Direct Fresh
BCTA MEMBERSHIP STATUS
Active
SECTOR
Agriculture, Food & Beverage
REGION OF INITIATIVE
Asia & Pacific
SDG CONTRIBUTION
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Bangladesh-based Direct Fresh Ltd has made a renewed inclusive business commitment to Business Call to Action (BCtA) aiming to provide 1 million low-income factory workers with quality produce and essential goods at lower than market price through a unique base of the pyramid (BoP) retail chain by 2022 and hoping to reach an additional 3 million over the next five years. The company aims to also increase the yearly disposable income of 500,000 BoP manufacturing workers by five percent by reducing their food costs by 2022.
Around 21.8 percent of the Bangladeshi population falls under the national poverty line. Of the urban poor, a good number of these individuals are those working in the manufacturing sector who live in the urban manufacturing production clusters – with 4 million working in the ready-made garment industry earning less than $5 a day.
With a monthly average wage of less than $150, these workers represent a huge market interested in using an innovative food supply service that caters to their financial and nutritional needs.
Direct Fresh plans to cater to the needs of these workers by establish BoP retail chains, or ‘retail fulfilment centres’ in urban production clusters, aiming to open 100 over the next two years. These retail centres will sell produce and essential goods at lower than market price and on interest-free credit. With a four-member household spending almost $35 on food, the market size for food and FMCG products is estimated to be $2 billion a year. Direct Fresh’s retail centres aim to reduce the yearly food expenditures of such families by five percent, thus increasing their yearly disposable income and their quality of life.
“A dedicated retail fulfilment centre targeting a 4 million strong BoP market is a unique concept that has not been done before. Our model allows low-income manufacturing employees to have access to quality products through affordable payment mechanisms that in turn creates easier shopping experiences, saves times and has a positive impact on employee productivity,” said Tanvir Sifat, Director of Strategy & Business Development at Direct Fresh.
The company currently caters to more than 40 local and international customers, delivering to over a hundred distribution points. Hence their experience in food procurement and supply for the last seven years, has allowed them to strongly establish backend sourcing channels for various products. They also procure dry commodity products in bulk from local farmer groups and aggregators and import products directly as well. This enables the company to achieve price arbitrage and in turn pass on the savings to buyers, while still making the venture a profitable one.
Low-income factory workers will be able to avail these affordable products through a ‘factory sign-up model’ where Direct Fresh partners with large factories and in turn assign credit limits to the workers to purchase products. At the end of the month, the purchases are adjusted against the worker’s salaries with no interest charged against the workers’ credit.