How a health-care nonprofit learned a lesson from the Avon business model.
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The Responsibility Project
In 2004, Chuck Slaughter was working as the pro-bono president of a non-profit drugstore franchise that his hedge fund manager friend had started in Kenya. As he traveled through the country visiting tiny local storefronts, he realized that the way medicine gets delivered in East Africa was hugely inefficient. The women who ran pharmacies would get a flood of business for a moment, and then they sat there twiddling their thumbs until the end of the day when people came by again. "They had all this unproductive time," Slaughter tells Fast Company. "We wanted to experiment with getting them out of the stores and into the communities."
Four years later, Slaughter--founder of the successful travel wear company TravelSmith--launched Living Goods, a San Francisco-based non-profit that's bringing health care door to door to 30 communities in Uganda. Slaughter had noticed that East Africa in 2010 was a strangely similar marketplace to America in the late 19th century--lots of rural women with scant access to quality products and a lot of time on their hands.
It made him think of Avon, the cosmetics company that tapped into this type of market in America in the 1880s by training Avon ladies to take the market to the people instead of the other way around.
To find out exactly how this model works, Slaughter signed up to become an Avon rep near his home in California and learned some tricks that would help him with his business. "Avon has a simple but brilliant tool that we shamelessly knocked off," he says. The company provides all their trainees with two blank worksheets. On the first worksheet, they make a list of everyone they know--friends, family, coworkers, community groups--and create a social map of their networks. The second worksheet is their field planner where they draw out a marketing plan based on the social map. "It gives agents confidence that they have something to build a business on," says Slaughter, "as opposed to pushing them out the front door with a bag of lipstick."
For Living Goods, Slaughter used these worksheets not only to help women create a marketing plan, but to target and hire the most networked and potentially high-earning women. He visited the local village councils to get recommendations on who was most likely to succeed, and received approval from Uganda's Ministry of Health to sell three or four basic medicines to treat diseases that accompany poverty like malaria, diarrhea, worms, and tuberculosis. "Collectively, these health areas account for 60-85% of child deaths," Slaughter says. "And each can be addressed with interventions that cost less than a cup of coffee."
The Ugandan government has public health facilities that offer free pharmaceuticals, but it takes some women a day's worth of travel to get there. Even then, there's no guarantee that the medicine they need will be in stock. "We retail a child's dose of malaria medicine for 75 cents," Slaughter says. "For most women, to transport their sick kid to a facility and back costs 75 cents each way. We are cheaper than free, and we are saving them time."
The agents--called community health supporters--buy into Living Goods with two forms of capital loans: a fixed capital no-cost-loan for borrowing tools like a uniform, a storage chest, and a thermometer, and a low-interest loan of about $75 a year for purchasing inventory. If the women under-perform or break rules, their tools are repossessed. Slaughter says he expects up to 30% of the women--the bottom performers who are not treating enough patients or not generating enough sales--to be removed from the program within a year.
To date, Living Goods has trained over 600 women out of 30 branches in Uganda, some of whom are making more than $100 a week. The cost of training a community health supporter is less than $200 a month, about one-tenth of what it costs to open a new storefront, and the drugs are sold at an average of 30% less than what local retailers charge. The agents are required to visit every household in their service area at least once a month. This means that there is significant amount of time between visits, but Slaughter hopes to solve that by providing the sellers with mobile phones. "We are the first organized nurse-on-call system in East Africa," Slaughter says.
The community health supporters are not real nurses, but they are supervised by a team of nurses and undergo a two-week training program that educates them on the basics of health care. Last week, Living Goods announced that they received a $915,000 grant from the Omidyar Network. With this new funding, Slaughter hopes to expand his operations to Kenya, add new essential products--solar lighting, high-efficiency cook stoves, water filtration systems--and facilitate client-agent communication and payment transactions through mobile technology.
Living Goods may face some real challenges as it scales. It's likely to put local retailers out of business, augmenting the risk of backlash from pharmacy associations and doctors who could lose chunks of their market share as people gain awareness about disease prevention and stop buying from retailers that give them financial kickbacks.
And while Slaughter is having little trouble finding women competent enough to sell pharmaceuticals door to door, a larger operation could result in a management void that is harder to fill in a country that hovers near the bottom of the Human Development Index. Still, Slaughter is optimistic about the future. "There's a saying that goes: if they're shooting at you, you must be doing something right," he says. "That will be an indication of success for us."