NEW CROWDFUNDING DISTRIBUTION CHANNEL FOR MOROCCAN ARTISANS Author
NEW CROWDFUNDING DISTRIBUTION CHANNEL FOR MOROCCAN ARTISANS Author: Zyad El Jebbari Advisor: Dr. Edgar Blanco & Dr. Tauhid Zaman Sponsor: MIT Legatum Center MIT SCM Research Fest May 21, 2015
Agenda Context Artisans’ platform background Data and Methodology Evaluating Traditional Supply Chains for Handicrafts The Hybrid platform Evaluating Social Network Impact for the Hybrid Platform • Learning and Future Research • • • MIT SCM Research. Fest May 21, 2015 2
Context 2. 3 Million Moroccan Artisans Accounts for 8. 6 % of the country’s GDP Exports represent only 8% of the market share Moroccan Handicraft exports to the United States 12 10 8 6 4 2 0 25% 20% 15% 10% 5% 0% 2006 2007 2008 2009 2010 2011 2012 2013 Moroccan Crafts Exports to USA (in million $) Weight of crafts exported to the USA (in %) Source: 2014 Moroccan Ministry of Handicraft MIT SCM Research. Fest May 21, 2015 3
Artisans’ platform background • Three models currently in place: • The “Middle Man” model: At best, artisan would earn 5 -20% of the final retail price • The “Market Place” model: No quality control in place, no artisan background checks (sometimes wholesalers) • The “Crowdfunding Platform” model: Only in the US, Western Countries MIT SCM Research. Fest May 21, 2015 4
Artisans’ platform background Source: 2013 Massolution MIT SCM Research. Fest May 21, 2015 5
Data and Methodology 1. Artisans’ platforms scoring framework: evaluate models using 6 criteria, from both the artisan and the customer perspectives: Artisan Side Customer Side Access to funding Shipping/Logistics Management Access for African artists Emotional link and Trust Reasonable Margin Lead time 2. Design of a new hybrid model maximizing the score for the 6 criteria : pilot test of the model conducted on Kickstarter, data collected on customers 3. Social network experiments: find the best strategy on social media to target the market segments identified previously MIT SCM Research. Fest May 21, 2015 6
Evaluating Traditional Supply Chains for Handicrafts Online Retail Model Fair-Trade Retail Model Marketplace Crowd. Funding Moro. Crafts Hybrid Model Criteria Artisan Customer Access to funding XX Reasonable Margin X XX Access for African artists XX X X #3 #2 Emotional link and Trust X X Shipping Management XX XX Lead time XX XX #3 #1 MIT SCM Research. Fest XX May 21, 2015 XX 7
The Hybrid platform design 18 handmade crafts / SKUs Pilot test on Kickstarter 8
The Hybrid platform design Lead time : 2 months Logistics costs: 26. 4% Two Supply Chains: Indirect Supply Chain: Customized and smaller items, bulk shipments to achieve economies of scale Direct Supply Chain: High-value items such as rugs through Fed. Ex Lead time : 2 weeks Logistics costs: 15. 3% MIT SCM Research. Fest May 21, 2015 9
The Hybrid platform: results • Revenues: $10, 200 from 91 backers within 1 month • Breakdown of costs and margins for each SKU Breakdown of the price for each SKU Share Production cost a m gra nd et ap al gr ot an co d l or Te e ap g ot ra nd La po La nt i nt nt er er gr ne ne an bo d bo is is br bl on eu ze e m oy en ne ze rre ca Te m iss is ie ug Bo Bo ug kh ie bo nt er ne br on et it tit la Pe t ite ap ot po in tp pe re pe lo co ot Te ap Te Bo ug ie kh m iss am et al is p bo ug ie Bo tit it et in e g i. T e rg ag ba g Ba La in M M ed iu m lb ag e al la c Sm Ne ck ac el et Br Ru gs 100, 0% 90, 0% 80, 0% 70, 0% 60, 0% 50, 0% 40, 0% 30, 0% 20, 0% 10, 0% Share shipping cost Margins • Conversion rate of 12% and 76% of backers are women 10
Evaluating the Hybrid Platform performance Online Retail Model Fair-Trade Retail Model Marketplace Crowd. Funding Moro. Crafts Hybrid Model XX XX Criteria Artisan Customer Access to funding XX Reasonable Margin X XX Access for African artists XX X X Emotional link and Trust X X Shipping Management XX XX Lead time XX XX MIT SCM Research. Fest XX XX XX* XX X May 21, 2015 X X* 11
Social Network Impact for the Hybrid Platform • Twitter 3 ways to engage with fellow users : - following another user - re-tweeting a post - mentioning the other account name and replying to a post • Experiment 1 : investigate the efficacy of the different strategies and measure the benefits of combining 2 strategies Best Single Strategy Best Combined Strategy MIT SCM Research. Fest May 21, 2015 12
Social Network Impact for the Hybrid Platform • Logistic Regression Analysis : • A user is more likely to follow back if followed • Replying is not the strongest tactic to gain followers: it allows people to engage in a different manner through mentions • Less popular users on Twitter are more likely to follow than popular users • Experiment 2 : influence of artisan gender on potential customer engagement No correlation between artisan gender and social engagement MIT SCM Research. Fest May 21, 2015 13
Learning • Scoring framework • Supply chains: segmentation of products – Pull system for high value items – Push system building inventory for low value items • Social media and information flow: – Best strategy: follow and retweet – No causality between artisan gender and engagement MIT SCM Research. Fest May 21, 2015 14
Future Research • Extend the scoring measurement methodology by including other criteria • Inventory holding cost for lower value items in the context of the hybrid platform • Extend the experiment to other social network such as Instagram or Pinterest • Tailor the experiment to other e-Commerce retail channels in order to engage potential customers and increase revenues MIT SCM Research. Fest May 21, 2015 15
Questions? MIT SCM Research. Fest May 21, 2015 16
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