Emma Colenbrander

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  • The Global Distributors Collective: Tapping the Untapped Potential of Last Mile Distributors

    November 22nd, 2018

    Written by the GDC partners

           

    Co-written / endorsed by leading last mile distribution companies

           

         

     

    This week sees the launch of the Global Distributors Collective (GDC), a new initiative to support last mile distributors in Africa, Asia and Latin America. This article from the founding partners – Practical Action, Hystra and BoP Innovation Center – explains why the GDC seeks to make last mile distribution the first priority.

    Last mile distributors are on the frontline of the fight to ensure no-one gets left behind. Sometimes they sell one kind of product but often they sell a range that can include solar lights, cookstoves, water purifiers, nutrition products and productive assets such as water pumps. Most companies selling these kinds of products focus on wealthier or more densely populated areas. For example despite the high risk appetite of leading impact investor Acumen, just 38% of their off-grid energy companies’ customers live in poverty (below $3.10 per day). In contrast, last mile distributors are often the only companies selling to the poorest customer segments, in risky and remote areas. There are thousands of them operating across the globe. No-one knows exactly how many exist or how many customers they are reaching. Understanding and shining a light on the sector is one of our key goals and we will be publishing a State of the Sector report in 2019.

    Last mile distributors have unique strengths, but face unique challenges. They know their communities better than anyone, and have strong local networks. This makes them exceptional salespeople and service providers. Distributors also create income generation opportunities not only through the products they sell, but also by recruiting and training local sales agents and retailers. However, they have to do far more than just sell products: they must raise awareness, change behaviour, generate demand, build routes to market, figure out logistics, train their salesforce, offer in-house consumer financing, and provide after-sales service. They particularly struggle to build capacity and to access finance.

    Last mile distributors have been largely excluded from the financing schemes that have driven the growth of larger companies. Donors and investors have tended to focus more on technology innovation than supply chain innovation, and to focus on one product category, rather than working across a range[i]. The more basic products that distributors sell, such as solar lights, are often not considered to have a ‘big enough’ impact,[ii] despite the fact that they are often the only products that poorer customers can afford, and deliver profound cost savings. There is a perception that the unit economics of last mile distribution ‘don’t work’, but leading last mile distributors such as Essmart and Pollinate Energy have proven break even at a local operation level. Continued innovation – exemplified by the unbundling of the pay-as-you-go sector and the emergence of more and more specialist intermediaries that seek to help distributors succeed – is addressing capacity constraints, enhancing access to finance and improving the unit economics of last mile distribution[iii].

    Even when donors and investors have wanted to support last mile distribution, they have lacked the tools to do so. Grant funds and concessional financing facilities in the sector are designed to ‘pick winners’ and minimise risk. Last mile distributors are less likely to have the strong track record, or collateral, that most funders are looking for[iv]. Funders are put off by the higher transaction costs involved in doing a larger number of smaller deals, and by the sector’s relatively high risk profile. In off-grid solar, for example, funding is concentrated in the hands of a tiny elite of international, vertically integrated companies. From 2012 to 2017, just 10 companies attracted 87% of the investment coming into the off-grid solar sector[v].

    Last mile distributors are finally starting to get the support they need at firm level. With the right support, they have the potential to increase efficiency, build capacity and boost overall performance – selling more products, providing better service, and increasing impact. Companies such as Angaza Design recognised this early on and are building specialised technology and logistics solutions for distributors. Pioneering investors such as VentureBuilder, SIMA Funds, Persistent Energy, Shell Foundation and the DFID-Unilever Transform initiative are finding new ways to invest in, and build the capacity of, last mile distributors. Increasingly there is interest in supporting an emerging ‘2nd wave’ of African and Asian-owned companies that focus on sales and distribution whilst outsourcing design, manufacturing, software and financing[vi].

    There is also a huge opportunity to enhance performance across the last mile distribution sector, through collective approaches that improve the visibility, interconnectedness and strength of the sector. Distributors often work in silos, reinventing the wheel with limited opportunities to learn from each other and collaborate. Collective approaches can address this by providing support to the sector as a whole, rather than to a small number of pre-selected firms. Through helping distributors unlock economies of scale, access information, share best practices and learnings, build capacity and test new ideas, we will help last mile distributors save time and money, adopt new business practices and form new business partnerships. We will pilot a centralised purchasing platform, run learning and collaboration events, and conduct open-source innovation pilots. We will shine a light on the sector by generating and sharing insight through a State of the Sector report, and build its collective voice through enhancing distributor representation at key events and forums.

    Practical Action, Hystra and BoP Innovation Center are proud to officially launch the Global Distributors Collective. The GDC is a collective of last mile distributors, which has been designed and built by last mile distributors. We are dedicated to helping our members reach more underserved customers, so that life-changing products can be made affordable and available to all. With the support of partners and funders, including DFID and P4G, we are committed to building a thriving last mile distribution ecosystem and welcome partnerships with those who share our goal. We invite last mile distribution companies to sign up as members to access GDC’s support services and funding opportunities. Contact us for more information at GDC@practicalaction.org.uk.

     

    [i] Last Mile Solutions for Low-Income Customers, Shell Foundation, October 2018

    [ii] In the case of energy, for example, the development community is increasingly focused on Tier 2 energy access and above, which excludes basic lighting and cell phone charging.

    [iii] Last Mile Solutions for Low-Income Customers, Shell Foundation, October 2018

    [iv] Last Mile Solutions for Low-Income Customers, Shell Foundation, October 2018

    [v] Off-Grid Solar Market Trends Report, Dalberg Advisors and Lighting Global, January 2018

    [vi] Last Mile Solutions for Low-Income Customers, Shell Foundation, October 2018; Off-Grid Solar Market Trends Report 2018, Dalberg and Lighting Global, 2018

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  • Innovation in last mile distribution

    May 22nd, 2018

    The Global Distributors Collective (GDC) facilitated an ecosystem event at the Skoll World Forum on 12 April dedicated to ‘innovations in last mile distribution’.

    Event hosts Practical Action, BoP Innovation Center and Miller Center for Social Entrepreneurship ran a panel with practitioners from the Shell Foundation, EYElliance and Danone Communities. The audience, which included a wide array of participants from the private sector, social enterprises, multinational institutions and NGOs, had a lively Q&A session followed by a world café.

    The event highlighted a range of key challenges and innovations in the last mile distribution (LMD) sector:

    The panel – Liz Smith (EYElliance), Meera Shah (Shell Foundation) and Valerie Mazon (Danone Communities), moderated by Emma Colenbrander (Practical Action)

    1. Working capital for inventory and consumer financing

    LMDs struggle to access working capital for inventory because they are not selling at sufficient volumes to attract the interest of mainstream debt providers, and are seen as too high-risk to lend to. They manage this challenge using different approaches, such as providing sales agents with stock on consignment, but innovation is desperately needed to facilitate better access to capital.

    The burden of providing consumer finance tends to fall to LMDs, but there is potential for manufacturers and intermediaries to play this role. There is significant opportunity to tap into MFIs, especially in countries like India where the pay-as-you-go (PAYG) sector is not as strong, but questions remain about how to de-risk this investment for MFIs. One innovation in consumer financing that Shell Foundation is exploring is digital lay-away schemes for customers to save towards down payments on products.

    2. Demand creation and behaviour change

    For complex products like eyeglasses and improved cookstoves, consumer education is needed to raise awareness and ensure adoption, but this is often expensive and inefficient. Broad campaigns can be a more cost-effective way of building demand and educating consumers than targeting individuals. Campaigns can be done nationally (such as those planned by EYElliance alongside governments) or on a local level (such as those done by Danone Communities using community ambassadors). Consumer campaigns must integrate LMDs on the ground in order to be effective and to ensure supply can adequately meet demand.

    Meera describes how LMDs are typically underinvested in compared with product companies

    3. Salesforce training

    All participants agreed that salesforce training continues to be an enormous challenge in the sector, especially given high churn rates in sales teams and the need to adapt training to different markets. Classroom training is of limited value, so ongoing mentoring and support (and a small sales manager/sales agent ratio) is essential. Innovative training providers are emerging in the sector to support LMDs and some companies (eg. M-KOPA) have set up their own training universities. However, these services are either exclusive or very expensive, and tend to focus more on technical skills rather than sales and marketing. There is huge demand for more innovation in this space.

    4. Opportunities to leverage economies of scale

    EYElliance represents an excellent example of how collective approaches can work in distribution. EYElliance is a coalition of multi-sector actors working at system level to create change in the vision sector. They have had success in distribution of eyeglasses by tapping into the expertise of many members and learning from distribution methods in other product categories such as antimalarials, solar lighting and Fast Moving Consumer Goods (FMCGs).

    The following key opportunities were identified to leverage the power of the collective across the LMD sector:

    • sharing best practices and lessons learned through online platforms, in-person networking and exchange visits between LMDs
    • improving access to information, including by building a directory of certified peer-reviewed products
    • developing standardised metrics and measurement tools for M&E
    • bulk buying products to streamline procurement processes

    5. Potential of emerging technologies to transform the sector

    Liz Smith describes EYElliance’s collaborative model to achieve systems-wide impact in eyeglass distribution

    Technologies that help gather data for operational intelligence are increasingly being utilised, for example software that can digitally track consumer behaviour. The next disruptive technologies are 3D printing which will transform manufacturing, and blockchain which will enable LMDs to track inventory through the supply chain and more effectively assess impact.

    6. Product specialisation vs diversification

    LMDs that use sales agent networks to sell complex consumer products generally need to specialise. Specialisation tends to be the most cost-effective approach because different skills and knowledge are required for different product categories, and also because LMDs have so many other functions to manage – logistics, procurement, finance, etc – that end sales need to be simplified to the greatest extent possible. However, LMDs can still achieve diversification across their portfolio by specialising at the sales agent level (ie, each sales agent only sells one product category) or by focusing on promoting different products during different time periods, rather than offering a basket of goods all year round. It has proven difficult to combine distribution channels for consumer durables like solar lights with FMCG products, although retail channels have more success than sales agent networks.

    The hosts closed the session by showing great willingness to work on the discussion points raised through the Global Distribution Collective.

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  • Beyond the jargon – why I’m participating in the UNLEASH Innovation Lab

    August 11th, 2017

    Here are some phrases many of us in the international development sector hate: innovative ideas, scale and scalability, accelerating impact, disrupting ‘business as usual’. These words have been so over-used that they’ve lost all meaning, and yet they continue to be plastered (mostly inappropriately) all over development programmes and initiatives.

    So when I read about UNLEASH, a ‘global innovation lab’ for ‘innovative, implementable and scalable solutions to the Sustainable Development Goals’ that brings together 1000 ‘young global talents’ to ‘accelerate disruptive ideas by engaging top talents in problem-solving and co-creation’, I admit my first reaction was…eye roll.

    Emma working

    However, though I might be a sceptic of the international development sector, I’m an optimist when it comes to the potential for positive change in the world to happen.

    So when I looked closer at UNLEASH, I looked beyond the jargon, and I saw something with potential. UNLEASH is bringing together smart young people, people with energy and experience and fresh ideas, and facilitating a hands-on experience that allows them to learn and work together to help solve very big problems. This is very interesting to me for three reasons.

    1. There’s a big problem I care a lot about solving.

    Improved cooking stove in Kenya

    I care a lot about the access gap – the fact that billions of people still lack access to very basic technologies and services like electricity, clean water and clean cooking facilities. Five years ago I co-founded a social business called Pollinate Energy to tackle the access gap in urban slums in India. Pollinate Energy uses door-to-door sales agents to distribute products like solar lights, water filters and clean cookstoves on credit to people who otherwise have no ability to access or pay for these kinds of technologies. Today, I work at Practical Action and collaborate with actors from across the sector to figure out how we can better support organisations like Pollinate Energy and improve distribution channels to close the access gap for the world’s poorest.

    2. I solve problems most effectively when I work with a team who care as much as I do.

    I co-founded Pollinate Energy with 5 other young people, and we worked together in a highly collaborative, iterative environment. We had different skillsets and personalities, we pushed each other and learnt from each other, and there was plenty of conflict. We made rapid decisions and many mistakes, but we also adapted quickly. While there are some people who would undoubtedly hate this approach to working, I loved it. UNLEASH is seeking to create a similar ‘start-up’ environment for people who share a vision. When I’m in this kind of environment I am at my best and can make a real contribution.

    3. UNLEASH seems to genuinely value and promote diversity.

    Participants at UNLEASH are coming from 129 countries, and it seems the majority are coming from the ‘global south’ which is a refreshing change. Just over half of participants are women. And participants have been chosen based on their experience in tackling the problems that the lab is trying to solve. This kind of diversity is critical to tackling any big challenge, but especially international development challenges.

    The idea of an ‘innovation lab’ that brings together different stakeholders to try and solve development challenges is not wholly new. But it’s hard to find research on whether other innovation labs have actually had an impact. Have they produced new solutions that work? Have they made hidden issues more visible or built momentum that has forced action? Have they developed the skills and knowledge of practitioners? I don’t know – and it seems the international community needs to put more effort into measuring the success of these kinds of initiatives – but I think there’s no question that UNLEASH has potential. And not just potential to deliver on its goals of building solutions to the SDGs, but also potential to prove that innovation labs can have a genuine impact.

    To a large extent, the success of UNLEASH will rest on the shoulders of the 1000 young leaders who have been given the opportunity to be involved. We can go a long way towards delivering on the goals of UNLEASH if we:

    • genuinely build on experience and lessons learnt, and don’t reinvent the wheel
    • use systems thinking to truly understand the problems we’re trying to solve and why these problems exists in the first place
    • come with the right attitude and in the right spirit, not focusing on building our own networks / promoting our own business / adding to our CV.

    If we can do this, we might produce some interesting new ideas and approaches that the whole international development community can benefit from. And hopefully some of these ideas and approaches will help us close the access gap for the world’s poorest.

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