Adaption to Alternative Marketing Approaches for Livestock and Dairy Products
This post is written by the Feed the Future Bangladesh Livestock Production for Improved Nutrition Activity.
The pandemic that unfolded in Bangladesh in March 2020 has affected all lives and sectors. However, small and medium-sized enterprises have been hit the hardest. The weakened linkages, broken supply and distribution channels, lack of finance, and changes in the purchasing power of customers have all been threatening the existence of these businesses. This could have ramifications across multiple sectors including the economy, health and nutrition, and political and social stability. As usual, the pandemic has significantly impacted the livestock sector in Bangladesh.
The COVID-19 situation analysis conducted by the Feed the Future Bangladesh Livestock Production for Improved Nutrition Activity revealed that 70 percent of the livestock farmers surveyed witnessed a change in their income from milk sales due to challenges in accessing the dairy market. Livestock-related enterprises, such as dairy processors, also suffered a 42 percent decrease in sales. As local dairy processors were unable to reach their customers due to the lockdown, the activity facilitated alternative online delivery channels for them to continue their dairy processing business and to help minimize economic losses for farmers.
Feed the Future Bangladesh Livestock Production for Improved Nutrition is a USAID-funded activity implemented by ACDI/VOCA. The activity works to increase livestock productivity for income and improve nutrition for rural households through the consumption of quality livestock foods. As part of its COVID-19 response plan, the activity undertook a number of program adaptations and focused its immediate efforts on restoring market access for local dairy producers and processors. The activity carried out rapid market monitoring and tracked the performance of local dairy processors to identify business struggles and opportunities. The activity has promoted alternative marketing strategies by linking online food delivery platforms with local dairy processors and help them reach new customer segments while minimizing the negative economic impacts on their businesses.
The activity facilitated virtual dialogues between selected dairy processors and Foodpanda, a leading online food delivery platform. This platform allowed the processors to use an alternative channel to reach their customers during the pandemic. The activity initially facilitated dialogues in the district of Satkhira (one of the southern districts under the FTF zone) where there is a higher concentration of dairy processors. Activity staff reached out to interested dairy processors and linked six dairy processors to subscribe to the online platform. Within two months, dairy processors saw an increase in their sales and were recovering losses. Building on the success of the response in Satkhira, the activity continued to replicate this response strategy in three other working districts including Jashore, Khulna and Faridpur. With the adoption of a new online retail channel, dairy processors were able to sell their products, which they would otherwise not have been able to do during the lockdown.
Since the beginning of the COVID-19 crisis, the activity focused on improving access for market linkages as well as building market actors’ ability to respond to this crisis. Therefore, it was required that the activity put extensive efforts in understanding and designing immediate responses to support enterprises and markets. As the activity prioritized its market access initiatives to bring in immediate results, it slowed down other planned activities such as capacity building initiatives for farmers and entrepreneurs. However, the learnings from the assessments and immediate responses helped activity reflect and plan its interventions around capacity-building in the near future, focusing more on the sustainability aspects of market linkages for livestock farmers and enterprises.
Another challenge the activity faced initially while facilitating the business model pivots was that only pivoting the business models i.e. diversifying or setting up new distribution platforms does not always have an immediate impact on sales. Initially, the enterprises that were selling through the online food delivery platform were experiencing slow sales growth. However, after investing in promotional activities, the enterprises saw sales accelerate. It was evident that pivoting business models also require promotional and other activities to see changes in sales.
Even under the adverse impact of COVID, more than 95 percent of the livestock entrepreneurs surveyed by the activity during the pandemic were confident in their ability to bounce back from their initial losses. The prolific adaptations to new platforms and promotional activities launched by smaller businesses under the pandemic condition were particularly surprising and interesting.
The processors witnessed an increase in their sales and were able to recover the economic losses to a great extent. From May to July, the activity linked 44 dairy processors to the online food delivery platform. Based on a recent study by the activity, 18 of these dairy processors delivered orders to 34,892 customers between May and July and sold 196,329 liters of processed milk products for $131,170. As a result of the pivot, local dairy processors were able to support smallholder farmers with regular purchases of their milk. New customers are added to the client base of the dairy processors and product demand has surged for more diversified products such as cheese and yogurt drink. Diversification in clients and products has helped build the capacity of these market actors to practice more resilient marketing strategies.
In thinking about how projects can adapt, here is what worked best for the activity:
- Pivoting to traditional dairy processors’ business models, i.e., diversifying or setting up new delivery platforms. This became part of a creative facilitation process supported by the activity and can be learned as an effective way for small businesses to survive and thrive amid the COVID crisis.
- Investing in remote capacity building and promotional activities to help local businesses participate effectively in new and innovative ICT based platforms. The activity was able to provide critical data analysis to businesses, including data on performance gaps and loss recovery, to inform which new customer segments to target.
- Diversifying delivery channels to help businesses remain resilient in many ways. As restrictions begin to lift, sales are not collapsing, and dairy processors are still serving customers both in-person and online.
- The introduction of a new platform, thus adding a new customer segment for many dairy processors. The dairy processors’ adaptation clearly demonstrates that increasing their client base through new and alternative channels should be a regular response strategy, as it allows them to diversify their revenue streams and mitigate risks.
- Assessing the inherent risk and risk management perspectives of business pivoting is an essential exercise to conduct under such a crisis with respective private sector partners in order to sustain gains.