2. In the developing world, there are two main supply chains for food, drinks and
other everyday products. Both start at the factories of the very few and large
CPGs (consumer-packaged goods companies), who then sell to wholesale
distributors to cover the national territory (sometimes this is performed
internally, as is the case of Coca Cola). These wholesalers then split the same
goods into two distinct channels:
The modern trade ends in large supermarkets and delivers products cost-
effectively but only to the richer segments of the population.
The traditional trade is composed mostly of hundreds of thousands of small
retailers (tenderos in Spanish), who sell to the millions of Base Of the Pyramid
consumers
Unfortunately, the small retailers are not very efficient, due to little business
education and the dearth of adequate enterprise tools (they are the only type
of business without any accounting!). This results in the “poverty penalty” that
makes poor consumers pay more than rich ones for the very same product. It
also makes the small retailer a very unstable and weak business. Finally, the
whole supply chain is very opaque and costly, making the CPGs wish for more
market data and other services like electronic orders and payments.
But fortunately, the situation is changing. On the one hand, the retailers
increasingly have access to financing options from Micro-Finance Institutions
(MFIs) to acquire productive assets and working capital. On the other hand,
they are already adopting technology in order to sell virtual products like top-
ups for mobile phones or to allow payments for utility bills. The mobile devices
used for these services are experiencing a fast evolution that is turning them
into smartphones as powerful as computers but much easier to use.
3. Given the size of the BOP in emerging
markets, it is not surprising that the
market for micro-retailers is also
huge. No one knows for sure, but
estimates for different countries show
that 1 in 80 to 120 people is a micro-
retailer. In family terms, this means
that 1 in 20-30 families in the whole
country derive their main income from
a shop. In absolute numbers, there are
800 thousand micro-retailers in
Mexico, half a million in Colombia.
Through them flows a significant
portion of national GDP, representing
most of the consumption of the BOP.
4. There is therefore a large market
opportunity to equip retailers with the
tools and connections they need to
take their business forward and
transform their relationships with
suppliers and funders. At the same
time, that would help the large
organizations that already work with
retailers, and this alignment of
incentives would make the diffusion of
the tools much easier and faster.
CPGs could benefit from an increase in
transparency by understanding their
market and its dynamics better. They
would also be able to place targeted
