This article is the second in a three-part series exploring the role Mercy Corps played in bringing solar power to rural Uganda.
In our first article, we explored how Mercy Corps conducted a comprehensive market analysis, which painted a picture of strong potential demand for solar lanterns from rural farming families.
How demand meets supply
Mercy Corps didn't give out a single solar lantern. They didn't give out any grants to buy solar panels. But, what the international nonprofit did do was bring solar to rural Uganda.
How? Market facilitation. It's a mouthful, but it's kind of like matchmaking, and it’s a key role nonprofits can play to boost local economies. It involves figuring out who all the players are and what they each want: displaced families returning after fleeing war and ready to restart their lives, farmers with savings that fluctuate with the harvest seasons, solar companies based in urban centers wary of “customers” who live on a couple of dollars a day, entrepreneurial local shop keepers interested in boosting sales but with little business training, and microfinance institutions with smart payment plan options.
With this lengthy list of players and armed with information from the comprehensive market analysis they conducted, Mercy Corps was ready to light the way for solar.
1. Have a product demo
Before buying an expensive product, no matter how amazing and life-changing it claims to be, most people want to touch it. They want to push its buttons, hold it, see a demonstration, hear others’ experiences with it. They want a product demo.
To satiate this need and build up demand, Mercy Corps set up sessions under mango trees in major trading centers throughout the District. They explained how solar-powered lanterns work and demonstrated the mobile phone charging component. To help people conceptualize how much they’d save by switching from kerosene to solar, the team helped families add up how much they typically spend on fuel and phone charging over a week, a month, a year, a few years. When they saw how much their incremental spending added up to, people were shocked.
The shop owners who attended the mango tree sessions saw that people were interested in buying solar products. To boost the supply side of the chain, Mercy Corps hosted a ‘meet and greet’ under a tent in Pader District’s main commercial center for the shop owners to develop personal connections with the Kampala-based solar companies. The solar companies shared more details about their products. Financial institutions were on hand to talk about small loans for the upfront costs of buying inventory. And Mercy Corps shared results from its market analysis to estimate how many solar products a small business could expect to sell and how much profit they’d make.
2. Develop good partnerships
If anything turns off a consumer to a new type of product faster, it’s a product that doesn’t work. The results are called ‘market spoilage’ and it happens with products sold in stores everywhere, from Wal-Mart in Idaho to the corner shop in rural Uganda. Mercy Corps needed to ensure that if families were convinced to allocate their kerosene budget to solar, the solar products worked. If the products didn’t function well and support wasn’t available for maintenance, disillusionment would replace curiosity and solar didn’t stand a chance. Given this need, Mercy Corps identified two respected companies to work with on the pilot, which meant working with two different models of distribution.
Barefoot Power’s distribution model gives shop owners two options: become a distributor or a microfranchisee. Microfranchisees can buy fewer products upfront and enjoy a larger profit margin over the long term than distributors. In order to become a microfranchisee, however, Barefoot requires entrepreneurs to enroll in and to pay for a special five-day business training course as well as to cover transportation costs to get to it and food and lodging costs throughout attendance. The course, given by Barefoot, puts the company at ease knowing that their products are being sold by people with both basic business know-how and a more comprehensive understanding of their solar technology, resulting in stronger sales and better customer service. Significantly, all the shop owners that chose to sell Barefoot products also chose to invest to become microfranchisees.
To make things a little easier on their new trainees, Barefoot moved its training course from the capital, Kampala, to Gulu, a northern town closer to most of the shop owners’ villages. Shop owners received training in basic accounting, general finances, creative sales and marketing, basic solar product function and maintenance, as well as details on how to order more inventory.
“The community members who subscribed to Barefoot Power’s entrepreneurship training have grown into successful micro-franchises who employ other community members,” said Anne Kayiwa, Barefoot Power’s Uganda sales and marketing director.
With the Mercy Corps partnership and promotional efforts, the number of Barefoot Power distributors in the area increased from two to 10. For us that meant more outreach, more sales, more customers and users, more market penetration, and more awareness of Barefoot Power solar products. It was a multiplier effect.
D.Light took a different approach to its distribution model. When a local savings and credit cooperative institution, Agaru SACCO, attended Mercy Corps’ meet and greet, they were so enthralled with the product and the idea that they decided to become D.Light’s “dedicated distributor.” Agaru pledged to exclusively sell D.Light’s products and to couple their sales with a microloan to families who needed a payment plan to purchase one.
3. Start marketing
Ok, now we’ve got shop owners trained to sell solar (along with some handy business skills, too), a microfinance institution at the ready, two solar company partners, and curious consumers. To put the final solar puzzle pieces together, Mercy Corps had one last chore: to build buzz around solar.
Rather than get behind any one company, Mercy Corps made sure it promoted solar power itself as the brand. On the supply side, the team produced promotional materials like posters, created “how-to” pamphlets and hosted discussion groups about marketing, and developed special business cards indicating a shop is a solar distributor. On the demand side, the team gave presentations at schools, community organizations, and to government officials about the benefits of solar and the new availability of the products at local shops. The African Media Development Initiative found that almost 48 percent of Ugandans report the radio as their main source of news while only 1 percent report print media as their main source. Knowing radio’s extremely high penetration, the Mercy Corps team featured every shop that signed on to sell solar in a radio spot that gave listeners the shop’s address and phone number.
And then Mercy Corps stopped. That was it. The team had played the role of the market facilitator, creating relationships on the supply side with marketing materials to push out, and pumping up interest on the demand side through education. Now they had to sit back and watch to see if it would work.
And that’s where our third piece in this series comes in. Find out what kinds of challenges the team faced and how it plans to leverage this new distribution channel to get even more low-cost, lifesaving products to rural Uganda.