Tell us a few words about the founders and how the idea came
As a father of three, the founder of Wasoko, Troels Plenge wants his kids to grow up in a better world. The climate challenge is one problem of many our society needs to solve. Troels has a background in IT and food logistics. This gives him an advantage in deriving a solution to reduce food miles, food waste and to move food production closer to consumers. Working with the largest Danish online grocery retailer, made him think of how to shorten food miles and enable food to go directly from a farm to the end consumer. This brought the idea of a peer-to-peer platform for food distribution in the fall 2015. The entry barriers in Denmark were too high for such a solution and the climate only enables food to be produced few months a year. Therefore, the idea came to start in a little developed market, where food could be produced all-year-round and the idea could make even bigger impact. In January 2016 Wasoko was created and started its operations in Kenya.
Why Kenya? In Kenya, up to 50 percent of the produce grown never reaches consumers and food prices tend to be very high and volatile. Due to this situation, almost half of the Kenyans’ income is spent on food and only few can afford healthy and nutritious products. Retailers also face challenges by using a lot of time to get the produce to their shops. At the same time, farmers strive to get market access and need to rely on brokers visiting the farms. As a result, they are often not able to get the best price or even sell their produce.
Your products and services
By building on the recent internet development and the mobile payment solution of M-PESA, we create a reliable peer-to-peer platform for the agri-food supply chain. Wasoko connects all involved parties along the food supply chain and gets food from producers to retailers fresher and more affordable. In this way, retailers firstly place orders at Wasoko.com, then Wasoko finds farmers to supply the produce and have it harvested. Later, Wasoko organizes drivers to deliver the produce directly from the farmers to the retailers. We do it with the shortest route and the best utilisation of vehicles or warehouses. In the end, all the parties verify the transaction by SMS.
Your success factors
We have a very strong team both in Kenya and in Denmark. Our main competencies are in logistics, food engineering, supply chain management, and community management. Moreover, we believe that Wasoko can benefit all the stakeholders along the food value chain.
Your factors differentiating and disruptive compared to the existing
The current solutions for sourcing fruit and vegetables in Kenya are primarily the centralized wholesale markets. In that case, farmers rely on multiple layers of middlemen to get their food from the farm to the market. Drivers have to make an effort to the wholesale markets, as these places are often very crowded. Then retailers have to go to the wholesale markets to bargain with the wholesalers and get the produce by themselves to the store, which is often time consuming.
Wasoko offers a different, but more effective alternative than the above mentioned solutions. For example, Wasoko is mainly a facilitator offering a platform for all the parties in the supply chain, rather than being a wholesaler. Furthermore, we do not own any infrastructure, instead we aim at enabling local people to build up, operate, and run their own infrastructure, so this would contribute more to the local community, compared with infrastructure operated and owned solely by a company. Also this helps lower our cost significantly.
These differences give Wasoko more advantages. Firstly, our solution entails a distributed nature, which gives an advantage in testing and improving the logistical processes. Because all products are not passing through central warehouses, new logistical process can be tested and implemented. For instance, a new type of crates can be tested with one truckload alone, as it does not have to go through a central warehouse using standardized processes. This will allow us through rigorous testing to bring the current process to a whole new level in a short time. Our model is highly cost-effective as it enables implementing an efficient supply chain. Once we have a fully-functioning operation, it can be deployed in new markets at a very low cost, as no costly infrastructure is needed to be built or operated by Wasoko. Furthermore, as the infrastructure implemented does not belong to Wasoko, it stimulates competition in the marketplace, where other operators can offer similar services to Wasoko, increasing the competition to the benefit of the local community.
The model has not been implemented before in developing countries, as it requires network coverage and e-payment solutions only being present in recent years.
Your business model (how do you make money?)
Wasoko is the facilitator of the platform and we provide the necessary logistics to connect farmers, drivers and vendors. Therefore, for each order from retailers, Wasoko takes a commission of 10% to cover the expenses and support further expansion. The long term plan to achieve this is as follows:
- Firstly, we connect farmers, drivers and retailers and use technology to implement just-in-time logistics and introduce standardized crates to ensure traceability and efficiency;
- Secondly, by cooperating with micro-lenders we enable local entrepreneurs to set up and operate the missing parts of the supply chain, such as small warehouses and hubs for consolidating/sorting the crates;
- Thirdly, to provide a stable demand we set up partnerships with retailers outside the local market or companies processing the fresh produce;
- Fourthly, we employ rigorous testing, such as the size and the type of crates and the ways to engage customers, to continually optimize our operation.
Since July 1st of 2016, Wasoko has been testing and modifying the platform in Nairobi, Kenya. We started with delivering tomatoes through SMS communications. By 19th of December 2016, we have successfully delivered more than 65 tons of tomatoes to around 53 retailers. We have worked with 11 farmers and 5 drivers, and we have delivered for 53 times. We take orders from retailers on Monday, contact and confirm orders with farmers on Tuesday. On Wednesday we arrange trucks to pick up ordered tomatoes and deliver the tomatoes on Thursday. We are trying to settle all the payment through M-PESA, a Kenyan mobile payment solution. Just recently, we started to test a mobile application and right now we measure its applicability in Kenya.
We focus our work mainly on supporting smallholder farmers, drivers, vendors and local entrepreneurs and therefore, measure our success by reaching with our platform as many of them as possible. Smallholder farmers rely mostly on the middlemen to sell their produce and lack direct connect to the food market. Therefore, by including the farmers in the supply chain process, Wasoko creates value by helping them sell more products and generate more profits. Retailers, supermarkets, or food processors, are often dependent on middlemen and wholesale markets to get fresh food from farmers. Wasoko can provide a reliable food distribution contributing to more sales, fresher products due to a more efficient logistical process, and cheaper goods. By connecting the farmers directly to the retailers, we increase food traceability and transparency. We are able to provide knowledge about the food, how it is handled, and where it comes from. Moreover, we also support drivers, who own vehicles but lack efficient route planning. Wasoko helps to arrange the routes making sure they are time efficient and optimized. That means a larger profit while allowing the vehicles to be used every day of the week. We also focus on enhancing the drivers working conditions by implementing smaller crates. That will further minimize work injuries and make the process safer for the drivers. Wasoko also tries to empower and support people who would like to start up a business by building and operating missing infrastructure along the supply chain, such as warehouses, sortation hubs, and cold storage facilities. We thereby create more opportunities for local entrepreneurship and cut unemployment. Wasoko does not build warehouses or logistic infrastructure like sortation hubs but instead focus on supporting the local´s to build and manage them. We help analyse their business case and partner up with micro-lenders to provide financial support.
Besides, by building a fair and more sustainable food system, Wasoko is able to minimize environmental footprint and food waste. Farmers are able to reduce post-harvest waste as we help them sell more. Moreover, we will also contribute to the reduction of food milage by arranging the shortest routes for food delivery. Indeed, it is because of our impact on the environment that we are supported by Climate Kic, Europe’s largest public-private innovation partnership focused on climate change.
A few words about your competitors
Companies like Twiga Food in Kenya or Meicai in China are our main competitors in this field. Their models are more or less the same, namely setting up the missing infrastructure along the agri-food supply chain, such as warehouses, cold storages, and even vehicles, and deliver food directly from the farmers to the retailers. However, the main difference with this model is that they require continual and massive investment, as they need to build the entire missing infrastructure by themselves. Thus, this limits its potential to scale up fast and expand into other parts of the world. Here, Wasoko has an advantage, mainly facilitating the logistics operations and supporting the creation of the environment, where local entrepreneurs can be in charge of these investments. Wasoko´s long-term vision is to contribute even more to the communities by giving the platform back to the users and transform it into a cooperative platform owned by the people.