Distribution Trumps Innovation: How To Win In Emerging Markets

, Distribution Trumps Innovation: How To Win In Emerging Markets
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, Distribution Trumps Innovation: How To Win In Emerging Markets

Senior C-level exec of 2ndBase Inc., strategist, and seasoned entrepreneur.

Back in 2013, I was the CEO of the biggest price comparison site in Africa. We’d built one of the first bar-code scanning shopping apps, taking that all-important step to create a cross-over between the online and retail (offline) worlds of shopping. This led to us being awarded the mobile app of the year, internationally, beating 150,000 other entrants.

This success and resulting PR would lead to lots of downloads, right? Wrong. This taught me a very, very important lesson: Distribution trumps innovation, especially in emerging markets. We eventually got to a million downloads in the year after the award, but it cost us probably the better part of a million dollars to get there.

If you don’t have your distribution methods and channels worked out very well and in advance, it’s going to cost you time, a ton of money and opportunities. But be aware, emerging markets respond differently in terms of product fit and how to get the product to the customer.

In terms of achieving product fit, too many times I find that international players (read, established market companies) think all they need to do is copy what worked in the U.S. or Europe and it will fly in emerging markets such as Africa and Asia.

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In Asia specifically, the way local players copied, perfected and then overtook established companies is a great example. Just look at how companies such as GoJek and Grab are dominating app-based ride and delivery services in Asia. They are way ahead of giants like Uber and Lyft.

If you’re looking to expand or grow in an emerging market, you’re going to have to know how to target differently. No easy replication is going to deliver results.

I saw this need for market-specific strategies and plans while rolling out a video-on-demand service across Africa. We initially came into the market with top-quality western content that looked good in press releases but hardly worked on the ground. What customers were looking for was local content — and lots of it.

This misstep in content didn’t stop us from exceeding our go-to-market projections though. Our saving grace? We got the distribution right. We’d partnered with mobile phone operators across Africa, which meant we could get our product into millions of users’ hands. This gave us the (small) luxury of time to fix the product.

Once you have product fit, the next important challenge is distribution. You might have the greatest tech, but if you don’t play clever and know who you’re dealing with, it’s going to be very (very) difficult to get them.

The complexity here is trust. Emerging markets are very low trust environments. And this will be the same with all the parties you need to deal with, from users to partners, regulators to banks.

It’s going to be a key part of your strategy: how to win and establish this trust throughout the value and delivery chain. The adoption of new tech, and more so mobile and internet businesses, has been very different in emerging markets compared with established markets. 

Most African markets got their first real feel for the internet through mobile, and so they play in that arena. But don’t make the mistake of thinking that means just a clever mobile app because there’s very little trust in app stores, and most phones don’t have enough memory to just keep downloading apps. And don’t forget that in emerging markets, a download costs data and data costs real money.

Also, just because the route is mobile doesn’t mean that an app is king. After we’d spent a ton of money getting users to download our “award-winning” app, we learned that as much as 75% of our traffic was coming from the mobile web, not our app. It used less memory, and there wasn’t a threat that our app might chew data unexpectedly so it felt like the safest option to our African userbase. The lesson was: Make sure to optimize across all platforms.

Successful tech in these large markets is so because of distribution. This is where new entrants need to get clever and play differently. Established first-world channels can be very expensive for individual downloads, awareness, education and building trust.

Where would you get trust, and where would you get distribution? Nowhere better to build trust than through and with traditional players such as older media houses and, more recently, the telecommunications industry. In this war, the battle will be won by the one with the best distribution.

A few myths and truths to be aware of:

• “Build it, and they will download it” won’t work.

• Trust and trust in your platform or the network you use is key. (Try for both.)

• Educate how your thinking, your product and system works and what it will bring. Don’t assume anyone understands.

• Beware of your innovation getting ahead of any local regulation.

• Find what it is your customers will use your product for and what problem you’re solving locally.

• Emerging markets are mobile-first, so think and grow that way.

How to win the distribution game: Build trust, use a trusted platform like a telecommunication company or a media house and incorporate super-app thinking to allow for the trust factor to build on top of another level of trust. Once you cross that threshold of trust, it will equal success.

Thanks to technology, the world is getting smaller, and we’re taking our companies and products to places that only a few years ago didn’t have access to even the most basic internet.

But don’t think you’ll be the new best thing or the knight in shining armor. These markets aren’t waiting for you to save them. They’re waiting for you to earn their trust, understand their challenges and solve their problems. This takes empathy, effort and a killer distribution network. For the sheer size of the market and the next billion users, it’s worth making the effort.


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