3 Global Trends in Last-Mile Distribution

On April 18, 2019, Angaza CEO Lesley Marincola co-hosted a webinar produced in partnership with the Miller Center for Social Entrepreneurship and Emma Colenbrander, Head of Global Distributor’s Collective to discuss top trends within the last-mile distribution industry.

Lesley discussed three emerging trends Angaza has observed by working with over 150 last-mile distribution businesses in 50 countries over the past six years. These insights include:

1) More distributors seeking to sell non-metered products, like clean cookstoves and mobile phones,
2) Distributors seeking enhanced data insights that predict potential client defaults, and
3) Distributors seeking solutions that enable better after-sales client support.

Hear more about these insights — and the solutions Angaza is designing to address them — on the webinar recording; or read Lesley’s transcribed presentation below.

Angaza CEO Lesley Marincola discusses three trends in last-mile distribution

 

Webinar Transcript Featuring Angaza CEO Lesley Marincola

My name is Lesley. I’m the CEO and one of the co-founders of Angaza. In the next ten minutes or so I’m going to dig into some of the needs that we’re seeing from a lot of the distribution partners that we work with and highlight some of the technology solutions we’ve created to address those needs. But before I dive too deep, I want to introduce you to Angaza if you’re not too familiar. We’re a technology company serving last-mile distribution businesses across emerging markets, across the globe. Our mission is to create the technology that allows these businesses to offer life-changing products to anyone, anywhere. We view life-changing products as any product that might help a client increase their income, save money, or increase their quality of life. So this is anything from a solar lighting product, to a motorbike, to a clean cookstove. Even laptops.

Our software platform enables distributors to fully digitize their business, get to know their clients, and ultimately help manage the complex realities of running a last-mile product distribution business. Angaza’s technology offers a full array of technology to help distributors at their headquarters, help them manage their sales agents, and help them stay in touch with their client base.

Today, Angaza works with over 150 last-mile distributors across the globe. And we work in over 50 countries with these partners. It might not be a surprise to you that about 80% of these last-mile distributors operate in Africa. And East Africa, specifically, has a very high number of distributors. What’s interesting is that we see about 10,000 platform users across these 150 last-mile distributors. So, this is anything from the management team of a distributor using our platform, all the way to their sales agent team which are equipped with a mobile app, called the Angaza Activator, that they’re using on-the-go to register new client information and collect payments. I’m proud to say that we’ve helped last-mile distributors sale over 1 million products. About 60% of these 1 million products have been large solar home systems. So, when I say large, this is typically over 6Watt solar home systems, and the 6Watt to 15Watt lighting and charging systems seem to be the most popular type of product. But, again, our platform supports all kinds of life-changing products.

And what’s interesting is that a key part of our platform is helping these distributors offer pay-as-you-go financing. So, essentially they can sell a product for a very low down payment and then collect continued payments over time as the client uses the product. And from those continued payments, we’re seeing about 95% of the payments being made via mobile money. I think this is very interesting because if you looked at this statistic five years ago, it would probably have been the reverse. Ninety-five percent of payments were being collected via cash. But now, because a lot of mobile money systems exist across these countries and a lot of distributors are using technology to manage their pay-as-you-go businesses, the trend has reversed, and most of these payments are being made by the clients in mobile money and deposited directly to the bank account of these distributors.

I hope that this gives you a sense of the varied ecosystem that Angaza works across and keep this in mind as I talk about the three trends that we’re seeing. I think the entire sector and industry has matured, especially over the last couple of years, and we’re seeing a lot of these businesses start to offer a varied product portfolio, and start to think about their relationship with their client, not just as a one-off product sale. But, really, there might be a pay-as-you-go relationship directly from the beginning, and it’s not just about that first product that the client might need, but after the client buys a solar home system, maybe they need a loan for a cookstove or a motorbike, and the last-mile distributor has built that relationship with the client to be able to offer multiple products.

Because Angaza is a technology company, I want to highlight three recent customer needs that we’ve been commonly hearing and the technology solutions that we’ve built to address them. One of Angaza’s company values is “Innovate with Empathy” and this relates to a lot of the work that we do with our distribution partners to understand their needs and know that the solution that we’re designing to meet those needs is going to be used and helpful. So, we use something called a human-centered design process. Essentially, we’re in the field with last-mile distributors trying to understand the challenges that they’re facing. We’re talking to their clients, their agents, we’re even putting prototypes, whether that be a pen and paper drawing, in front of the agents, or we mock up something quick through PowerPoint to help them interact with a piece of software or with a new screen on the mobile app. This is all to ensure that we’re designing something that’s useful for the distribution business, and that’s easily understood and used by the client base and rural sales agents.

 

Trend #1: Selling Non-Metered Products Risk Free

The #1 growing trend that we’re hearing from last-mile distributors is that they also want to sell non-metered products risk-free. The majority of the partners that we work with sell metered pay-as-you-go products. That means that these products have Angaza’s embedded metering and monitoring technology inside of the product, such that the product will turn on or off based on whether that client has paid for time on that product or not. Essentially, the client will prepay for a week of light and the product will turn on for that week, but once that time runs out that product deactivates automatically until the client pays again.

So that scenario is the metered product, but that technology can only be embedded in a product if it’s an electronic product that has a circuit board and a battery inside of the product. But many last-mile distributors are selling what we call non-metered products. This could be a ceramic clean cookstove that doesn’t have an electronic component. And they still want to offer consumer financing for these types of products because they tend to still be too expensive for a typical off-grid family.

So we continue to hear about this need to offer non-metered products risk-free and we noticed that a lot of these distribution businesses often sell a variety of metered and non-metered products. To address this need, we developed a technology solution to remeter a metered product such that it can be the technical enforcement for a non-metered product. What I mean by that is once a client pays in full for a metered product, like a solar home system, the product will unlock for good and it no longer has metering as a part of it. But if that client wants a subsequent loan for a non-metered product, that distributor can re-meter that original metered solar home system and turn it into that lock-unlock state again such that it can enforce the loan for that clean cookstove. So, we’re seeing the up-take of this feature, especially with distributors that are selling a variety of these products. It’s helping them control the risk of being a consumer financing business.

 

Trend #2: Predict Potential Client Defaults

The second trend is no surprise, probably, but a lot of last-mile distributors offering consuming financing are taking the risk of paying for that asset up-front while the client pays for it over time. They need to better predict against potential client defaults. Distributors need to know out of their entire client base which of their clients have low risk, meaning the client understands how to use the technology, they have enough buying power to make payments, and they’ll most likely stay on a pretty sure payment plan through paying off that product. But there are clients that are much higher risk and the distributor needs to know who those clients are and how to deal with them. If you think about a big part of the cost of last-mile distribution is client follow-up; you don’t want to send a sales agent out to a client if they don’t need it. Especially if they aren’t part of that high-risk category. Angaza has aggregated a lot of the data that we see across payment trends and client demographic information, and built a series of predictive data science models that helps distributors understand the risk of these clients and take action accordingly. This enables distributors to focus their time and resources on the clients that need specific types of follow-up.

 

Trend #3: Better After-Sales Client Support

An overarching distributor need is providing better after-sales client support. Again, distributors are starting to think about that long-term client relationship and their reputation is a big piece of that. They need to build trust from the client over time. One thing that we’ve done to address this need is help enable manufacturers with a GSM technology. Again, this is for metered products, typically solar lighting systems. You can essentially turn that system into a cell phone and transmit data bidirectionally between that product and Angaza software. This provides the ability to wirelessly transmit both diagnostic and usage information from these types of products that have already been sold to the client and are living in the client’s home.

last mile distribution unit healthYou can see above, just in a snapshot, how this GSM technology helps last-mile distributors. That “Unit Health” bar that you see in the snapshot shows how you can monitor battery performance remotely, solar charging behavior, and more. Ultimately, what this enables a distributor to do is when a client calls in and says, “My product isn’t working. Can you help me?” the distributor is very likely able to help them over the phone. It might just be that they positioned the solar panel incorrectly and need to move it into full sunlight, rather than sending an expensive sales agent out to help that client.

Learn more about Angaza’s technology solutions for last-mile distributors. Schedule your demo today.