Starting and running a solar lamp retail business in a developing country like Kenya is no small feat. Kenya lacks strong transportation infrastructure for product distribution, and the bureaucratic red tape is not only tedious but can be opaque to foreigners. Meanwhile, the customers who need and want solar portable lamps most are those who can least afford it.
Solar portable lamp companies, such as Little Sun, must navigate informal economies and limited distribution infrastructure to market and sell their products to customers who benefit from the environmental, social, and health improvements that these lamps can provide. (Source: Little Sun)
But although Kenya’s economy lacks many of the market and political institutions that facilitate business operations in the industrialized world, there is significant potential for businesses to support rapid economic growth and generate social impact. A variety of successful solar portable lamp businesses have reframed Kenya’s lack of institutions (let’s call them institutional voids) as opportunities for economic growth.
In 2010, two Harvard Business School professors published the book Winning in Emerging Markets: A Roadmap for Strategy and Execution, highlighting the opportunities and challenges of operating a business in a developing country. They also released a toolkit for identifying and dealing with a country’s institutional voids, raising the following questions that are pertinent to running a solar portable lamp company in Kenya:
- Do large retail chains exist in the country? Do they reach all consumers or only wealthy/urban ones?
- Do consumers use credit cards, or does cash dominate transactions? Can consumers get credit to make purchases?
- Is there a deep network of suppliers? How strong are the logistics and transportation infrastructures?
Successful solar portable lamp companies in Kenya are using a variety of strategies to address these challenges and to mitigate, avoid, and leverage the institutional voids that would otherwise deter or limit business operations.
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Across the developing world, retailers are selling solar-powered portable lamps that can meet basic lighting demands, reduce dependence on expensive and inefficient kerosene lighting, and contribute to important development goals like energy access and improved literacy rates.
Solar portable lamp companies must find innovative ways of restoring consumer confidence in their products after a flood of cheap, faulty models created a distrust of the technology (Source: OneDegreeSolar).
Small solar portable lamp companies are learning how to navigate the relatively unstructured business environments of developing countries, but a lack of consumer confidence in the unfamiliar technology is a serious deterrent to scalability. Confidence has been eroded further by the presence of low-quality lamps that mimic higher-quality products. To increase sales and improve both the social and environmental impact of solar portable lamps, companies must develop a dependable product and brand that is appealing to customers both familiar and unfamiliar with solar technology.
Gaurav Manchanda, an Indian-born entrepreneur and founder of One Degree Solar, found a new way to restore consumer confidence in a low-cost lamp that meets the standards of the Lighting Africa project. He developed a short messaging service (SMS) technology that both provides customer service and allows the company to monitor the social and environmental impacts of every lamp sold.
The use of mobile phone technology has skyrocketed in East Africa, and Manchanda’s development of a customer service practice that utilizes this unique market characteristic allows his product to penetrate markets previously characterized by uncertainty. Manchanda’s interest in tracking the social and environmental impact is based on his background in development work, but is also reflective of this market as a whole. Companies that operate in the solar portable lamp market are typically social enterprises interested in the triple bottom line of economic profit, social impact, and environmental health.
Manchanda realized that high-quality customer service is a competitive advantage and a way to generate confidence in relatively new and unfamiliar products among customers with very little purchasing power. With the help of an in-country partner, he developed an SMS platform hosted by Safaricom and Airtel that allows his company to send bulk text messages to purchasers of One Degree Solar products.
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