IMPACT | AGRUPPA

A healthy organization to drive healthy food
supply chains.

 
 

Colombian social enterprise Agruppa was founded to deliver fresh produce to urban vendors in the country's lowest-income neighborhoods. Their unique model to create sustainable supply chains and empower small businesses had the support of World Bank, Mercy Corp, and Yunus Social Business. But the stretched team of first-time entrepreneurs needed a partner to guide brand strategy, operations, and marketing in attempt to pivot and scale.
 

 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
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INTRODUCTION

Inefficiency addressed by technology

 
 

There are 340,000 mom-and-pop food shops (tenderos) in Colombia. Their collective commerce naturally sets prices for 70% of fresh produce in urban areas. Without sufficient capital to buy in bulk, tenderos are forced to get daily stock at the central market. They lose as much as 15 hours per week and 20% of income on transportation, and face a 45% markup on goods resulting from a chain of middlemen between the farms and market. 

Agruppa leveraged existing mobile technology to create a virtual buying group among tenderos to help them reach wholesale prices on fresh produce. By aggregating demand, Agruppa could buy in bulk from the farm and deliver directly to tenderos. This had the potential to create a savings of roughly six minimum monthly wages per year (roughly US $1,500) per shop owner. And it opened the possibility for tenderos to provide reduced prices to their low-income consumers.

 
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SITUATION

A clear need demands clear values

 
 

Agruppa had clearly identified a need. Their model was promising and their vision compelling: Everyone has the opportunity to nourish themselves with healthy food choices so they have the ability to reach their fullest potential. 

But Agruppa was struggling to retain certain customer segments due to misperceptions of their value. End-user touchpoints with the brand were limited to the ordering process, product delivery, and packing slips. And the internal operations weren't aligned around specific value propositions, making it difficult to achieve the margins needed to sustain and scale.

Agruppa’s service and product value had already been proven by independent third-party auditors, with the price point verified as competitive. So we surmised that a stronger brand voice and sharper articulation of the value prop(s) had the potential to improve perception, drive loyalty, and reduce turnover among customer segments.
 

 
 
 
 
 

ACTIONS

Deeper understanding and better org health

 
 

We believe the best way to truly impact a changemaker is to walk a mile in their shoes. So after the virtual discovery process, we went down to Bogotá for a full week onsite with Agruppa, riding in delivery trucks, interviewing customers, observing warehouse operations, and spending hours with the leadership team in the boardroom.

In the field
Our most influential insights came during a customer understanding process, based on design thinking best practices. We visited dozens of Agruppa customers, whom we divided into three unique segments. With an interpreter by our side, we dug into the goals and daily realities of the tenderos.

We found that individual preferences and cultural norms worked directly against the main value prop of saving time: 

  • Most tenderos view their trip to the central market as an opportunity to get out, socialize, and conduct research.
  • Some of them value the ability to haggle over prices, even if the cost per kilo was no different than Agruppa's offer.
  • They care about size and ripeness, and see their ability to select produce with specific qualities as a key part of their job as a tendero. 

Another insight challenged the value prop of lower prices. Even though long-term use of Agruppa’s services could generate great savings, this extended horizon isn’t important to tenderos. We now know that Agruppa needed to deliver immediate, recognized cost savings versus longer-term returns.

  • Tendero cash flow horizons are incredibly short, measured not just in days, but in hours and minutes.
  • We observed some tenderos refuse deliveries, asking drivers to return an hour later so meantime sales could fund the purchase. 
     

Lastly, we identified a strong cultural aversion to any outside organization. In the words of one tendero, “trust kills”. For an outsider to convince this audience of brand promise, it had to be inarguable or delivered on extensively to be believed.

In the boardroom
For brand strategy, we conducted a series of workshops to clarify the business and impact models, core ideology, vision, landscape, positioning, and brand personality. These exercises are essential to establishing value props and communicating differentiators to customers. But we noticed some critical operations opportunities that might hinder downstream growth if not addressed alongside outward marketing.

So we also made a full court press around organizational health to establish clarity among the leadership team, communicate that clarity to everyone in the company, and put structure in place to reinforce clarity going forward. We recommended 10 immediate actions to improve by 10% in 10 days, and by 100% in 100 days, including:

  • Quarterly rocks, or the setting of priority goals.
  • An accountability chart to focus each team member.
  • A healthy rhythm of meetings.
  • A company-wide metrics scorecard.
  • Bringing in help to areas where gaps were identified, e.g. a key logistics role.
  • Discussing final positioning with each customer.

Then we developed a comprehensive project plan that would address the following key performance indicators (KPIs):

  • Existing customer retention and return rates.
  • New customer acquisition costs, rates, and velocity.
  • Average order size.
  • Cost of employee recruitment and acquisition.
     
 
 
 
 
 
 
 
 
 

 

 

"Mighty Ally took the time to get into the hearts and minds of everyone, from the team to the tenderos. This is key to their assertive advice both in terms of strategy and organizational health. They helped shift our business model toward sustainability and delivering what our customers need."

– CAROLINA MEDINA, CEO & CO-FOUNDER

 

 

 

 
 
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RESULTS

Shifting strategy toward sustainability

 
 

With the full endorsement of a key Agruppa investor, we challenged the team to rethink their current business model and pivot to one that could take them in a more clear, defined, and sustainable direction.

In short order, they took the insights generated through our interviews and observations and shifted their strategy to perfect the purchase and delivery of only two specific crops. They hoped that by achieving margins so absurdly good – a 20% savings over the central market – the tenderos would have no choice but to trust buying these two staples from Agruppa.

They also implemented core org health components we prescribed, setting them up to:

  • Improve accountability and leadership.
  • Clearly divide roles and responsibilities.
  • Create strategies to better manage inventory movement and accurately report on it.
  • Watch product waste and develop alternate channels to sell it.
  • Put measures in place for optimal product selection.
  • Develop customer communications strategies.
  • Review margins 24/7.

Unfortunately though – even with the team’s final herculean effort – our work together came a bit too late. We entered the engagement knowing it was a last ditch attempt to turn things around as their existing funding depleted. But they were realistically looking at a burn rate of less than 100 days.

Agruppa reached the bottom of their funds and was forced to make the difficult decision to wrap this chapter and shut down the existing model.

We couldn't be more proud of how these first-time entrepreneurs have handled the winding down process. Failure is inevitable in business, but we believe a good leadership team is just as well defined by how they handle setbacks as they do wins.

Since closing, the Agruppa team has written a series of blog posts detailing their journey and celebrating their achievements so other social entrepreneurs can learn from their experience. They started with the tough "Why we closed down our social enterprise".

We especially appreciated this post about value propositions, and the nod to Mighty Ally for the role we were certainly honored to play.

 

 

 

 
 
 
 
 
 
 

 

 

"Before Mighty Ally, we didn’t realize how much clear values that are practiced throughout the business would improve not only our operations, but ultimately the customer experience. They helped us reorganize our thoughts and strategy as a company, focusing on building healthy internal rhythms in order to drive organizational change."

– VERENA LIEDGENS, COO & CO-FOUNDER

 

 

 
 
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