Following a pilot that was launched in April 2021 to test a savings product that let SokoWatch retailers to leave out funds in their SokoWatch wallets, for the chance to yield weekly bonuses of between 1% and 2%, the team behind the product:
- Mercy Corps Ventures
- SokoWatch
- IdeoCoLab Last Mile Money, and
- Terra
discovered that, more than the possibility to earn yield, the customers want a more efficient service.
That was the main lesson out of several lessons about introducing financial products to retailers, and even consumers in Africa.
With a $50,000 grant from Terra staked on Terra’s Anchor protocol, earning between 18-20% APY, the ultimate aim of the product was ‘to explore how to share the earnings of DeFi with those traditionally excluded from the financial system – while protecting them from risk.’
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SEE ALSO: [MILESTONE] African SMEs Among Over 1 Million Borrowers Getting DeFi Loans from GoldFinch DeFi Pools
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Other than that, the pilot that was conducted among Sokowatch retailers (merchants) in Kigali had the following objectives:
- Help retailers to digitize payments and other transactions
- Manage their Cash flows
- Help retailers plan their businesses
SokoWatch (now Wasoko), which recently raised $125 in series B funding, is a B2B/Retail startup that delivers stock to informal retailers / merchants across communities in Africa, with an app to make orders.
According to a Mercy Corps blog post, the pilot produced a number of key lessons:
(1) On Onboarding Retailers
At first, the team thought SMS would be effective to onboard retailers who were already familiar with the SokoWatch brand to a new product. However, they discovered that a combination of texts, calls and in-person visits, while leveraging the personal relationships retailers have with Sokowatch delivery agents, was more productive.
(2) On Storing Funds to the Sokowatch App
Secondly, when it comes to the fintech interface for making payments, the team made the user experience within the SokoWatch app to resemble aspects of mobile money transfer based on the idea that users trusted mobile money as a tool to store their money.
It is typical for retailers to load funds to their wallets to purchase the stock/supply they need while hardly leaving out fund in the wallet. The pilot tested out a product that incentivized the retailers to store their funds in the SokoWatch wallet in a process they dubbed ‘PrePayment.’
However, the pilot discovered that their is a level of lack of trust in mobile money to store money, and the key learning was to include multiple confirmations during the prepayment process.
According to Mercy Corps:
“A number of retailers have been robbed, even from mobile money accounts, so they are actively seeking alternative avenues to store cash that cannot be stolen.
Prepayment is a key moment of trust, and multiple confirmations (with a personal touch) are an opportunity to build that trust.”
– Mercy Corps
(3) Users Ask for Better Service
Another lesson is that while the team had introduced a savings product, what would best suit the retailer needs was a loyalty product. This is based on the feedback that they kept on collecting leading them to discover that, more than earning yield from prepayments, the customers were looking out for:
- Faster delivery
- Reserved stock to avoid stock-outs
- Protection from price fluctuations by locking prices at the time of order
“For them, these benefits would make them feel like valued customers even more than a monetary bonus did.”
– Mercy Corps
(4) DeFi for Savings
According to the team, the earnings from retailers during the pilot period came to $989 while they had staked 50K $UST in Anchor protocol, which earned $2,246. As such, the amount that was staked on Terra more than covered the earnings earned by retailers.
This displayed the significant opportunity for organizations to take advantage of DeFi for savings.
According to Mercy Corps:
“[The pilot is] highlighting the opportunity of crypto treasuries to enable organizations serving low-income users with thin margins to offer disproportionate value via participating in DeFi ecosystems.”
– Mercy Corps Ventures
According to Mercy Corps Ventures, 78% who signed up for the product did not make any prepayments.
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RECOMMENDED READING: The Development Bank of Ghana (DBG) Launches to Provide Long-Term Loans to Ghanaian SMEs
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