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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The results to date provide evidence of their positive impact not only on income generation but empowerment of microdistributors while increasing anchors companies’ sales volume and BoP market knowledge.  

That's great Aminta. Have you also been able to capture some of the benefits to business?


Aminta Perez-Gold said:


 

The results to date provide evidence of their positive impact not only on income generation but empowerment of microdistributors while increasing anchors companies’ sales volume and BoP market knowledge.  

So we are already hearing about 2 types of networks.  One where people are already operating as micro-distributors, such as sari-sari stores or Hapinoy stores.  Others, such as for Jita, LIving Goods, or Solar Sister (I assume) the distributors are more likely to be newly incorporated into the distribution chain. 

William Maddocks said:

There is also Hapinoy in the Philippines started by CARD MRI a large microfinance organization. Thousands of Sari sari shops have co-branded signage and products and benefit from support, access to credit and group puchasing.

Sari-sari Stores are small neighborhood retail shops started and run by women microentrepreneurs from their homes. Quite often these microentrepreneurs mothers – or Nanays – who engage in this microbusiness in order to augment their family’s income.

http://hapinoy.com/#home

Thank you everyone for helping frame the conversation with some examples.

In the interest of time, let’s move on to our second question:

Q2. What are the most significant challenges to scale these models, and how do they vary across models, regions, and/or industries?

HI Abby.  I'd like to know if the women that operate as Solar Sister distributors are new to distribution, or were they marketing other goods before?

Abby Mackey said:

Well Solar Sister is one example. We are building a clean energy last mile distribution chain that is made up of women run businesses in Uganda, Nigeria and Tanzania. Women make up the majority of the rural energy poor market in sub-Saharan Africa so Solar Sister has responded with a women-centered supply chain to meet this demand. We have found that more often, women are able to find female customers due to community involvement and strong social networks. Also, women make the majority of energy decisions in their household so it makes sense to target them as the consumers then. 

In the examples that I've just mentioned one key challenge to scale is to convince large companies of the benefits of such projects for their core business. Most inclusive projects leveraging networks of existing micro-enterprises are managed by the large companies’ CSR department or foundation and their limited budget. If instead they would be handled by their sales areas, incentives to scale would be bigger.



Jessica Davis Pluess said:

Thank you everyone for helping frame the conversation with some examples.

In the interest of time, let’s move on to our second question:

Q2. What are the most significant challenges to scale these models, and how do they vary across models, regions, and/or industries?

Hi Elfid - that's a great example.  One of our colleagues, Beth Jenkins, wrote a report about 4e: http://snipbfp.org/2geP91c

Elfid Torres said:

Another Example may be the Program 4e Camino al Progresso (quoted in the paper) successfully strengthened SAB Miller’s distribution chain in Latin America, supporting 25’000 Mom and Pop shops across 6 countries of the region. Through training, on-site personal assistance and access to simple and low cost technologies, it enabled participating shopkeepers to increase their sales by 10% and their margins by 2% on average. With the financial participation of the FOMIN, the program also included a community development component, which consisted in training 4000 shopkeepers to leadership role in their communities, supporting them in implementing social impact initiatives. While SAB Miller can now count on more robust, sustainable, loyal and productive distributors, tens of thousands of households across Latin America are now better off.


Jessica Davis Pluess said:

Living Goods is a great example of using product mix that includes durable goods like cookstoves and healthcare in the same distribution channel

Caroline Ashley said:

What's interesting about Living Goods is that they have a distribution model for multiple beneficial goods.  Creating such networks is such a big ask that other companies want to use their network, not create their own. 

Welcome Mauro! It wonderful to hear more about the Danone Kiteiras and what you've found to be some of the key challenges to scale the direct sales model

Mauro Homem said:

Hello everyone, this is Mauro Homem from Danone Brazil. I´m the Head of Public Affairs and in charge of all the Social Innovation platform.

The biggest challenge I hear from multiple enterprises is salesforce churn.

Hello Jessica! We started one year ago to build a network of microentreprenuers in rural areas of Colombia and El Salvador. The microentrepreneurs, most of them women, sell unilever products in their communities. We´ve been developing skill building courses for our microentrepreneurs, so they can get their businesss stronger. We've as well developed courses on nutrition and health.

Jessica Davis Pluess said:

Welcome Juan! It would be great to learn more about how Unilever is engaging micro-entrepreneurs in their downstream value chain in Latin America?

Juan Céspedes said:

Hello! this is Juan, from Unilever. I work as Social Channels Manager for the Andean Region and Central America


Salesforce churn is a huge problem, but takes slightly different forms depending on the network.   Some companies deploy their own salesforce and invest hugely in their training and set-up costs. Then suffer when they leave.  Others have more independent sellers,  who take more of the risk, but might not have the incentives to remain.


Jessica Davis Pluess said:

Thank you everyone for helping frame the conversation with some examples.

In the interest of time, let’s move on to our second question:

Q2. What are the most significant challenges to scale these models, and how do they vary across models, regions, and/or industries?

Most Solar Sister entrepreneurs were informal entrepreneurs in some capacity before, mainly selling crops, baskets, soaps, etc. We are talking very small scale here (typically they do not have actual store structures or permanent selling areas). So entrepreneurs have some experience with selling and Solar Sister provides business skill trainings that not only help them with their new clean energy businesses but also help them improve their existing businesses. Most Solar Sister entrepreneurs also take advantage of our business opportunity on a part-time basis. They sell when they need the additional revenue or they do their Solar Sister activities on top of other business activities. We like that it is a flexible business opportunity. 

Caroline Ashley said:

HI Abby.  I'd like to know if the women that operate as Solar Sister distributors are new to distribution, or were they marketing other goods before?

Abby Mackey said:

Well Solar Sister is one example. We are building a clean energy last mile distribution chain that is made up of women run businesses in Uganda, Nigeria and Tanzania. Women make up the majority of the rural energy poor market in sub-Saharan Africa so Solar Sister has responded with a women-centered supply chain to meet this demand. We have found that more often, women are able to find female customers due to community involvement and strong social networks. Also, women make the majority of energy decisions in their household so it makes sense to target them as the consumers then. 

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