Thursday, August 5, 2010

Scaling out distribution: The Unilever way

The most common example of scaling out distribution is the ice cream truck or, as seen in Thailand, the fish truck. The ice cream truck in the US drives around suburbia playing The Entertainer through a loudspeaker; the children here the music and come running. In Jakarta, the Walls Ice Cream cart plys the narrow streets playing an unforgettable melody with similar effect (Walls Ice Cream is owned by Unilever).  Frames and Wheels rode through a remote town in the hills to the east of Chiang Mai and saw the fish truck: this is a pick up truck with ice coolers in the back full of fish and a large loudspeaker on the roof of the cab through which the driver broadcasts at startling high volume the selection of his inventory (Frames and Wheels saw the cat fish truck). These forms of distribution are common in emerging markets because of poor distribution networks, the remoteness of markets and perhaps poor infrastructure or transportation alternatives that prevent the customer from coming to market.

There is another example from Uilever, the consumer products company. In remote villages in India, the company appoints individuals to become dealers as well as educators for their products. The way Frames and Wheels understands it, there is a distribution point near a target market. But the target market is so remote or impenetratable that selling through traditional kiosks is too costly or difficult. Consequnetly, the company hires the people who use the product the most: in the case of detergent, it is women who run households. These women act as ambassadors for the product and convince their friends and acquaintenaces to use the product too. It is the Avon Lady model, but instead of cosmetics, it is household products. This is a great example of scaling out distribution. Applying this model or something like it to bicycle frames is one that Frames and Wheels will mull over and explore in a later post.


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