Chuck Slaughter, founder of clothing company TravelSmith, has a secret he doesn’t often share: He’s an Avon lady. But he only enlisted to better research the cosmetics giant, he explains, having had a “eureka” moment. If children in developing countries are dying because their parents can’t find or afford the requisite drugs, then why not deliver low-priced drugs to their doorsteps using an Avon-style direct sales technique?
In 2004 Slaughter had been hired to turn around the struggling Child and Family Wellness Shops—microfinanced franchises in Kenya that distribute affordable medical products and services to remote communities—and he only succeeded, he says, once he had “gotten the clerks off their tails” and into schools and churches to sell their wares. “And later I thought maybe we don’t need the store at all. Maybe it’s not McDonald’s we want to imitate, but Avon.” (See “Micro-Franchise Against Malaria,” Stanford Social Innovation Review, fall 2007.)
Slaughter now helms LivingGoods, a nonprofit he founded last year that sends its version of Avon ladies—white-uniformed “health promoters”—knocking on neighbors’ doors in 200 Ugandan communities. (That number will rise to 680 over the next few months.) From fat shoulder bags they sell low-priced medications for the four diseases responsible for more than two-thirds of childhood illness and death—malaria, diarrheal diseases, respiratory infections, and tuberculosis. But like Avon ladies who also pitch Shaklee and Herbalife products to their captive audiences, health promoters offer a variety of goods: prophylaxes such as bed nets and water treatment pills, eyeglasses, first aid staples, personal care products, birth control, and, yes, cosmetics.
Slaughter enlists only women for the same reason Avon did at its start in 1880s California: Rural women need a job they can fit around children, a husband, and perhaps a farm, and they tend to have strong connections in communities with poor access to quality products. Also like Avon, LivingGoods provides a workbook wherein agents can map all their social connections, and from that create an outreach plan. Slaughter says he’ll also experiment with direct sales’ practice of rewarding agents who move the most product. “At Mary Kay you get a pink Cadillac; we might give you a pink bike.”
LivingGoods has tailored Avon’s franchise model to suit Ugandans’ needs. It carefully selects its agents from a pool of women entrepreneurs already signed up with BRAC, a global microfinance institution and LivingGoods’ joint venture partner. It then gives the agents a free starter kit (uniform, locking storage chest, and banner for the home or market) and a below-market loan from BRAC to buy inventory from LivingGoods, which sells the women products well below market rate, having bought in bulk from a direct importer. (The women keep the gross margin on every sale.)
LivingGoods can keep prices low on essential medicines by raising its profit margin on other products. Oral rehydration salts, for instance, are 30 percent below market rate at 15 cents a pack. “In these markets you can be two pennies cheaper and people will come to you,” Slaughter says. Health promoters might soon offer malarial treatment gratis if Slaughter closes a deal to have Uganda’s Ministry of Health provide it for free.
Health promoters also establish trust and identify their clients’ health issues before they bring out the goods. They visit every household on their maps to take health surveys, and will have conducted several monthly health forums on pertinent topics—“just a small group of women meeting by a tree,” Slaughter says. When they do start selling door to door, they must hit at least 150 households—as far away as can be reached on foot or bicycle. And if they can’t meet a family’s health needs, they refer their customers to secondary care in the public system. “Malnourished children, for example, need to get into the public system quickly, but one of our goals is to reduce the burden on that system by preventing these problems,” Slaughter says.
Slaughter also hopes to arm the health promoters with more products for the very poor: high-efficiency cook stoves, solar lanterns, pedal irrigation pumps, and water filters. He’ll soon expand with BRAC into Afghanistan and Rwanda, and if discussions go well, partner with an American direct sales business that could put a dent in the $15 million he wants to raise. The potential business partner “won’t make as much money as it does selling cosmetics to the upper class, but it wants to do this for all the right reasons.”
Read more stories by Jennifer Roberts.