The markets of Kinshasa function mostly on an informal, street-side basis with a highly concentrated pool of poor consumers and small enterprises. These consumers rely on access to small, affordable produce and offer great potential for micro-distribution by market vendors on the road and in small stalls. There is a high potential for income increases, particularly for women; this coupled with the potential for large consumer outreach, present significant opportunities for companies to expand their sales networks. Yet large international companies do not have access to these sellers so are missing a large space for product diffusion.
ÉLAN RDC collaborated with an international FMCG supplier in the DRC to test out a new model for micro-distribution that relies primarily on pedestrian power and road and lane-side micro-retail stalls. For one month 10 street vendors sold Nestlé products to over 1,000 small isolated retailers in the town of Ndjili. Each vendor on average made a profit of $36. It proved successful so ÉLAN RDC is now seeking other fast moving consumer goods to apply this to.
Kinshasa has a very efficient network of around 66,000 small scale sellers and retailers of whom 55% of women. 90% of everyday purchases are made at these informal boutiques, stalls and tables set along every street throughout the city. Poor Kinois mostly shop on a low-scale basis, preferring to spend small amounts of money on ‘micro-products’. Yet sellers do not have access to the majority of Fast Moving Consumers Goods (FMCGs) as suppliers’ traditional distribution systems do not reach them, being sent solely to market centres.
Blonde Mangana has been selling bread on the streets of Kinshasa for over three years in her district near the airport. Despite the availability of bread and its saleability, her margins were always low giving her little profitability. On average she earned about $30 a month and found it difficult to save anything.
Earlier this year she was recommended by her community to Nestlé to take part in a pilot scheme for a new system of distribution. This model was proposed by ÉLAN RDC to Nestlé to bridge the gap between international supplier and poor retailer in a cost-effective manner. ÉLAN RDC developed the idea to create a new service provider: the ‘vendeur à pied’ (VAP), who would distribute sachets of Nestlé products such as Nido powdered milk and Nescafé coffee to small points of sale throughout the city.
As the name suggests, the VAP would walk with the produce from one stall to the next selling strips of micro-products to small stalls within a commune. This would not only help reach retailers in some of the poorest neighbourhoods of Kinshasa but would also create new employment within the city.
ÉLAN RDC and Nestlé quickly launched a pilot in 2015 to test the model and employed Blonde as a VAP. In total 10 VAPs (4 of whom are women) were identified and trained by Nestlé and ÉLAN RDC and worked within the Ndjili commune to deliver milk and coffee sachets to more than 1,000 small retailers.
Blonde said: “It’s really easy for me. I meet my distributor in my commune in the morning who provides me with enough strips for the day and then I visit my clients in the neighbourhood. I earn much more than I did by selling bread which means I can save in order to continue my studies.”
The results of the pilot were promising. On average Blonde made a profit of $60 per month by selling around 45 strips of milk and 50 sachets of coffee a day. Thanks to her limited expenses she also managed to save $5 a day. These results proved the efficiency of the model and its potential for its scale up. By diversifying Nestlé’s offerings, it would be possible to increase the benefits of both the VAPs and the small retailers.
Nestlé is currently planning the extension of this model to 20 Kinshasa districts, which will equate to around 200 VAPs on the streets serving around 20,000 small retailers. For each VAP this will represent an increase in clients in their designated area. ÉLAN RDC will collaborate with Nestlé for this expansion, which will also allow a better understanding of how to reach, penetrate and how to work with this huge ‘base of pyramid’ market.