Tag Archives: base of the pyramid

Cracking the last-mile distribution challenge

You can’t manage what you don’t know.

While we’d probably all subscribe to that maxim, it’s one that rings especially true for organizations seeking to serve the more than four billion low-income people living at the base of the pyramid (BoP).

BoP markets have long been heralded for their potential to drive economic growth and social impact on a massive scale by providing millions of poor households with affordable access to essential goods and services such as safe water, clean energy and improved sanitation.

The fact that we’ve barely scratched the surface of that potential points to the essential problem: these markets are notoriously hard to reach, with geographic isolation and limited access to information leaving BoP customers disconnected from any business value chain.

This dislocation is the crux of the so-called last-mile distribution challenge and, if we’re going to crack it, then finding ways to reliably connect with end customers, and capture and make use of their insights, is surely a vital part of the equation.

That’s because — in largely informal economies, where word of mouth is king — the end customer is so much more than that. They’re also potentially your sales force, your design team and your corporate strategy department — your best source of market intelligence on what works and what doesn’t out there in the real world.

A collaboration between EY, Acumen (the world’s leading impact investor) and Frontier Markets (one of its investees) stands as proof of the difference that can be achieved when impact entrepreneurs invest time and energy in establishing robust feedback loops with customers, as well as the dealer networks that form an essential part of so many BoP value chains.

Insights and lessons learned from that collaboration (including from the odd failure as well as successes) are the subject of a new report I had the pleasure of writing – Are your customers in the loop? – which aims to accelerate the growth and impact of the social enterprise sector at large by translating the experiences of that single project into practical and generally applicable guidance that any BoP business can follow.

It not only shows that it’s possible to mine a rich seam of valuable customer data, if you are prepared to experiment with technology, and create the kind of incentives and experiences that make customers want to engage with you; it also illustrates how that insight can be used to drive all manner of strategic and operational improvements that can help BoP businesses to increase their resilience, productivity and capacity for sustainable growth.

The importance of such efforts shouldn’t be underestimated.

Impact entrepreneurs and their businesses are crucial to achieving the United Nations Sustainable Development Goals, making sure that many more millions of people are able to share in the benefits of economic growth. Fusing the social mission of a nonprofit with the market-driven approach of business, they are critical engines for powering inclusive growth, human dignity and potential.

They are at the epicentre of an altogether different narrative about inequality and business’ role in tackling it, by providing affordable access to the essential goods and services — energy, education, health care, housing, water and sanitation, and agricultural inputs — that give people the agency to change their lives.

Often succeeding in spite of massive constraints, few are more significant than the challenge of last-mile distribution. If we can find reliable ways through and around that challenge, then there is no telling what more these innovators might achieve.

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