Tuesday, September 10, 2013

Perceptions, Profit, and Information Disconnect

Distribution networks in emerging economies are fraught with obstacles, foremost for small companies with new products. Getting your merchandise from manufacturing facility to home country seaport/airport to end consumer is difficult enough due to lack of economies of scale, misapplied tariff codes, corruption, and poor infrastructure. But the challenge is even further compounded by another, frequently overlooked factor: an information disconnect between those resellers at the top of the distribution pyramid and those small-purchase, often rural customers at the bottom.

A market in rural Jigawa State, near Dutse
Although West Africans always take pride in the “village” where they come from, more and more are settling in some of the fastest-growing urban agglomerations in the world – Lagos, Dakar, Abidjan, Douala, and others. The link to the usually rural village is gradually becoming severed, for better or worse. As SVTP’s West Africa Sales Manager for the past 11 months, I’ve frustratingly realized firsthand that many large vendors at the main big city wholesale markets are not as attuned with the struggles and needs of low-income consumers in rural and peri-urban areas, which are our main markets.

Onitsha, arguably the largest market in Africa, and
full of urban-minded wholesale vendors
Thus, large wholesalers at Alaba International Market in Lagos or Emeka Offor Plaza in Onitsha may “come from” villages and peri-urban areas in Osun State or the hinterlands of Imo State, but in reality spent little time there and might only visit every few years for a couple days, perhaps for a wedding or a funeral. As a result, their perception of what the average Nigerian consumer wants and needs is often skewed towards those Nigerian consumers they interact with on a daily basis in the big city. Electrification may be relatively high in Lagos and Blackberries may be all the rage in Onitsha, so the urban wholesaler may assume that the same goes throughout Nigeria.

What this means on the ground is that top-level distributors tend to stock devices that they themselves can attest to based on the needs of their environment. And while they refine their purchasing decisions based on orders and feedback from their lower-level reseller and retailer customers, they still are products of their environment, pun intended. And when the product itself is new, not yet very well known, and geared towards the rural and peri-urban consumer, a paradox of sorts emerges: The wholesaler is not convinced that there is a market for the product since he doesn’t require the product in his immediate surroundings and also because his rural retail shop customers aren’t demanding it. However, the retailers, who often come to the large market every week or so to buy goods, would indeed derive great utility from the product, yet don’t demand it from the wholesaler as they don’t realize the product exists.

SVTP Sales Representative, Tunde Akinboye, demonstrating a solar charger to a crowd in rural Ogun State

Therein lies one of our greatest yet also most fulfilling challenges here at SVTP: bridging the information disconnect. Our basic line of solar chargers  (model C200) are geared towards rural or peri-urban customers who spend most of their time using small/feature phones. Our job, then, is to convince the wholesale vendors at the top that not all consumers enjoy near-constant access to electricity, have Blackberries or smartphones, and are away from the sun all day like them.

Part of SVTP's marketing team at a promotion in Computer Village, Lagos
Luckily, SVTP is not tackling this empty-handed. We have quality designers and engineers always incorporating on-the-ground feedback into the next batch of production in order to increase the value proposition of our products. We have well-run marketing campaigns at our disposal to spread the word about our innovative products, both to the end customer as well as to the potential mid or top-level distributor. And we possess a strong sales team who deal with wholesalers, retailers, and end users alike. Together, the information disconnect becomes far less daunting, and we are able to increase our chances of getting useful products at the right price to customers who truly need them.

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