In addition, cash collection is extremely expensive - and high risk for our both our entrepreneurs and our staff.


Jessica Davis Pluess said:

Welcome Rob1 It would be interesting to hear more about the Chakipi model in Peru and Haiti and what you've found to be some of the key challenges to scale. 

Robert Mooney said:

Hi this is Rob Mooney. I am the Director of Global Operations for the Clinton Foundation's "Chakipi" ID businesses.

some areas where we think partnerships in the distribution channels could add value: 

Improving distribution of FMCG products to last mile approach A partnership culture can improve and enhance infrastructures and networks, providing improved distribution systems for product delivery at the last mile. In Uganda, Living Goods leverages the network of the BRAC NGO to distribute its products, including a fortified porridge, to communities in urban and especially in rural areas

Creating and strengthening a joint culture among FMCG stakeholders Given the different voids and lack of synergies among partners within the FMCG ecosystem, enhancing a joint culture generated through partnerships could promote management systems oriented towards social impact, guaranteeing results, expanding knowledge generation, and information sharing, as well as spurring innovation and better communication systems amongst the players. The Senegalese dairy company, La Laiterie du Berger, collaborated with the Enda Graf Sahel NGO and the Ministry of Education, to develop a specific program based on the distribution of a fortified product to school-age children in Senegal. All stakeholders shared the common goal of improving the diet and nutrition of children in Senegal and have joined together to maximise their impact

Improving sustainability of the FMCG value chain Partnerships can reinforce the engagement of key players working on improved packaging design as well as the collection and recycling of waste. In Mexico, Bonafont partners with Pasa, Ashoka, and Mundo Sustentable, to reduce the company’s environmental footprint by using recycled PET to produce its bottles.

Diversifying and increasing resources through joint mobilisation One of the main challenges the FMCG sector faces, is the need for intensive Research and Development funding in order to provide infrastructure for logistics or to promote pilot cases for testing. Partnership building in this context can become a successful mechanism for increasing funding and promoting co-funding structures through new and non-traditional partners, to respond properly to such financing needs. Through financial support from GAIN and the International Finance Corporation (IFC), Tetra Pak was able to offer Reybanpac’s fortified yoghurt product to low-income consumers in a safe and affordable package, matching the product and the target group’s needs. 

That brings us to the end of the live section of this discussion. Thank you so much to all our panelists for generously sharing their time and insights.

And thank you to everyone from the Business Fights Poverty community who joined in - we appreciate your support of the Inclusive Distribution Challenge and we look forward to continuing to collaborate with all of you.

 You can continue to post comments here; please do include links to reports and other materials that you think might add to our exploration of what works.  We also invite you to review our new report and share your feedback, examples and suggestions on next steps.

http://snipbfp.org/2gfwtmV

Thank you!

Pharmnet continues to expand opportunities at the BoP by ensuring that Pharmaceutical start ups by newly qualifying professionals are started on quality basis. We mentor professionals in our participating member pharmacies on business skills and best pharmacy practice.

We do this in the BoP areas to allow them acclimatize with the practice areas. Joining a professional network insulates start ups from the stand alone pressure and gives them good visibility and confidence from day one. Above all else, we help them purchase and pre-negotiated prices and also help them with credit facilities.

Thank you very much to all the panelists and the moderator for the thoughtful discussion and insights on this (very interesting) topic! 

My name is Natalia Palacio and I am with BSD Consulting- a global sustainability consultancy firm focusing on business solutions and sustainable development. We hope to continue supporting organizations in their sustainability goals, including setting up and developing successful Inclusive Distribution Networks- something that we are sure has the potential to create meaningful impact at a global scale. 

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