In the previous sections, we have determined that business to business (B2B) represents the best opportunities for craft producers wishing to take advantage of the Internet and related technologies to develop their businesses.
Here we present key recommendations, most of which are relatively easy to implement. We do not consider that the Internet currently offers a radical new business model for craft producers: but rather enhancements to existing processes and activities. We are therefore cautious about the scale of benefits offered by ICT for craft producers in the current market.
However we believe that appropriate application of some or all of the below can bring measurable cost-benefits to producers.
In the section Future Opportunities (see 8.6) we consider a wider range of options that involve more tangential business models and opportunities for consideration by fair trade craft stakeholders.
Although sales of craft
goods via on-line catalogues to individual consumers have been low to date,
catalogue-based web sites can be a helpful enhancement when dealing with
wholesale and retail buyers (B2B).
This is the approach
taken by specialist craft sites such as OneNest and PEOPLink, as well as more
generic virtual marketplaces such as Global Sources. However experience to date
suggests that offering a searchable catalogue on its own will not help
businesses find and win new customers. Rather this should be seen as an
additional service to help known buyers find products, review new designs and
samples quickly, before the buyer requests a product sample.
Producers will need to
continue to develop conventional (largely off-line) marketing to find new
customers, such as:
·
Attendance at trade shows
·
Advertising in relevant trade
publications/directories
·
Mailshots of
catalogues/newsletters
It is instructive to
note that this too is the direction taken by OneNest in their dealing with
retail buyers, whom they describe as very conservative in their approach to and
use of the Internet.
On-line catalogues also offer significant benefits when these are integrated with or linked to additional promotional materials such as:
· Stories of individual artisans (especially linked to featured products). These can include text and photos, as well as video content, where available. Such materials give buyers and (if well-presented) end-consumers a strong connection to the individual artisan and context of the craft products.
· Historical/cultural background to indigenous materials and processes
The Fair Trade Global Communication System feasibility study (Caserta 2001) noted that World Shops identified receiving information about producers, stories, images and characteristics of products as being a priority information need.
PEOPLink’s CatGen software enables producers to link this type of information to particular products and producer groups: both for the benefit of buyers, and for their own administration and organisation of content.
Many producers we have
spoken to consider design input from professional designers from the US and
Europe to be crucial to help them develop suitable export products.
Organisations such as Traidcraft (www.traidcraft.co.uk) have seen this as an important way of building local
capacity, to help producers win retail contracts. There have been successes to
date, with some producers winning contracts to supply UK and US retail chains.
However the cost of
sending a designer to work with producers for 1-2 weeks are high, and may often
be disproportionate to the amount of export sales smaller groups can achieve.
(For this reason, where possible, a designer may hold a workshop with a number
of producer groups at the same time).
A possible application
of Internet technology could allow a designer (or designers), based in Europe
or the US, to offer real-time consultancy and advice to producers using on-line
conference tools (such as Microsoft Netmeeting and others). Although this would
currently only be possible for those producers with robust (and ideally higher
bandwidth) Internet connections, the approach could be very cost-effective, and
would allow a designer to have input throughout the whole design process - and
not just concentrated within a brief overseas visit.
Existing conference
and meeting tools allow a group of users to share photos and other files, use
an interactive whiteboard, and share voice and video communications etc.
Peoplink have developed some tools to facilitate such conferencing,
but have not yet tested these with producers, due to lack of funding.
While it is likely
that a designer would still need to make an initial visit to a producer group,
this could extend the value of such visits significantly, and allow continuing
interaction.
Email has been identified as being by far the most important benefit brought by the Internet for developing countries. In Bangladesh, for example, 82% of Internet traffic consists of email; whereas in the USA the web accounts for 70% and email only 5%[1]This is largely a result of the relatively high access costs in Bangladesh, as compared to the USA.
Although Internet access costs are still a major barrier for ngos and small and medium sized enterprises in developing countries, the rapidly increasing number of community telecentres and cyber cafes provides increasing access to email, especially in urban areas.
Email has brought
enormous benefits to many ngos, development organisations and international
businesses. For those who have affordable access, email is a cheap and
effective way of communicating nationally and internationally - especially when
compared to the much higher per minute costs of long-distance and international
telephone/fax calls.
In a survey of fair
trade organisations, email was identified as the most important communications
medium, ahead of fax and telephone, by both producers and importing
organisations. Of 34 fair trade producer groups who answered the questionnaire,
91% had email (62% had a web site).
Email can also bring
significant benefits in-country too. In many of the less developed countries,
telephone and postal communications can be unreliable or non-existent. Using
email can bring considerable efficiencies in saving time and costs, and in
sharing key information rapidly among groups who may be far apart
geographically. Thus email has already brought many benefits to organisations
in processing sales information, assisting in product development, and enhancing
communications within organisations, and to those on the periphery.
Email also enables
digital images to be sent internationally quickly and at low cost. Although
digital photographs by their nature are not colour accurate (many ATOs prefer
producers to use Pantone charts as their reference point), they do give an idea
of design and shape, and can be a valuable contribution to developing new
products (especially where there may be considerable dialogue between buyer,
producer network and individual artisan).
In our workshop with
producers in India, we discovered that there were significant cost savings that
could be made if individual producers made use of the growing number of cyber
cafes, Internet restaurants or telecentres which are springing up in many urban
(and some rural) areas (see sections 5.3 and 5.4).
Delhi, for example, now has more than 1,000 Internet facilities offering access
to the Internet and email on a pay-per-use basis.
The feasibility study for a fair trade global communications system commissioned by NEWS! (Network of European World Shops) notes that producer groups in the developing world are in some cases making more effective use of new technology than their counterparts in Europe. Thus many producers have seized the opportunities offered by email to promote their goods and supply company information to prospective buyers; but many of the specialist ‘World Shops’ in Europe lag behind. According to the survey, an average of only 29% of World Shops in Europe (787 of 2741 shops) have email (and only 9% a web site). Only 3% of the UK’s World Shops (13 of 400 shops) have email, as compared to 43% in Germany (300 of 700) and 100% in Spain (62 of 62)[2].
The report notes that ‘many producer organisations are investing in Internet technologies to promote the organisation and products, increasing the use of email for communication with buyers’. Through organisations such as PEOPLink, many producers have received training on digital images and simple web page and catalogue creation, and have invested in simple digital cameras and computer equipment.
Barriers to the use of email by producers are identified as:
· slow or unreliable Internet connections
· small producer groups only having access to fax and telephone
· Internet connections only available to exporting organisations
In the same report, producers identified their top five most important communication needs in relation to importers as being:
· receiving feedback from importing organisations on sales and market trends
· sending to importers information on new products
· sending to importers photographs and descriptions of products
· sending to importers general information about themselves
· letting importers know the producers’ vision of fair trade (criteria, goals, strategies)
We conclude therefore that investing in email is one of the most cost-effective benefits of the Internet for producers, bringing both cost savings and improvements in efficiency and speed of communications. The benefits of email are:
· significant cost savings compared to international and national telephone and fax charges (incurred by producers when dealing with importing organisations overseas, or exporting agencies in-country)
· email can still bring cost benefits for the smallest groups and businesses, who cannot afford to buy, run and maintain a PC, when accessed on a pay-per-use session or hourly basis via a local telecentre or cyber café
· can speed up product development, especially when used to send and receive digital images, allowing importers to feedback more quickly on designs, colours etc
· as a preparation for e-commerce, email allows producers to develop cheap, simple marketing tools, such as a regular email newsletter, and to build an email list of buyers and contacts
The Internet and
related technology also present new media for promotion and marketing. While
few producers would think of creating their own video programmes, rapid changes
in digital video technology mean that £2000 can buy near-broadcast quality
equipment (video camera; laptop or PC equipped for video editing) that would
have cost five times as much two years ago, and even ten or twenty times as
much five years ago. Reducing costs and increasing standards present many new opportunities
for promotion both on-line and off-line.
As a demonstration of
what is possible, we have created a short 10-minute video programme to show how
one of HEED Handicraft's producers makes clay pots in Bangladesh. This was shot
on digital8 video, edited on a laptop, and output to video cd format (which is
common in Asia). Compressed formats of this programme could be streamed from a
web site, or even played in-store (from a video player, or multimedia kiosk
etc) to show customers the people (and their stories) behind the products.
Video and other multimedia formats (eg Flash presentations, slideshows with text/audio commentary etc) can be used to tell the stories of individual producers and groups, show a particular production process, give the community context etc. World Shops, which sell fair trade craft goods to consumers, consistently identify this kind of material as a priority need to help the promotion of craft goods (see Caserta 2001).
The sample video sequence is on the cd which accompanies this report. See 9.9.3.
While the Internet
allows individual customers and retail buyers in Europe or the US to see products from a less developed
country on-line, it also allows producers to see what craft goods and giftware
are currently on sale in key stores in the North.
Accurate, up to date market
information is a key component of successful export designs. This is currently
provided by a number of organisations, who provide market intelligence as a
service to producers.[3]
Often producers and designers rely
on magazines or catalogues (which may be out of date) - whereas viewing
products currently on sale enables producers to view the latest trend or
season, see room sets and on-line displays etc.
Caserta (Caserta 2001) identified
sales and market trends as being the top information need listed by both World
Shops and producer organisations.
We recommend therefore that craft producers make use of the Internet to view current products, designs, trends, colours etc in key on-line US and European stores on a regular basis. As part of the workshop conducted in Bangladesh, producers were exposed to both sample colour magazines and digital images (viewed on a laptop), as part of an exercise to evaluate different ways of gathering design information. The workshop found that producers were equally happy to work from digital images as magazine pages, and that the selection of images provided by the laptop encouraged producers to have more ‘effective’ designs.
However since many producers can access the Internet only on low-bandwidth connections (and where telephone lines are often of poor quality, as in Bangladesh), ATOs and other organisations could consider enhancing their market intelligence services by offering archived content on cd-rom Thus, for example, Traidcraft and others who provide a newsletter giving details of web sites and links could enhance their service by offering the actual content on cd (subject to copyright and agreement with on-line stores).[4] This could be a cost-effective means of enabling producers in remote areas to make use of the Internet in this way. Even where producers do not have their own multimedia PC, cd-roms can be accessed using the growing number of cyber/Internet cafes.
We also note the experiments of Viatru in this area. Viatru, before their collapse in April 2001, had set up a Visible Commerce Forum to share market information, give background information to producers (eg about seasons), recommend on-line shops etc. Viatru hoped that the Forum would grow into an interactive exchange for all stakeholders with an interest in fair trade products: producers, importers, buyers, retailers etc. This did not happen; though the concept is still worthy of consideration.
A range of the materials produced by Viatru for this forum, which are no longer available on-line, are included on the accompanying cd (see sections 9.1.1 and 9.9.3), along with sample archived web pages from on-line craft stores (see 9.9.3).
We have said that there is very little opportunity for disintermediation of the supply chain through B2C trade. Many of the barriers to e-commerce can only be solved by having a supply chain similar to the traditional one – ie a consolidation of products through a respected outlet which can hold stock and supply quickly on demand near the end market. These functions have been provided by ATOs (Alternative Trading Organisations) such as Traidcraft, 10,000 Villages etc. The model below represents this by the solid arrows flowing from one organisation to another.
However, Information Technology does offer disintermediation opportunities for information.
In the traditional fair trade business model of the 70’s, the market would tend to ‘see’ the handicraft industry through the eyes and images of the ATO (Figure 18). ATO retail outlets would offer some explanation of who produces the goods, and marketing from the ATO would promote the cause of the poor. Similarly the producers would only have an understanding of the overseas market through the information given to them by their local ATO intermediary.