Solidarium Fair Trade - Brazil

Competition Finalist

This entry has been selected as a finalist in the
Powering Economic Opportunity: Create a World that Works competition.

Project

This innovation also has a Project Page where you can read more about its latest progress.
Go to Project: Solidarium Fair Trade.

There is more than 39 millions of our fellow citizens in Brazil (23% of our population) who, despite working extremely hard, survive on less than U$2 per day. Poverty and hardship limit people's choices while market forces tend to further marginalise and exclude them.
Solidarium promotes the development of new products through a network of recognized and highly qualified design studios, identifying, qualifying and integrating a network of local producers to increase their production capacity through shared techniques and orders in an operation model called "Decentralized Fair Trade Industry". Solidarium distributes its products through major retailers such as Walmart, being able to generate scale and a greater income monthly to the producers.

About You

Organization: Solidarium Visit websitemore ↓↑ hide↑ hide

About You

First Name

Tiago

Last Name

Dalvi

About Your Organization

Organization Name

Solidarium

Organization Website

Organization Country

Brazil, PR

Country where this project is creating social impact

Brazil

Is your organization a

For‐profit

How long has your organization been operating?

1‐5 years

The information you provide here will be used to fill in any parts of your profile that have been left blank, such as interests, organization information, and website. No contact information will be made public. Please uncheck here if you do not want this to happen..

Innovation

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Entry Form title

Solidarium Fair Trade - Brazil

What change do you want to bring to the world?

There is more than 39 millions of our fellow citizens in Brazil (23% of our population) who, despite working extremely hard, survive on less than U$2 per day. Poverty and hardship limit people's choices while market forces tend to further marginalise and exclude them.
Solidarium promotes the development of new products through a network of recognized and highly qualified design studios, identifying, qualifying and integrating a network of local producers to increase their production capacity through shared techniques and orders in an operation model called "Decentralized Fair Trade Industry". Solidarium distributes its products through major retailers such as Walmart, being able to generate scale and a greater income monthly to the producers.

What are the primary activities of your project?

Solidarium sells fairly traded products with cool, innovative and useful design in areas of Fashion and Female Acessories, Home Decoration, Domestic Utilities, Kitchen Utensils and Corporate Gifts.
The development of new products at Solidarium initiates from the observation of a real demand from final consumers or retailers. This market research generates a briefing which summarize a market opportunity. This briefing is sent to a partner designer whom will create alternatives of products together with the producers previously selected and already members from Solidarium network. New products can also be suggested by producers via Solidarium website. When a product is finished, it will be registered into our system. From this record, the product is ready to be presented to retailers. If a sale is made, we generate a purchase order, which is sent to our production network (Cooperatives and Associations). During production, we apply the quality control and at its completion, the batch of products is directed to the retailer and become available for purchase by consumers.

What is innovative about your initiative? How is it a new contribution to the field?

Solidarium promotes the development of new products through a network of recognized and highly qualified design studios, identifying, qualifying and integrating a network of local producers to increase their production capacity through shared techniques and orders in an operation model called "Decentralized Fair Trade Industry". Differently from its peers in the Fair Trade sector, Solidarium distributes its products through major retailers such as Walmart, Lojas Renner (JC Penney) and TOK STOK, being able to generate scale and a greater income monthly to the producers.

What stage is your project in?

Operating for 1‐5 years

Tell us about the community that you engage? eg. economic conditions, political structures, norms and values, demographic trends, history, and experience with engagement efforts.

Solidarium works with a specific group of beneficiaries. About 85% are women aged between 30 and 60 years, with primary school completed, with family incomes up to two minimum wages and families with up to 5 people. Currently, Solidarium works with 65% of its producers located in urban areas and 35% in rural areas.
We identified some common points that directly affect the growth and development of these micro enterprises ahead competition and the demands of the market, listed bellow:
• Many of them do not consider themselves as entrepreneurs, they are insecure and have low self-esteem;
• Low capacity to draw long-term plans and vision;
• Scarce resources, lack of support, knowledge and appropriate structure;
• Few contacts and relationships with potential clients in other regions and social classes;
• Poor perception of added value, quality, design and business opportunities;
• Low qualification, background and professional training;
• In rural communities, challenges of communication and logistics make it more difficult;
• Lack of knowledge about ways to minimize environmental pressure and sustainability in its production processes, marketing and logistics.

Share the story of the founder and what inspired the founder to start this project

I started my career at JR Consulting, a junior enterprise inside business scholl, where I assumed the posts of consultant (2003), Marketing Director (2004) and CEO (2005). In 2006, I joined the Entrepreneurs Alliance (aliancaempreendedora.org.br) , a social organization that works to promote entrepreneurship, where I assumed the area of market access, environment that led me to found Solidarium in 2007.
In just three years, Solidarium become a case of national and international success by innovating while promoting social impact in a profitable business that operates through a network of product development, inclusive production and distribution of high value added products through major retailers such as Walmart.

Social Impact

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Please describe how your project has been successful and how that success is measured

Solidarium works to increase the income from its direct beneficiaries to the equivalent of 1 minimum wage ($265) per month. Currently, Solidarium generates $70 per direct beneficiarie, in average. This increase results from a set of activities such as growth of sales in retailers, an increment of production capacity and an increase in the number of products developed. With a greater income, they are able to move out the poverty line, improve its health and from its family, provide a better education for its children, improve its housing and finally, to inspire other people to become part of this network.
Solidarium has a monitoring system called DASH BOARD. In this system, we follow the main results generated by the company both in the social and economic sides such as Income, Direct Beneficiaries, Indirect Beneficiaries. This system is monitored monthly and integrated into a spreadsheet. The results are printed and shown to the entire organization. Furthermore, we cross the monthly goals with the results obtained to evaluate the performance of Solidarium considering the actions and goals previously outlined. This analysis results in the redesign or maintenance of our Impact Strategy considering the short, medium and long term.

How many people have been impacted by your project?

1,001- 10,000

How many people could be impacted by your project in the next three years?

More than 10,000

How will your project evolve over the next three years?

The next major milestones of Solidarium are related to (1)expansion of commercial agreements, (2)increase sales of our E-Commerce and (3)strengthening our production network. (1)To make E-Solidário Walmart a channel widely recognized by the consumers of Solidarium. For this, Solidarium will have to develop an innovative communication approach focused on results. (2) To fullfil the commercial agreement with Natura (the largest door-to-door cosmetics manufacturer in Brazil), which will demand about 50k shopping bags per month. (3) To qualify Allied Organizations which will work with Income Generation and Fair Trade as a way to broaden our impact and share the market channels opened by Solidarium.

Sustainability

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What barriers might hinder the success of your project and how do you plan to overcome them?

Currently, the major barrers Solidarium faces are related to the scale of its business model, such as:
- The brazilian market still don't know what Fair Trade is: we intend to face this barrier by mobilizing a network to improve and increase our marketing range and capillarity.
- Lack of cash-flow: during the last 3 years we built a great network with major investment funds located in Brazil. Our idea is to expand this network overseas, specially because of the 6 weeks program at the Unreasonable Institute starting in june and july.
- High team turnover difficult Solidarium management: we're investing in our team by participating in team building sessions, empowering each area coordinator
- Commercial agreements with large retailers take too long to start selling and consume Solidarium cash-flow: we started a Representative Sales program to start building a network of small and medium retailers. It will generate quick sales.

Tell us about your partnerships

Solidarium depends on its network to increase its impact. Here is some of Solidarium partners and what we do with them.
- Unreasonable Institute: network of social and environmental business entrepreneurs focused to scale up Solidarium activities;
- Artemisia Negócios Sociais: network of social business focused to accelerate the results of the company;
- Walmart Institute: invested $150.000,00 on Solidarium operations in 2010;
- Walmart Stores: commercial agreement to sell Solidarium products in 53 stores in 3 different states of Brazil;
- TOK STOK: commercial agreement to sell Solidarium products in all of the 35 stores all over Brazil;
- Lojas Renner: commercial agreement to sell Solidarium products in all 110 stores all over Brazil;
- Mundo Verde: commercial agreement to sell Solidarium products and to have access to all of its 215 franchises;
Aliança Empreendedora: Solidarium is part of Aliança's network, by providing market access to Aliança Empreendedora's beneficiaries;
- SEBRAE: provide potential producers, organize roundtables and events to build a bridge between producers and potential buyers;
- Nódesign: located in São Paulo, this design studio is responsible to generate new cool and innovative products;
- Inove Design: located in Paraná, this design studio is responsible to generate new home decor and utilities products aligned with market trends;
- Tekoha: allied organization qualified to access Solidarium's market channels and provide new producers and products;
- Mundaréu: allied organization qualified to access Solidarium's market channels and provide new producers and products;

Current annual budget of project, in US dollars

$250,001‐500,000

Explain your selections

The strategy of financial sustainability of Solidarium is 100% based on the pillar of product sales. Solidarium's pricing policy consider all the costs related to the product development such as design, production, logistics, marketing, communications and sales plus Solidarium's markup (net profit goal) which vary from 12% to 20% of the sales. Considering the results achieved in 2010 and the planning for the coming months, Solidarium will reach its breakeven point in March/2011. A projection made by Solidarium shows that with the existing trade agreements, the company could reach $1.0MM in sales by June/2012 with a net margin of 12%.

How do you plan to strengthen your project in the next three years?

The communication strategies of Solidarium seeks to increase the conversion rate of awareness into sales. In this sense, we structured the communication actions in two main fronts: online and offline. The online actions contemplates Sponsored Links at Google Adwords (j.mp/i1wsKp), newsletters sent weekly by Solidarium, newsletters sent monthly to Walmart.com.br database (http://j.mp/fypoIP), Twitter updated daily (@solidarium), website (www.solidarium.com.br), Facebook and Trilha do Produto as a way to enhance the transparency in the value chain (http://j.mp/fsSta2). The offline actions are those performed directly in the retail and contemplate Paper TAGS in all of the products, personalized display and participation in Fairs.
We initiated a process to identify and qualify some Allied Organizations which work with Income Generation and Fair Trade as a way to broaden our impact and share the market channels opened by Solidarium. This process is simple and enables Solidarium to scale up its operation, since most part of producers from these Allied Organizations starts supplying products for Solidarium without compromising our operation, since all the work of monitoring production and shipping products to the retailers is carried out by the Allied Organization. Our intention is to replicate this model in other countries by 2012.

Challenges

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Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

Restricted access to new markets

SECONDARY

Lack of skills/training

TERTIARY

Inadequate transparency

Please describe how your innovation specifically tackles the barriers listed above.

Solidarium business model was developed and improved to provide and increase market access for producers located in poor communities. The commercial agreements with large retailers answer to the questions of seasonality and also the demand for sales continuity.
Solidarium answer to this question by building partnerships with organizations such as Aliança Empreendedora, SEBRAE, SENAC, and others. These organizations are responsible for management and technique qualification.
Last but not least, Solidarium developed a program called "Trilha do Produto" which is a track and trace system to turn Solidarium's value chain 100% open to the customer. As a principle of the Fair Trade, transparency is crucial to build trustful relationship between producers, retailers and customers.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

Grown geographic reach: Within host country

SECONDARY

Grown geographic reach: Multi-country

TERTIARY

Grown geographic reach: Global

Please describe which of your growth activities are current or planned for the immediate future.

Solidarium started the Allied Program in 2010 to share its market channels with other Fair Trade organizations. The program is running and we're expanding its action for other states and regions. This is a great strategy due the low investment and high impact.
We intend to start Solidarium International first to increase our current producers sales and in a second phase by integrating producers from other countries. This plan will be improved during the 6 weeks at the Unreasonable Institute.

Do you collaborate with any of the following: (Check all that apply)

Government, Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities.

If yes, how have these collaborations helped your innovation to succeed?

According to what we presented before, our results are much more effective when we do this with partners.
Currently, the government is part of a strategical sphere. Our intention is to improve the Social Busines sector and the Fair Trade movement by becoming a success case.
IT suppliers are crucial to provide the right structure for us to grow in a organized way. Currently Solidarium has partnerships with Ideal Soft (ERP) and Go2Nplay (web).
The non profit organizations provide producers and, specially, local support.
The private sector makes the business to run and all the retailers must be included here.
The universities, specially the junior enterprises, provide us great talents and support in market research.

AttachmentSize
foto_solidarium.jpg1.44 MB

Comments

Kohl S. Gill, Ph.D profile img
Sun, 05/29/2011 - 01:21





Good evening, Tiago.

It looks like you have a very well-thought-through approach here with Solidarium!

Innovation

New Contribution

  • How do other fair trade groups operate, differently from Solidarium?

Social Impact

  • Why should we consider this a “social enterprise” and not just a regular business? I don’t see the connection between a more labor-intensive road-building model and systemic change in the labor market.

Evolution

  • It seems you’re focusing very closely on a few key buyers. What happens if those relationships change?

Sustainability

Barriers

  • How does your product pricing compare with non-fair-trade products? Why would vendors buy your product when Brazilians “still don’t know what Fair Trade is”?

Strengthening

  • What are you doing, in detail, to solidify the management challenges?
  • Since domestic sales seem to dominate your current strategy, is an Internet-focused growth strategy appropriate?
  • If your model is solid enough to expand to other countries, then why are you engaging with Unreasonable Institute and Ashoka? It seems you can grow and scale under your own steam, now!

Challenges

  • How do you address the “lack of skills/training”?


Tiago Dalvi profile img
Fri, 07/08/2011 - 13:39

Dear Kohl,
Thank you very much for your comments!

Here is our answers for your questions. Hope we can clarify some points:

Innovation New Contribution: How do other fair trade groups operate, differently from Solidarium?

> Basically, other FT organizations works with their own market channels, specially in Brazil. These models are usually hard to scale up and we know that because we started with our own store in a Shopping Mall in Brazil.
Our main difference is related to our business model and structure. We're based in 3 main pillars, where we integrate a network of (1) Design Partners, (2) Local Producers and (3) Major Retailers.

Social Impact: Why should we consider this a “social enterprise” and not just a regular business? I don’t see the connection between a more labor-intensive road-building model and systemic change in the labor market.

> In Brazil we have more than 2 million local producers (people) living with less than $2,00 a day. Our mission is to get these people out of poverty by providing unrivaled market channels. We've been working with 1600 local producers who within 2 years working with Solidarium are increasing their income by 80%, which is a huge impact on their lives.
We only work with Cooperatives, Associations and Communitie Groups with the idea to not only generate income but also to develop their community as well.

Evolution: It seems you’re focusing very closely on a few key buyers. What happens if those relationships change?

> We realize that working with major retailers is a good way to scale up our business and impact, but the negotiations take too long. So what we're doing wright now is to set up a sales network with people in field selling our products for small and medium retailers as well. The idea here is to become less dependent on this major retailers and to dilute the risk with this fast sales made for the small and medium retailers.

Sustainability Barriers: How does your product pricing compare with non-fair-trade products? Why would vendors buy your product when Brazilians “still don’t know what Fair Trade is”?

> We don't believe that FT products should have a premium price. Our products are usually competitive with other products. As our chain is more expensive, we add perceived value with these design partnerships. Our focus is to sell products that are useful, has a great perceived value, a competitive price and a great design. We don't want our customers buying our products because it is socially responsible or because they wanna help our producers. That would be charity and would not be sustainable. The fact that "brazilian customers still don't know what FT is" it is a solvable problem and is one of our focus on the customer side.

Strengthening
What are you doing, in detail, to solidify the management challenges?

> Raising investment to bring people with market experience. Inviting advisors to be part of our Board. Bringing professional investors to professionalize our management tools and reports. Talking with many mentors here at the Unreasonable Institute to discover what are our real gaps.

Since domestic sales seem to dominate your current strategy, is an Internet-focused growth strategy appropriate?

> We believe that an internet-based strategy is appropriate to include even more producers. But it cannot be the main or the only sales strategy due the fact that the e-commerce market in Brazil is still small, specially for our products. Anyway, it is growing with a 2-digit rate every year, so it is important for us to be part of this "movement" since now.

If your model is solid enough to expand to other countries, then why are you engaging with Unreasonable Institute and Ashoka? It seems you can grow and scale under your own steam, now!

> Our model is not solid enough to expand naturally to other countries. We're engaging to Unreasonable Institute and Ashoka because we believe in the power of networks, sharing ideas and to collaborate with other social business. We're now raising investment to structure these 4 main areas:
1) Develop a Crowd Sourcing Design Tool to become less dependent on our current design partners;
2) Set up a sales network in Brazil and in the US to expand our sales;
3) Develop an Online Marketplace to include even more local producers in the market;
4) Bring people with market experience to build a solid team in Production and Commercial area.

Challenges: How do you address the “lack of skills/training”?

> We're now partnerring with local NGO's to qualify the local producers we've been working with.

Well, i think that's it! Thank you again for the questions! I hope I was clear.
If you have any other questions, please fell free to write me again.

Best Regards,

Tiago Dalvi.

Lisa Heydlauff profile img
Fri, 07/08/2011 - 01:34

Looks like a good model. If I wondered if, after some time working with you, many of your participants were interested in setting up as entrepreneurs themselves and whether / how you encouraged this? Best wishes

Tiago Dalvi profile img
Fri, 07/08/2011 - 13:42

Hi Lisa,
Thank you for your comments!
Well, all of the local producers we've been working with are working as independents business from Solidarium. The're usually formed as Cooperatives, Associations or even Community Groups (still informal) and we do not have and exclusive agreement with them. We actually present them to many other potential buyers for them to become independent.

Cheers,
Tiago Dalvi.

David Cadia profile img
Fri, 07/22/2011 - 01:15

Hope your project wins! I am trying to something similar in Nicaragua. I knowhow tuff it can be to change the system. Maybe one day we can collaborate. THe poverty is terrible in Nicaragua, we are the second poorest nation in the Western Hemisphere behind Haiti but just like Brazil we are blessed with natural resources and hard-working people. We just need some changemakers.

David Cadia profile img
Fri, 07/22/2011 - 01:15

Hope your project wins! I am trying to do something similar in Nicaragua. I knowhow tuff it can be to change the system. Maybe one day we can collaborate. THe poverty is terrible in Nicaragua, we are the second poorest nation in the Western Hemisphere behind Haiti but just like Brazil we are blessed with natural resources and hard-working people. We just need some changemakers.

David Cadia profile img
Fri, 07/22/2011 - 01:15

Hope your project wins! I am trying to do something similar in Nicaragua. I knowhow tuff it can be to change the system. Maybe one day we can collaborate. THe poverty is terrible in Nicaragua, we are the second poorest nation in the Western Hemisphere behind Haiti but just like Brazil we are blessed with natural resources and hard-working people. We just need some changemakers.

Mon, 07/25/2011 - 13:01

Go Solidarium! Can't wait to see you guys taking this model and spreading it across Brazil. You've got my 200% support!

Wed, 07/27/2011 - 23:24

Tiago is one of the most determined, relentless, and caring entrepreneurs I've ever had the privilege of knowing. You and your team are going to take this tot he stars my friend!

Vidya Ravilochan profile img
Thu, 07/28/2011 - 02:01

It's simple: just watch Solidarium change the world. This is more than "economic opportunity." This is absolute brilliance.

Enjoy the show.