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?
Thank you, Fernando, for those great thoughts on partnership. I wonder if you've run into any good resources looking at organizations that sell and/or distribute a combination of FMCG and durable goods? Are there any challenges that such organizations should be ready to face if they go down that path?
Fernando Casado said:
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.