FIP 108: Last mile distribution 3/3 – How to pivot from a cash-based to a PAYGO model, with Washikala of Altech
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This is part three of a 3-part mini-series on last mile distribution. This series is a collaboration between the Finding Impact Podcast and the Global Distributors Collective (GDC). The GDC is a collective of last mile distributors around the world, with over 140 members in over 40 countries, who cumulatively have sold more than 8 million life-changing products to last mile households.
The GDC is dedicated to supporting and representing last mile distribution companies to help them reach underserved customers with life-changing products like solar lights, clean cookstoves, water filters and nutrition products. The purpose of the GDC is to make last mile distribution the first priority so that life-changing products can be made affordable and available to all.
This episode is with Washikala, Founder and CEO of Altech, who operate in the Democratic Republic of Congo. Altech is a distributor of solar lamps, working to enable off-grid households and institutions to have access to modern energy.
On this episode you’ll learn:
- Washikala got started by focusing on cash sales in his own village, but found the upfront cost of the product too high for the target market;
- They focused first on selling to schools and their teachers, and to health centres and their health workers, giving credit for two months, and the school administrator would be responsible for collecting cash. Insight here is to start with the most trustworthy groups in the community to build traction.
- Next they opened it up to all households through a solar ambassador model, recruiting young people from the communities, to recruit households on credit, and collect money on a daily basis. This was essentially an early PAYG model without the technology. They encountered significant ‘leakage’ (cash disappearing), and it was a cumbersome process.
- They heard about PAYG in early 2017, and an enabler called Angaza. Altech were selling d.light lanterns but back then, they had no PAYG solar lamp option. So they selected suppliers for a pilot and ordered a small batch of PAYG lanterns.
- They started the pilot in Jan 2017 in two areas in the DRC, with 50 products, 10 sales agents/solar ambassadors, 5 products each. The Angaza app was managed in the office, and solar ambassadors had the app on smartphones.The payment collection process was end-to-end. i.e. No “leakage”.
- Some initial problems included having to buy smart phones for solar ambassadors, but it later became part of the recruitment criteria; data is expensive; needed to connect the lamp to the smartphone using bluetooth, but initial equipment was faulty and didn’t connect so had to replace; there were regular internet shut downs, so when customers called they couldn’t go and activate lamps; sending money using mobile money was a challenge, as some agents had no liquidity so they couldn’t deposit money.
- Previously, their office would send daily sales reports to sales manager, who checked collected money agrees with report and collects money from solar ambassador; then sales manager sent money to the Altech office via a local bank branch. It was a very cumbersome process but now they’re using mobile money.
- There was a close collaboration between the tech guys and people in the field, so they could change inputting errors to eliminate differences in the app and cash collected. They setup Whatsapp groups so they could connect on issues immediately.
- Angaza were very much involved in the training of their team, which included technical info and how to market the product to households.
- Altech competes with international companies in the same space by having more local people on their team who know the market very well. Also they focus on distribution, not the design of new products. Solar technology is changing so fast, and it’s not easy for vertically integrated companies to change product tomorrow but Altech can switch suppliers very easily.
Links to resources:
Connect with guest:
- Email address: firstname.lastname@example.org
- Washikala on LinkedIn
This is great!
How do manage working capital;
Is the organization profitable or does it break even;