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Algramo

A sustainable IoT connected machine distribution system to eliminate in-home sachet use & create major cost savings for BoP families.

Photo of Brian Bauer of Algramo
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Describe how your Idea has or will evolve during this phase

We have now received significant funding to further develop our low cost, IoT connected vending machines. Current funding will deploy a pilot of ~60 new low cost IoT connected machines.  We expect first new low-cost machines to be  introduced into our stores in October. 

We have a call scheduled with Linus Jiremark, of PACKGROUND, to gain insights on B2B solutions and technical plastics engineering opportunities to increase durability (# of life cycle uses of containers), while improving performance of our reusable containers. The aim being to minimize environmental cost of our plastic packing while improving performance of our plastic packing and developing a strategy to recycle end of life plastic. We are especially interested in creating a packaging solution that will deliver liquid products, like shampoo, conditioner or liquid detergent, in volumes from 35 ml to 140 ml.   

We are researching potential technological innovation from FMCG brands that could erode the importance of our proposal. Like Unilever's Indonesian pilot of its CreaSolv Process to recycle sachets. However, we believe if a LCA was applied to the idea Algramo is presenting in this proposal and compared to Unilever's CreaSolve Process (which entrenches the use of sachets), Algramo's solution would have major environmental benefits, plus significant social impact benefits. Our economic modelling, based on offering a 50% discount on a per/ml basis for shampooo, suggests a 35ml reusable container would save $7.45 over the 25 refill life cycle of the 4 cent container and this would eliminate the need for 75 sachets. With larger 140 ml containers, the economic savings relative to sachets, is US $29.88 and 300 sachets are eliminated. We have recent got some quotes and here in Chile we can buy quality shampoo at wholesale prices, for 600 Chilean Pesos (US $0.95) per litre-at this rate we could easily increase discount rate over sachets up to 70% savings, which would add significant strength to our value proposition and competitive advantage. See above Excel file "EconomicModelSachet_VS_Algramo_Aug30" for modelling.

In regards to a a 140 ml bottle averting the use of 300 sachets, if a cradle to gate LCA analysis was conducted on the material inputs for a 140 ml plastic bottle, verses the corresponding material inputs for 300 sachets, the analysis would likely favour sachets. But many LCA studies have a limited impact assessment or understanding of what happens to the packaging material post consumption. We believe our system is designed to capture and recycle a very high percentage of our packaging (due to deposit paid on container). Clearly, sachets have very poor rates of recycling and have very high environmental impacts-even cradle to grave analysis has a limited ability to quantify how sachets can impacts marine ecosystems and how to quantify these staggering negative externality costs. These post consumption disposal factors must be considered to accurately assess the objective costs and benefits of our proposal verses conventional sachet distribution systems.   

We will research how environmental policy and regulatory forces may put pressure on FMCG brands to move away from sachet focused product distribution and thus incentivize a solution like Algramo is proposing. 

Below explains Algramo's innovative business model, technology objectives and its social impact objectives

Algramo is a Chilean based social enterprise that has been dedicated to distributing food & essential liquid based products to the BoP for the lowest possible cost, with maximum sustainability. We strive to correct a market failure that results in low-income families paying what we call the 'poverty tax'. In much of Latin America, the lower ones income, the more likely they buy most of their food in small daily portions from neighbourhood mom and pop stores (MAPS). MAPS get most of their products from inefficient supply chains and information asymmetries often raise the cost of food, and other essential products for the storekeepers in our MAPS. This results in many low-income families paying about 30% more, sometimes up to 50% more, for food, on a per unit cost basis. In Chile, BoP families use 30.3% of their incomes for food (IDB 2015). A key objective of Algramo is to use our innovative business model that integrates technology, into our network of 1,100+ MAPS. We do this to lower the cost of essential products and maximize socio-environmental benefits across the Algramo ecosystem. Algramo makes technology as a force for good that reduces social inequalities in Latin America.

Our reusable containers have a deposit of US ~30 cents to motivate our low-income consumers to reuse containers. We have found 35 ml plastic containers (that would compete with sachets) for as low as 2 to 3 cents per container. We believe this idea is viable with container in the 10 to 15 cent range. Especially, if we could create containers with greater longevity (more refills), better performance and easy recyclability. We can adjust container cost (deposit) to maximize container reuse-this varies by regional income levels of end consumers. 

Currently, in Chile, containers costing US ~30 cents are not overly cost prohibitive for our customers to purchase, but the cost is sufficient to ensure consumers reuse containers. Depending on product, reduced costs (product savings), will pay for the cost of the reusable container after as little as 1 use. With some container types/products it could take 2 uses to pay off the ROI for the container cost. We are interested in designing our containers to have maximum longevity, ideally 25+ refills/container. However, it might be possible to have containers with significantly greater longevity. 

To increase the circular use of our plastic containers, old containers no longer serviceable will have a value of ~1/3 of their original cost which can be traded in for a discount on new containers. These end of life containers will become a quality homogeneous feedstock for new containers or another type of polymer input which decreases demand for virgin plastic inputs. 

IoT technology in our vending machines lowers delivery costs and improves inventory management, both create a positive feedback cycle (via decreased product costs) that increases demand for our innovative business model based on selling products in reusable containers. Despite having a network of over 1,100 stores we still lack ideal economies of scale which would enable us to get lowest possible prices on our food and liquid cleaning/personal care products, so we can pass on savings to our MAPS and end consumers. This is a key reason we are interested in a partnership from a values aligned FMCG brand.  

On the July 26th webinar, Angus Grahame of Splosh! noted that vending machines can be complicated to integrate into stores as they require the stores to modify and upset display space. I am sure Angus understands his UK based market sector well. However, in the context of Algramo's Latin American BoP markets, I would argue the vast majority of our storekeepers are very keen to embrace using our vending machines. In fact, Algramo has noticed a significant percentage of new stores who are strongly motivated in joining the Algramo movement based on their store having a vending machine. We have had a considerable number of storekeepers say they want to join the Algramo movement, but if we tell them we do not have vending machines currently available, they often say that they are not interested in working with us until we have a vending machine for their store.

Algramo's vending machines are a technology platform that subconsciously fosters a responsible consumerism and recycling culture, in areas where these concepts previously did not exist or were extremely nascent. This is critical as formal waste management infrastructure is very limited, sometimes even lacking, where Algramo distributes its products. This makes the impact of our reusable containers much more significant than if we were operating in developed markets were advanced waste management and recycling infrastructure exist. 

This factor, that our distribution is focused on BoP centric distribution, means waste aversion attributed to our machines is environmentally much more significant than it would be in developed economies with advanced recycling and formal waste management systems. In Chile, our market research shows that a family of four using all Algramo's product offerings would avert 2 kg of plastic waste per month. Our 1,100 stores are estimated to serve 40 families/store, for a collective 44,000 families. Thus, in Santiago de Chile, Algramo has potential to eliminate about 88,000 kg of plastic waste/month. Furthermore, much of this 88,000 kg of plastic would be poorly managed and virtually non of it recycled-as is common in most BoP communities in LI or MLI countries. 

Much of the discussion for ideas presented in this contest were focused on developed economies. Really it is all important, but the evidence is clear, most of the environmental damage associated with mismanaged plastic waste comes from underdeveloped economies. If there are limited funds to decrease the environmental impacts of plastic pollution, underdeveloped economies/market segments will provide the greatest environmental impacts and social benefits per dollar invested.

For all of the above reasons, Algramo offers a world class market-based solution to a more sustainable and circular use of plastic that is especially impactful due to its focus on underdeveloped markets that lack advanced, sometimes even basic, waste management systems. We have a proven distribution strategy, a robust social licence, significant experience designing and integrating vending machines based product distribution into a network of 1,100 MAPS. The social impact we create is noted by B Corp as "Best for The World". We believe all these accomplishments should make us a viable partner for a values aligned FMCG brand looking to increase its impact and exposure in BoP markets. 

References

IDB 2015: https://publications.iadb.org/handle/11319/6992


Idea Title

Replacing the Low-Cost Connivence of Sachets With More Affordable & Sustainable Technology Based Distribution for BoP Markets

Company / Organization Name

Algramo uses technology & sustainability to solve a market failure forcing BoP families to pay unfair prices for small format consumption.

Website

http://www.algramo.com

cofounders: https://www.linkedin.com/in/salvador-achondo-469b9232/ https://www.linkedin.com/in/josemanuelmoller/

Where are you / your team located?

We are located in Santiago de Chile's BoP neighbourhoods, spread across a network of 1,100 stores.

How does this Idea redesign unrecyclable small format plastic items that often end up as waste?

First, Algramo replaced plastic packaging for dry food packaging with reusable containers & now liquids. For this proposal we will customize machines & reusable plastic containers to directly compete on price/connivence with sachets. With a 4 cent, 35ml reusable container we can sell shampoo for at least a 50% discount per/ml verses sachet costs. Depending on container size 35ml to 140ml, respectively, each container refilled 25x will replace 75/300 sachets & save consumer $7.45 to $29.88.

Which use cases does your Idea apply to?

Algramo's idea relates directly to Case 1 single-use for liquid consumer products.

We offer a solution that outcompete sachets on price (50%+) & connivence. Since our machines can dispense by converting any payment into a per/ml volume, we outcompete the low cost of sachets. For example, if a sachet costs 20 cents, but a BoP customer only has 10 cents, with our system the customer could buy 10 cents worth of shampoo-with our 50% discount they would get 15 cents of shampoo by sachet prices.

In what geographical context or area does your Idea plan to operate / solve?

Grand prize would enable implementing our idea into an area like Indonesia-an ideal location as sachet use is rampant with huge enviro impacts & our cost saving create major social impact.
Smaller prize would restrict our focus to Latin America.

How do you envision scaling up your Idea?

Challenge is securing a FMCG brand dedicated to sustainability to create symbiotic partnership to market & distribute our IoT connected machines & FMCG product offering in our machines. How/why a FMCG might be attracted to us: With optimal dispensing machines & reusable plastic, we can replace many types of sachets with 35ml-140ml reusable containers & create major cost savings for price sensitive BoP customers. The IoT connectivity of machines optimizes delivery & supply chain management.

At what stage of development is your Idea?

  • Piloting: You have started to implement your solution as a whole with a first set of real users. You may have started to develop a business model for your idea, including identifying key customer segments, relevant partnerships, go-to-market strategy, and draft financials.
  • Full-scale roll-out: You have developed a pilot, tested, and analyzed the impact of that pilot as it pertains to the problem scope. You are ready to expand the pilot significantly and begin to scale.
  • Operating Concept / Startup: You have fulfilled the stages of testing, undertaken a full scale roll-out, and are currently operating this concept/idea as a business.

Please describe how becoming a Top Idea and working with the Think Beyond Plastics Accelerator Program will help to accelerate your solution.

Exposure would help us attract attention of a major FMCG to partner with & spread our project at scale. Also gain us access to experts in plastic engineering who could design an optimal container for key sachet products we aim to replace. Each product will require an optimal plastic type to dispense product well & provide max longevity of plastic. Funds would support R&D of machines/plastic types, marketing, distribution, subsidized initial containers & ability to maximize our sustainability.

Please describe from where your Idea emerged

In an Industrial Ecology class at Harvard, I learned about the impacts of plastic. This attracted me to Algramo, who is dedicated to the sustainable use of plastic & has leveraged this concern into an innovative social enterprise focused on helping the BoP. I have travelled extensively in Asia & seen the impacts of sachets. I have applied academic knowledge, travel experience, Chilean work experiences & worked with Algramo to put forth a potential solution for a global problem: sachet pollution.

Tell us about your work experience

Salvador Cofounder- Entrepreneur & Master's Innovation
José Cofounder-Economist, from family dedicated to social equality& Master's Advanced Design
Brian-Design Entrepreneur& Master's Sustainability

Please describe your legal and organizational structure

Algramo is a SpA business (Sociedad por Aciones) this translates to 'Society for Stocks'-to the best of my knowledge very similar to an LLC.

Please describe, in detail, your business model and how you intend to test and iterate this model.

We work with BoP MAPS. We aim to make MAPS more competitive so they can pass on major savings to their customers. We do this with an innovative business model & by integrating technology based solutions into our network of 1,100+ MAPS.

We have been evolving our social licence with our storekeepers to enable us to integrate technology into our MAPS. Our MAPS are connected to about 176,000 customers. Our stores & their customers are ideal for testing, iterating and evolving our business model.

Please explain how your innovation will work within, potentially improve, and provide benefit to the plastics system.

We reduce plastic use by using reusable containers. Our containers cost ~US 5–30 cents. We will offer a deposit on end of life containers equal to ~1/3 of new container cost to increase recycling rates. Our offer will provide 50%+ cost savings on shampoo/other common sachet products. All containers are designed to be easily recycled & economic incentives can be adjusted to maximize reuse and recycle of end of life containers. Recycled containers used for feedstock for new containers/products.

Please describe, in depth, how your solution will reduce the overall environmental footprint of packaging.

See 'Sachet_Costs_Aug 25' each 35ml reusable bottle will eliminate the need for 75 sachets or 300 sachets for a 140ml bottle. End of life bottles will have a deposit value to motivate recycling. All bottles will be designed to be 100% recyclable. Cost saving will motivate BoP consumers to use our products, one 35ml bottle will save US $7.45, a 140ml bottle will save $29.88. Deposits will make 90%+ of our packing recycled, compared to 90%+ of sachets not recycled-many ending up in our oceans.

Please outline how your design, material, and delivery choices will influence price, and how you intend to address the price increase that may result from this solution.

Integrating our vending machines with IoT connectivity & SaaS (grant funded) enables us to gain real time sales data. This helps us coordinate optimal delivery schedules & more fine-tuned just in time inventory management. Providing major cost savings/competitive advantage. These savings can help us slightly subsidize container cost to nudge price sensitive consumers-if needed. See 'EconomicModelSachet_VS_Algramo_Aug30' with container costs we significantly lower product costs-by at least 50%.

Please explain how your solution will impact user behavior, and what design considerations you've included to ensure easy and intuitive interactions with your Idea. 

Our machines are designed to gamify the purchase of essential daily items. Our machines bring modern tech into MAPS that have not technologically evolved in many decades.

We will design our plastics to ease the distribution of products to be more convenient/efficient than sachets (for liquid products). Our machines can dispense smaller % of total bottle size, by calculating ml/unit of payment-this is ideal for volatile BoP incomes & allows us to outcompete even ultra low costs of sachets.

Please describe how you intend to use the prize funding, if selected as a Top Idea. Be specific.

Funds used to attract a values aligned FMCG partner to optimize economies of scale & enter new markets. To do this, funds would optimize machine design, develop SaaS & improve reusable containers for longevity, performance, cost & recyclability.
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Attachments (2)

EconomicModelSachet_VS_Algramo_Aug30.xlsx

Excel modelling showing one of our recyclable 35 ml or 140 ml bottles, refilled 25x, will respectively eliminate the need for 75 or 300 sachets & our containers will create cost savings of US $7.45 and $29.88 over sachet use. These major cost savings (of at least 50% on a per/ml basis) and the sustainability and convenience our distribution system offers create a potentially disruptive solution to upset BoP sachet markets in developing economies.

Aug21 slide deck.pptx

Brief Powerpoint explaining how our IoT connected vending machines create value and increase Algramo's sustainability. Explains some key facts about why Algramo would be a valuable partner for a FMCG brand aiming to reduce their reliance on sachet based sales.

55 comments

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Photo of Lauren Ito
Team

Hi Algramo Team and Brian Bauer !

As Refinement Phase quickly comes to a close in 12 hours, I want to remind you that the following must be submitted by tonight, August 31st at 11:30 p.m. Pacific Time.

1. Submit the Refinement Questions Form online that was sent again via email yesterday evening! This is mandatory for Top Ideas consideration, so this should be your first priority in the final stretch.

2. A secondary priority, which is optional, is to update your Refinement Phase post. I see you've already significantly updated your concept on the platform.. But please share any additional information, photos, and documentation of your progress throughout this Phase!

Looking forward to reviewing and celebrating the amazing work you've achieved this Refinement Phase!

Photo of Brian Bauer of Algramo
Team

Lauren Ito Hi Lauren, thank you for the updated information.
However, I am a bit confused about the 'Refinement Questions Form online that was sent again via email yesterday evening'. I have already submitted my refinement questions-I did this a couple days ago. If possible, can you confirm that you have received my refinement questions and also please confirm that there are not new additional refinement questions. Thank you very much if this is possible and sorry for any confusion. Cheers, Brian

Photo of Lauren Ito
Team

Brian Bauer thanks for following up! We have received your materials. We appreciate the information you have added to the post to provide more context for the Idea on the platform.

Cheers to a great Refinement Phase and we're excited to have you as a part of our OpenIDEO Community!

Photo of Brian Bauer of Algramo
Team

Thanks a lot for the clarification Lauren. Best of luck to you and the IDEO team in the next stage of the Circular Design Challenge! It has been an amazing experience so far!

Photo of Manoj Manduva
Team

This is a great implementation! My idea is similar to this, but in no way closer to the detail you have given. However, my main apprehensions were
1. As a user, I cannot try as many brands as possible. I need to be loyal to one.
2. All the popular brands cannot share these IOT machines. So there cannot be All-in-One vending machine.
3. Who has to invest in these machines? Stores or Manufacturers?
Thanks
Manoj

Photo of Brian Bauer of Algramo
Team

Manoj Manduva Hi Manoj, thank you for your interest in Algramo!

As per your questions:
1. As a user, I cannot try as many brands as possible. I need to be loyal to one.
A key point to consider is that we work with low income people (~$4 to $15 daily incomes) we plan to move into some markets where incomes will be $2 to $5 per day. People with these income levels need simple basic but quality foods that are low cost. In this market segment, the BoP, we offer a strong value proposition-great value per gram of product consumed and high quality products. I think you are correct, with more affluent customers our model might not work as our distribution limits brand options.
 
2. All the popular brands cannot share these IOT machines. So there cannot be All-in-One vending machine.
We are focused on distributing low cost, high quality essential items for BoP consumers. We strive to provide a limited product range, but have this product range account for a major percentage of BoP consumption. As an example, in many BoP markets 15 products might make up over 50% of total food products bought. And InterAmerican Development bank notes Latin Americas BoP food market to be a $228 billion dollar opportunity of a $752 billion total market.

3. Who has to invest in these machines? Stores or Manufacturers?
Currently, Algramo designes and pay for the machines. We then provide the machines to our mom and pop stores for FREE-no catches-on top of that we share profits 50-50 with storekeepers.
If we won funding from this contest, we are looking into the idea of leasing our machines to a FMCG brand if they were able to follow our sustainability values and keep prices low for BoP consumers. We are interested in this as we believe a FMCG would enable the necessary economies of scale to reduce the cost of goods to end consumer even more. Increased cost savings and wider distribution from support from a FMCG would reinforce our business model and help further foster the idea of using reusable containers for consumption of food and essential liquid products (like soap, shampoo and laundry detergent for clothes).
Cheers, Brian

Photo of Kate Rushton
Team

Hi Brian!

There are 7 days left in the refinement phase.

If there is key information in the comments on your idea submission, I recommend that you move them to the main body of your idea submission before the cut-off time.

I also recommend spending a bit of time before the end of the refinement phase thinking about the formatting of your idea submission. There are a few examples of ideas from previous challenges that you may want to look at:

https://challenges.openideo.com/challenge/food-waste/ideas/cobuy-group-buying-software-that-helps-people-buy-good-food-at-good-prices-together

https://challenges.openideo.com/challenge/financial-longevity/top-ideas/rightsize

Please do remember that these ideas are from previous challenges where the requirements for ideators was different and they did not have to complete the refinement questions as well.

I just want to remind you that the deadline to complete the Refinement Questions via the online submission form is August 31 at 11:30 p.m. Pacific Time.

Photo of Brian Bauer of Algramo
Team

Hi Kate,

Thank you very much for the advice. I have been doing some addition research and collecting some images and ideas from our CTO. As well, the advisor appointed to us had a medical issue and I have had a lot of international flights so we are not able to meet with our advisor until August 28th. I am planning on editing our proposals over the weekend and then later integrating ideas from our meeting with our advisor Linus Jiremark into the final edit.

Take care and enjoy your weekend. Best, Brian

Photo of Kate Rushton
Team

Brian, if there are any issues, feel free to email us. Have a lovely weekend as well!

Photo of Brian Bauer of Algramo
Team

Kate Rushton Hi Kate, I have a question for you about formatting my idea submission. I have worked on my submission in many different stages, so I agree it's a bit fragmented and could be made more succinct. However, will the judges be focused more on my 'refinement questions' or does the above idea submission carry equal weight to the 'refinement questions'? Thanks for the clarification. Best, Brian

Photo of OpenIDEO
Team

Hi Brian, Kate has sent you an email.

Photo of Kate Rushton
Team

Hi Brian!

Welcome to the refinement phase!

I look forward to knowing more about how you would evolve your concept from rigid bulk containers to becoming a substitution for single-use, flexible packaging.

How would your solution be more attractive than single use sachets for consumers?

How do you plan to buy the liquids from the suppliers?

Would a lower tech version of you IoT vending machine make it easier to scale and/or prototype the concept?

Do you have any sketches that you can share on your prototype machines? I noticed that you mentioned that ‘prototypes finished soon ready for market.’ It would be great to see some customer feedback, even if it is only on the sketches.

There are few ideas from this and past OpenIDEO challenges that you might want to check out that have video footage of customer feedback:

InLid - another idea in refinement - https://challenges.openideo.com/challenge/circular-design/refinement/icecap - has a really good example of recording feedback on a product from users

Friendly ATM - https://challenges.openideo.com/challenge/financial-longevity/top-ideas/all-generation-friendly-atm - a top idea from our financial longevity challenge has a great example of rapid, low budget prototyping and gathering feedback from customers. The use of video to demonstrate the prototyping/testing session is really good. This team is based in Chile.

I just want to remind you that the deadline to complete the Refinement Questions via the online submission form is August 31 at 11:30 p.m. Pacific Time.

If you have any questions, feel free to reach out to me by tagging me here (@ followed by my name) or send me an email - krushton@ideo.com

Photo of Brian Bauer of Algramo
Team

Hi Kate,

Sorry for the delayed response, I have been very busy catching up on projects after a week in Dubai.

Thank you for the astute questions, I will address them over the weekend when I get some time to work on my proposal. Take care and enjoy your weekend.

Cheers, Brian

Photo of JP De Mussy
Team

Brian Bauer Great contribution. I am proud of being Chilean! Let us share some insights. I am trying to implement sth similar in a different context. Intercambiemos x email: jeanpaulgdm@gmail.com

Photo of Brian Bauer of Algramo
Team

Hi JP, great, I connected with you on LinkedIn. I look forward to hearing about your idea! Best, Brian

Photo of Brian Bauer of Algramo
Team

JP De Mussy Hi JP, I have not heard from you. I am curious to hear about your project. What context are you distributing products via machines? Feel free to get back to me here or by email at brian@algramo.com

Cheers, Brian

Photo of Brian Bauer of Algramo
Team

Hi Bruno,

Thanks a lot for your comments and suggestions. Sorry for the delayed response but I was in a very time intensive/demanding program in Dubai for their Expo Global Innovator program.

I think at this point, constructive criticism is important and valuable. That said, your comments are very valuable. I did not communicate our communications strategy well. And as you point out it is an important issue. But we address this issue on our packaging by including little stickers which mimic Minister of Health warning labels. The official government stickers are new in Chile and say things like 'high in saturated fats', 'high in sugars', etc. We have put similar looking stickers on our products that say things like 'high in saving', 'free of collusion' and 'high in improving the life of your community'. We do this to foster a communications strategy that fosters a sense of belonging.

Is this what you were suggesting, by a communications strategy that fosters belonging of our customer base? Do you have any other suggestions about how we might be able to use communications to strengthen brand loyalty? Thanks a lot for any suggestions.

Lastly, I will try and get back to your project and give you some constructive criticism to see if I can provide you with any valuable ideas or insights. I really like your project so I would be happy to do this and I am really happy to see your project has advanced to the shortlist stage. Best of luck! Cheers, Brian

Photo of Bruno dos Santos Pierosan
Team

Hello Brian Bauer !

Firstly I would like to thank the comments on the Voltei, they were very constructive and we will think of a way to add the complete package cycle through the system! No problem about the time, we are doing this and other projects here, so we also have a high delay answering.

About the labels, I think what Algramo is already making is very positive, it would be something in that aspect that I suggested. What I could comment on in order to contribute, I will try to do through an example: We serve a company of mineral water that uses a source of very high quality, very low sodium content and residue of evaporation, besides other advantages that the source has . However, the consumer does not have a reference of how many mg / L of sodium is healthy or recommendable ... but they know to identify a lighter water and one that causes less heartburn, for example .... so we proposed a communication with some phrases doing An allusion to the benefits their water could provide, such as "do you want a sip of disposition?" Or "do you want a sip of joy?" ... all this with a relaxed and attractive language, as in this example (wich is in portuguese): https://www.dropbox.com/s/m3ho4p6azg0ryq4/frases.jpg?dl=0

Perhaps if you simplify the communication in these signs and say directly the benefits people could "won", it would help in a positive way!

Just for curiosity, have you ever considered selling organic or agroechological products?

Good luck for you too Brian, wish you all the best!

Photo of Brian Bauer of Algramo
Team

Bruno dos Santos Pierosan Thanks a lot for the constructive feedback, greatly appreciated.

In regards to your question about sourcing organic products, we would be very interested in doing this if we could source products which did not increase price for our BoP customers. Our customers tend to be price conscious so it could hurt us competitively to source products that increased costs for the end consumer-I think organics are a better fit with less price sensitive consumer segments.

That said, if we were able to source organic products that did not increase our prices we would be interested. We have started to try and source more locally produced products, from small holder farmers. In fact, we are currently in discussions with an impact focused organization in Europe who might help subsidize a small part of our product costs so we can provide more food from small holder producers-without increasing product costs. By working with small holder producers we could have more control/influence of packaging used in the upstream of our supply chain. This could be a great way to further reduce Algramo's plastic footprint.

Best of luck to you your team at Voltei!

Photo of Irina Ankudinova
Team

It is absolutely brilliant and potentially has so many implementations for various products. You ingeniously spotted the important problem with small format plastic - consumer pays for its transportation and excessive packaging with costs sometimes higher than the desired product itself. I can see your system potential to bring awareness of excessive packaging the customers and initiating behaviour change. I see a lot of potentials in a vending machine like distribution model as it is closer to consumption point and therefore different packaging models can emerge as no long term storage and transportation required. Thank you - I will follow your journey.

Photo of Brian Bauer of Algramo
Team

Irina Ankudinova I am sorry for the late reply to your comment. I had thought I replied to this comment back in July. I really appreciate your kind words and support for Algramo. As you point out we bring awareness about excessive packing. For us this is very important as our customers generally lack any recycling facilities and in some of the lowest income regions we operate, government sponsored waste management is grossly underfunded, which means a lot of plastic waste leaks directly into the environment.

I see your idea has moved forward in the contest, congrats! I find your idea to be a very practical high value solution to reducing plastic waste connected to restaurant food. Each solution is important for the specific area it addresses. Best of luck with your proposal! Brian

Photo of Nina Bergmann
Team

Hi Brian, great idea ! Do you have any links to Algramo videos translated to English ? VIMEO is blocked in all Indonesia, can only view via YouTube. I found some but they are all in Spanish. Many thanks ! Kind regards, Nina

Photo of Rieta Aliredjo
Team

I'd love to see it in English too :) Or maybe you can work on some subtitles?

Photo of Brian Bauer of Algramo
Team

Rieta Aliredjo Hi Rieta, on the link below, as long as you can view Vimeo, you can activate English subtitles. One of our partners wants to use this video and is putting in English audio, when English is added to the video I will repost it for you to see in English. Thank you for your interest in Algramo. Cheers, Brian

https://vimeo.com/104942937

Photo of Rieta Aliredjo
Team

Really appreciate how this idea also considers the economic benefit for low income families!

Photo of Brian Bauer of Algramo
Team

Rieta Aliredjo Hello, happy to hear you are keen to view Algramo's video! If you can view the Vimeo link below, just click on the 'cc' button and you can enable English subtitles. Cheers,

https://vimeo.com/104942937

Photo of Rieta Aliredjo
Team

Thx!

Photo of Brian Bauer of Algramo
Team

Rieta Aliredjo Thanks a lot for your comment. At Algramo we do this for both social and environmental reasons.

Socially, I think it is obvious that creating major savings for low-income consumers has major benefits. Environmentally, low-income neighbourhoods generally tend to have limited waste management facilities and in many parts of the world, they completely lack recycling facilities-this magnifies the benefits of our business model. In many ways, Algramo is essentially providing a recycling service to the low-income communities where we operate-we don't really market our services/business model as a recycling service but fundamentally our reusable containers provide a recycling service that creates a more sustainable, more circular use of plastic.

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Hello Brian Bauer ! I have reread your work and, as a designer, I think the business model is really well grounded and has solid foundations. I could spend a lot of time saying good things about your project, but I think I can focus on giving a different view, since I came from another area, so I can try to contribute something. From the point of view of the consumer, I believe that a more human-centered approach could be able to deliver a more interesting experience, both in communication and in the interface for using the equipment. You already did this aproach when you tought about the size of the packages available in addition to the market share you would serve, but an experience that fosters a sense of belonging could result in an adoption that goes far beyond the financial. So even if other initiatives emerge to compete in the area of ​​financial value with you (even if they use cheaper packaging and distribution systems whose companies do not really care about the consequences), it would be possible for their consumers to remain more loyal to your initiative.

Good Luck!!

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@Bruno dos Santos Pierosan Hello, I just wanted to let you know that I replied to your comment yesterday, but I forgot to tag you with @your name. Please see abovemessage. Also, I just wanted to give you an example of the labels we put on our containers to increase loyalty to our brand. We can't post images here, so if you are interested you will have to click on the link below-since you speak Portuguese, I suspect you will understand the Spanish, if not let me know. Cheers, Brianhttp://www.algramo.com/uploads/7/1/5/5/71550255/discopare_orig.png

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Rieta Aliredjo Thanks for your comments and best of luck to you if you are in the competition.

At Algramo we see our business model as both important for social reasons, like increasing disposable incomes in low-income families and also for environmental reasons. Our reusable containers have extra benefits in the markets we operate as recycling tends to simply not exist. In some of the most marginalized markets we operate there are not even properly functioning waste management systems-meaning a huge percentage of waste plastic ends up in the environment.

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I have looked at your idea many times and read Angus's comments about about vending machines. I am of the mind that this is an adventure in the KIS principle and that vendors complicate things.
How do you over come an energy shortage or blackout period?
Does a machine pack multiple products into one machine similar to a soda filer does?
What packaging is used to get the product to the machine?
Are you running more or less trucks to deliver the product?

I look at the total chain value and if it is taking more trucks because of frequency or larger cube capacity demand, then there are added costs in the supply chain, pushing the price up. Additionally, more trucks adds more pollution into an environment, creating the knock on effect.

I am just trying to get my head around the end to end solution. The immediate solution is very nice.

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Hi Micheal,
Thank your for your questions and discussion about Algramo's vending machines.

We are currently focused in Santiago, Chile. Blackout periods are very rare, my guess would be one average maybe 10 hours a year. But as we move into new regions, this could become an issue worth carefully considering. One potential solution to solve this issue is to have small solar powered energy systems on top of stores.

Machines can distribute 4 items per machine. We could scale this up, but overall machine size will increase.
Products come in an industrial plastic packaging. We would prefer it came in Jute, but most supplier deliver products in an industrial plastic material. As we increase our economies of scale we might be able to put pressure on our suppliers to ship us products in jute.

IoT Vending machines allow us to run significantly less trucks. Here is an article that explains how and why Algramo's supply chain is much more efficient and product cost lower due to our IoT machines. As is discussed in the article below, we have significant emission reductions.
https://www.extension.harvard.edu/inside-extension/building-sustainable-supply-chain-food-startup
One last important point is that we distribute our products to mom and pop neighbourhood stores. We have reviewed life cycle assessment studies that note there are major emissions reductions and other socio-environmental benefits when people walk to a near by neighbourhood store to buy their food, as opposed to driving to a distant corporate grocery store. Most of our customers have a store within a few hundred meters from their homes, so virtually all of the food they buy is transported without emissions.

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Amazing Project! Congratulations !! We would like to collaborate from Mexico, we have connections with the biggest abarrotes network in Mexico. I just connected in linkedin. Please look www.agualu.com agualu , emilio@agualu.com, mobile +5213310030491 . Cheers Bro.

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Emilio Chalita Thanks a lot for the kind words and your support! I passed on your message to the founders of Algramo. Longer term Algramo is interested in operating in Mexico. If, or more likely when, Algramo moves into Mexico we will get in contact with you to explore collaborative ideas. Best of luck with your idea! Brian - brian@algramo.com - https://www.linkedin.com/in/brian-bauer-chile/

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Hi Nina,
Thank you very much for the detailed response about plastic issues in Indonesia. When The Plastic Bank is ready to move into Indonesia it would be great to have a chat with you. I offered a LinkedIn connection so we can remain in contact beyond this contest. I found that Rethinking Single Use Plastic document really insightful. Congratulations on all the amazing work you have done and are doing in Indonesia.

In regards to Algramo, our best video is that one on Vimeo (which has subtitles), too bad about the Vimeo ban. However, I did find a decent Algramo video from competition we did a couple years ago and it is in English. Here it is: https://www.youtube.com/watch?v=hS6ljgBoU58

I would be really curious to get your opinion on if you think Algramo's vending machines (especially our new lower cost IoT connected machines) could be applied into the context of small family owned Indonesian stores as a strategy to dispense shampoo, soap, etc into reusable containers (about 75ml to 200ml) to compete against sachets. I think we can lower the cost by at least a few hundred percent (on a cost/ml basis) and still have a low price that makes sachets so popular with consumers who have limited incomes. Putting a small deposit on our plastic ensures each bottle gets reused many times. We would even put a smaller deposit for end of life bottles to subsidize cost of new bottles and enable end of life bottles to be recycled-so we see this as a viable solution with huge sustainability benefits compared to sachets.

Thank you very much for your comments and best of luck with the amazing work you are doing in Indonesia. Best, Brian

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Congratulations on being today's Featured Contribution!

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OpenIDEO Wow, thank you so much! Algramo is very honoured to be today's Featured Contribution! Amazing platform you guys provide for the exchange of innovative ideas!

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At LOLIWARE EDIBLE BIOPLASTICS we have a special place in our hearts for the BoP audience. In your target markets, is there a big brand player (like Goya in the US) that has a brand following in less affluent markets already? I can see Algramo making a huge dent in the number of plastic sacks produced every year for Goya dried beans...

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LOLIWARE EDIBLE BIOPLASTICS Before I answer your questions, I just want to say I did a little reading on your product: amazing! I love it. If you can produce a product like this that can serve a BoP market, from a pricing perspective, I think you have a HUGE idea. Especially if you could replace a plastic that does not get recycled and ends up in the environment-for example, straws, sachets, utensils etc. Even sticking to higher end markets, with non-BoP pricing still an amazing idea that is very much in the spirit of this contest and super innovative in my opinion.

In regards to your questions, in Chile I see little corporate brands that have customized BoP products-this is a market Algramo strives to carve out. Most of Algramo's competition comes from global FMCG brands who tend to have very slight, often no product variation for BoP markets. The main difference is inefficient and complex distribution makes the products more expensive in mom and pop shops where the BoP buys most of their food. This is a critical issue as in Chile the BoP uses about 30% of their incomes just to buy food, in lesser developed economies income allocation for just food often exceeds 50%. Since food makes up, by far, the largest allocation of BoP incomes, it is very important poverty reduction mechanism to reduce the cost of basic food and day to day products. As we evolve and expand, we increase our ability to put a dent on the amount of plastic that is mismanaged and often ends up impacting our environment and in doing this we are proud that we also serve an important socio-economic issue by increasing disposable incomes in Latin America's BoP.
Thanks for your comments and best of luck to LOLIWARE EDIBLE BIOPLASTICS!

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Love this hack, a semi forced tax on people can afford it least is one of the easiest to solve with relatively simple solutions in industrial design/systems design. Particularly when this section is living so close from hand to mouth, 30% change is a huge change in quality of life. Great idea!

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Hi Troy,
Thanks for your comments and appreciation for Algramo's work. You are completely correct that saving low-income families on food can create meaningful improvements in quality of life. Not surprisingly, the lower ones income the higher the percentage that is typically allocated to procuring food. In some regions, well over 50% of BoP incomes are allocated to food. So any idea or business model that can lower the cost of food to BoP consumers is critical for decreasing social inequalities.

What made me interested in working with Algramo is that they are solving both a major social issue (decreasing the cost of food/increasing disposable incomes) and an important environmental issue-reducing plastic waste. Lastly, it is worth noting that plastic waste in developed economies has different environmental impacts than it does in underdeveloped economies. Underdeveloped economies often lack any plastic recycling facilities, sometimes they even lack formal waste management systems-resulting a very high percentages of the plastic ending up in our atmosphere (burning) or being washed into our oceans.

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Hey Brian Bauer I have to dig deep into the documents you provide to start to understand the link between technology and making supplies available at lower prices to low-income families. You proposal looks like you are promoting Algramo's vending machines. Can you better explain how IoT is playing a role in here? Especially how this can allow Algramo to choose sustainable products / producers...

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Hi Christel,
Thanks for your comments and questions. I understand your viewpoint it is a bit complex to clearly explain all issues in few words. The challenge is that Algramo has many layers of sustainability integrated across its value chain (for example, soon IoT in our vending machines). When many of our sustainability strategies are viewed individually without understanding the bigger picture it can be hard to see the full potential of each strategy. It is like this, 1 + 1 + 1 can equal 13 if there are synergies created between strategies.

Our vending machines are technology (that allows for more sustainable distribution with reusable containers). Integrating IoT into our machines brings very savvy actionable inventory management across our supply chain-both upstream and downstream. Ultimately, IoT can provide powerful real time data that allows us to manage a less capital intensive, just in time supply chain that gives us greater economies of scale. All of this enables us to lower our cost of goods sold. The IoT in itself does not enable us to use sustainable products, like reusable containers, but it does lower product cost, ensure that our machines always have optimal levels of product (happy customers) and all of these advantages reinforce our business model based on replacing small format and single use plastic with reusable containers.

The IoT does not directly allow us to procure from a sustainable producer but indirectly it makes our business model more profitable which potentially gives us more room to purchase from suppliers that might be more sustainable but cost slightly more. We have recently started to source fairly local beans from small holder farmers. By working with local small holder farmers, we can potentially evolve the upstream bulk packing from our suppliers to become more sustainable. We do not currently have resources to improve upstream packing resources, but with funding it would be an interesting issue to explore as there is a lot of plastic packing waste in agricultural production.

All of this is a bit complex to explain, I hope this helped clarify your questions. If not, my school wrote a great article about research I did for Algramo, perhaps that will further clarify some issues. Cheers, Brian
https://www.extension.harvard.edu/inside-extension/building-sustainable-supply-chain-food-startup

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I am tagging a few people here from very different geographies to understand their perspective and whether this concept could work in a local context:

Paricha Duangtaweesub 
Christel Tardif 
Kiri Close Caroline Schulz Tetsuko 
We have an OpenIDEO Lima Chapter that you might be interested in. They have over 200 members - https://beta.openideo.com/chapters/44

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There is also a Bogota Chapter - https://beta.openideo.com/chapters/15

I do know the Lima Chapter is taking part in the challenge and they might have some insights to share.

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Thank you very much Kate. And thank you in advance to anyone that provides any advice or insights.

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Hi Brian,

It is great to have you and Algramo in the challenge.

Which one of the use cases is the easiest for you to implement - https://d3gxp3iknbs7bs.cloudfront.net/attachments/d7cfea9d-b5a2-4ce3-a8de-3e518a3c4b67.pdf ?

Have you been able to get feedback from your customers on what they think of the idea and for what use cases they would use the machine?

What is the next step in the development of your idea?

Photo of Brian Bauer of Algramo
Team

Hi Kate,

Myself and Algramo are happy to be here, it seems like a great contest/platform to exchange innovative ideas.

For this proposal the key focus is replacing single use sachets with small reusable plastic containers that dispense product into reusable containers-volumes dispensed in accordance to a price per ml. I have looked at the economics of it and I am confident we can provide smaller sized containers (especially in the 75ml to 200ml), so price points are BoP friendly and offer major cost savings, with improved connivence.

We have been selling mostly dry food (rice, beans, lentils, etc) via vending machines into reusable plastic containers, for about 4 years. But we are now moving into dispensing liquids by machine-prototypes finished soon ready for market. Sometimes it can be a challenge getting customers to pay ~30 cents for a reusable container, but after a while the concept catches on and the customer realizes the significant cost savings. But on the note of cost saving, a lot of research shows that many in the BoP are suspect of lower cost being equated to lower quality. We strive to never compromise quality. Basically, it is a slow process were we expand our network of stores and slowly build/improve our social licence which helps us win customers and have them embrace our reusable plastic containers. We estimate that a family of four using all our product offerings will avert about 2kg of plastic waste per/month-a lot of which leaks into the environment.

The next step is to complete the redesign of new, much lower cost machines that are IoT connected to optimize supply chain management. Lowering the cost of machine is critical as we provide the machines for free and share profits with the storekeepers. We are also working with a social impact agency in Switzerland that is considering short term subsidization of the cost of our plastic containers for smaller format sizes, so that we can bring cost savings from our distribution model to people with the lowest levels of income. We are also interested in having a plastics engineer customize containers so product and container have optimized functionality and longevity.

Lastly, we are interested in partnering with a values aligned FMCG brand that wanted to lease our machines and leverage our last mile BoP distribution and expertise to spread our machines and reusable plastic containers into other parts of BoP markets in Latin America to maximize our social impact and circular use of plastic packaging.

Photo of Kate Rushton
Team

HI Brian,

This is really interesting. Do you have a timeline for the development and planned market date for the machines?

Are you able to share websites for the organisations you mentioned?

Naman Mandhan - what do you think of the vending machines? I am tagging a few more engineers here Alex Blondek Samarth Mahajan Fausto Camargo Suren Avakian 

I am tagging Isaac Jumba here. Isaac, are there similar stores in Nairobi? Could the same model work in Kenya?

Photo of Naman Mandhan
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Hi Brian!

This is amazing! I love how you are providing such a low cost alternative to edible goods and removing a lot of the costs associated with packaging. I have a couple of questions about your idea to help me understand it better.

1. Is there a mechanism that prevents users from using containers that aren't sold by Algramo?

2. Have you faced challenges associated with users concerned about the "freshness" or sanitation of the food that is being dispensed? How often are the machines cleaned and maintained and what does that process look like?

3. What purpose is the IoT integration going to serve and what challenges do you see associated with the same?

4. Do you foresee any challenges associated with cultural differences that might prevent you from scaling this product globally? What are some community/cultural aspects found in the locations where you have tested your product that might have contributed to its success?

Looking forward to connecting!

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Team

Hello Naman,
Thanks for the astute questions.
1. Currently there is not a mechanism other than the storekeeper not allowing it. Using different containers can lead to spilling. So our main policing of this is having the storekeepers try and enforce the use of official containers. A technology based solution we can create is have a scale where the container goes and only allows the product to be dispensed if there is a container in the specific weight range (ex, if our container is 24 grams only containers of 23.5 to 24.5 grams will enable machine to dispense). Currently, we are not using a scale to do this, but it could be an option in the future as we enter new markets.
2. We are now using smaller machines which means they have a quicker product turn over rate this reduces freshness concerns. But generally, the products sell fast and we have had minimal concern with freshness (also most of our products have been things like dry beans, rice, lentils which are not overly sensitive to these issues). I don't deal with cleaning the machines, so not sure the answer, but there are government standards that we always exceed. Now moving into liquid machines, I suspect maintenance will increase and be more complex-but IoT sensors can help minimize/optimize maintenance.

3. One example, see above, maintenance sensors. Primary concern is managing inventory optimally, knowing when we need to refill machines, ideally, in the future, our networks of thousands of machines would always have products, never run out of product as we have real time inventory management. A key point is the IoT and data analytics gives us a major competitive edge and can perhaps help entice a partnership that can lead to increased economies of scale (lower prices to serve our value proposition). Below is an article about my research for Algramo that describes in detail some of the other benefits of IoT in our vending machines.
https://www.extension.harvard.edu/inside-extension/building-sustainable-supply-chain-food-startup
4. Good point and clearly the world is a very culturally heterogeneous and cultural factors can greatly help or hinder the success of our business strategy. For this reason, we are keen to potentially partner with a values aligned FMGC brand that has insights into nuances of regional markets. Community/cultural aspects that contribute to success are having a sophisticated understanding of bottom of the pyramid marketing and market dynamics. In particular, in BoP markets, it is critical to consider the 4T's of BoP marketing-truth, trust, tribes and trials. Lastly, building a social licence is a critical element of success in BoP markets and leveraging the power of the 4T's.

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Team

Hi Kate, I really enjoy this platform, lots of really solid discuss and sharing of ideas.

We have been developing our new low cost IoT machines for about 8 months. We recently won significant funds from Expo 2020. These funds will rollout 100 of our new low cost IoT machines, starting in about a week from now-lasting about 8 months! If this rollout goes well and Expo 2020 likes our results, we have proposed funding for a rollout of 1,000 machines. We have support/are working with a really amazing team supported by the French government and Chilean government & 8 universities (inria.cl) to help use with complex technology related challenges and software development.

Another area we are moving into is sourcing food directly from small scale local food producers. By buying directly from producers we greatly simplify our supply chain, cut out a lot of middlemen and we will gain the ability to further reduce plastic/other packaging waste in the downstream of our supply chain.

In regards to links for the Swiss social enterprise that might offer us partial subsidization on our smaller size containers, I would rather not share that as we have been working on this for 6 months and we are close to hopefully being awarded funding, so I would prefer to not comment on this until we complete the process. That said, there are a growing number of impact focused investment firms and foundations that fund sustainability initiatives with high social impacts or environmental benefits. Just Google Social Impact Investment and a long list will come up-these guys [ http://acumen.org ] are some of the leaders for investing in social enterprises/enterprises with major environmental benefits. As well, another business strategy I would recommend if you want access to alternative lower cost capital from impact focused investment firms or foundations is focus your business plan on supporting UN Sustainable Development Goals. This website [ http://sdgfunders.org/sdgs/ ] gives some really solid advice and actually contacts for how SDGs can be leveraged into financial opportunities.

@Isaac Jumba I would be curious to hear you views on how well a business idea like Algramo might be able to be integrated into Kenya? Long term, Algramo wants to spread across Latin American and into other regions, hopefully Africa. Lastly, Kenya has had some really amazing social innovation-developments like M-PESA. I really look forward to your comments.

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Hi Brian,

This is fantastic work! I was really impressed with the cost savings Algramo is providing to customers and market shops while giving customers the opportunity to buy more product at the same cost as product+packaging.

How did Algramo convince shops and consumers to try out its vending process and products? It always seems to be a challenge to get those first few early adopters to try out a promising idea. Was a cost benefit model enough or were there other environmental or social impact concerns that helped to convince them to try out your system?

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Team

Hi Gabriel,

Thanks for your comments!

Great question about how to motivate shops and customers to use our vending machines and reusable containers. For the machines and stores there is a fairly simple answer, we provide the machines for free and share profits with the storekeeper.

Motivating BoP customers to pay 30 to 40 cents for a container can be a bit trickier. But the cost savings are fairly easy to see and ROI on the container often happens after about 1 to 3 purchases (depending on product). We are now up to 1,100 stores selling our products, so as our name builds and our social licence increases, it gets easier to motivate consumers to use our containers-but still at times it has been challenging.