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Tuesday, May 31, 2011

What Contests, Soda, and the Internet Have to do With Distributing Solar Power in Tanzania

By Elly Brown

The Internet has become the effective distribution model for virtually any information. It is fast, cost-efficient, and consumer-driven. Users receive what they demand in a manner of seconds. Distribution of products, however, is far more complicated, particularly when faced with diffusing innovations across rural villages in Tanzania. Lessons can be learned from Internet models, but we must go beyond them when thinking about most-effective distribution models.

Recently, I had the privilege of supporting Lesley Silverthorn, the CEO and co-founder of Angaza Design. Angaza, a runner up in the 2010 Harvard Social Enterprise Pitch for Change Competition, is a start-up social enterprise aiming to illuminate the world through modular solar home lighting and battery charging systems. With the invaluable support of Roxann Stafford, a design strategist and friend from FSG, we explored case studies to highlight the implications of an effective distribution strategy for the Angaza SoLite in Tanzania. The Angaza SoLite, at %7E$0.20/lumen (outputs 200 lumens), is among the brightest and most compact solar modular light in its price range, specifically designed for the BoP market.

Angaza believes that designing the lowest-cost product and sacrificing quality is not always the best solution. Instead, its answer lies in innovative rural distribution and financing methods to deliver high-quality, appropriate products to the people who need them the most. This mission is reflected in its multi-pronged distribution channels of retail and wholesale solar shops, entrepreneur-led sales networks, and NGO partners - including microfinance organizations.

Building on success and challenges of others, we studied a broad range of distribution models from large multinational corporations such as Coca-Cola's Manual Distribution Centers (MDCs) to the entrepreneur empowerment models of D.Light, VisionSpring, and KickStart. Three key takeaways can be highlighted from our research. 

Be mindful of adoption

Understanding the importance of how the product fits with the lifestyle of the target population early on is critical.  Through incorporating customer feedback mechanisms from the onset and empowering the entrepreneurs to become "need finders", hardships in the future can be mitigated. After all, product design can have significant implications for distribution and post-purchase support. KickStart was mindful of adoption when it designed products to require minimal need for outside help with repairs. The company also spent majority of its funds and time on developing the markets through innovative campaigns such as water pumping contents. They recognized the power of visual demonstrations when employing technologies completely new and foreign.

Cultivate retailers and entrepreneurs

Time should be spent identifying the unique training needs of partner organizations and entrepreneurs. In particular, entrepreneurs may experience network fatigue and cultural barriers when selling their products in their villages. For example, after trial and error, VisionSpring recognized that it takes a certain type of entrepreneur to maintain their sales quota beyond their network of communities. The key is to find these stellar entrepreneurs, cultivate them, and incorporate "train the trainer" models to spread their skills and sales knowledge.

Explore synergies and partnerships

When forming partnerships across sectors, the challenge is building incentives and navigating conflicting objectives. For example, when Coca-Cola explored partnering with a health supply NGO, Cola Life, they faced seemingly insurmountable challenges including increased costs, quality control, and legal liability. A well-defined agreement should clarify which partner is responsible for the specific links in the social product value chain. But what about incentives? When a partner organization or an entrepreneur is distributing your product, how do you make sure that your product maintains top billing in their sales pitch? Finding a suitable partner with a win-win relationship will bear fruit in the long run.

For solar energy producers like Angaza, mobile phone carriers may be an interesting complementary business as a distribution partner. Interestingly, the Angaza SoLite is often sold in conjunction with Angaza's personal solar cell phone charger product. According to a report by the GSMA Fund in 2009:

  • Over half of the mobile service providers in a 2009 survey have already introduced, or are considering introducing off-grid charging solutions in the near term.
  • Solar chargers can increase average revenue per user by 10-14 percent. With 500 million off-grid mobile consumers in the world, the expected increase in direct revenues to operators would total US$2.3 billion per year.

While consumers may be unable to download their solar equipment online, Angaza's entrepreneurial salesforce and consistent feedback loop ensures its distribution system is as cost-efficient and consumer driven as any dotcom.  

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