The artisan craft industry is the second largest employer in the developing world. Its workers are also some of the most disenfranchised. On average, women account for 80% of the workforce, but make only 10% of the income. Fashion brand/tech company Soko provides a way for artisans to improve their livelihoods by connecting them directly with market demand around the world through a first-generation mobile phone marketplace. This approach matches existing consumer behaviour with responsibly sourced products, proving that ethical small-scale production can feed the mainstream market.
This case study is part of Brand The Change, the guidebook, in a series of twelve studies of succesfull changemaking organisations and the way they have built their brand. This blogpost is an excerpt of the full case study in the book. We spoke to Soko founders Ella Peinovich and Gwendolyn Floyd in Nairobi in January 2016.
Start, pivot, leap
Nairobi is a hotbed for social innovation and tech, and it was here that Soko founders Ella Peinovich, Gwendolyn Floyd and Catherine Mahugu met and recognised their shared passion for artisanship and women’s empowerment. Combining their talents for technology and systems design, they have invented a radically new way for fashion brands to source their products.
When a Soko customer puts in an order it is sent to a digital marketplace that artisans in Kenya can access and respond to via their mobile phones, even if they lack access to the Internet, a computer, or a bank account. The artisans produce the jewellery, and Soko delivers it to the customer. Because there are no other middlemen, a Soko partnership can quadruple the income of the average artisan.
The road that led to today’s success has had some twists and turns. Soko began as SasaAfrica, a tech company conceived as the ‘Etsy of Africa’, a digital marketplace that offered local artisans a platform to sell and market their own unique, one-off designs.
‘The perceived value of the products didn’t align with the actual value of the goods. We realised marketing and branding were very important,’ Peinovich says. ‘Also, the style of the jewellery was very ethnic,’ adds Floyd, ‘which only appealed to a niche market. We recognised a scalable market demand from wholesale consumers that would enable us to pivot our supply chain to a more robust end-to-end solution.’
During this initial phase, time and money were both in short supply, eaten up by the demands of maintaining and operating the tech platform and building their supplier and market bases.
The team started applying for funds and entering competitions, and SasaAfrica won the BiD Women in Business award, Rice Business Plan Competition, Global Social Entrepreneurship Competition (GSEC), the DEMO Lionesses and People’s Choice awards at DEMO Africa, the ITV Telecom World Young Innovators Competition, a USAID Development Innovation Venture Grant and a Best Buy College Innovator Fund prize, getting over US$200,000 (€184,000) in seed funding, mentoring and coaching. The awards and funding also resulted in substantial early PR and a group of first fans who gave the founders crucial feedback.
‘That is when we rebranded to Soko,’ says Peinovich.
We needed an umbrella company that could raise the kind of prices that could cover the cost of marketing and promotion involved to meet the mainstream consumer.
‘We went from a technology company for artisans to a consumer-facing company. To make this possible we moved from unique pieces to a collection of items that could be produced in series, and then we offered them at wholesale.’ The change quickly paid off. In 2015 Soko raised US$700,000 from a Dubai-based venture capital firm and from angel investors to help support further growth.
Enter the world of fast fashion
One of Soko's necklaces from the 2015/2016 collection
For a tech company to enter the extremely competitive world of online fashion retail is no small feat. The shift from a miscellaneous assortment of artisan-designed pieces to a coordinated collection was particularly significant. ‘We are lucky that both Ella and I are trained designers,’ says Floyd, ‘so when we made that switch it was easy for me to pick up the product design, and I now design several hundred pieces each year over the course of six weeks.’ Soko’s collection offers quick delivery, an attractive price point and contemporary aesthetics that score major points with upmarket stores in the West like Nordstrom and Anthropologie.
As Floyd says, ‘We sell ethical fast fashion and have a product that is very on-trend, demand-responsive and very affordable and ethically produced. So we were able to corner that niche fairly easily because no one else is able to do that in the way we are able to through our technology. We can actually compete on timelines with Zara and H&M, but we are ethically and sustainably sourced. Plus, our story is really differentiating.’
From harvesting goodwill to building an aspirational brand
Peinovich considers a differentiating brand proposition absolutely vital, an aspect that she sees a lot of social-impact companies ignore. ‘If you are producing life-saving devices make them as cheap as possible, but if you are marketing a service or product where you need to differentiate yourself in the market, it is extremely important to create an aspirational brand.’
That aspirational aspect includes the stories of the artisans themselves. At first, they featured prominently on the website, but Soko has adopted a new approach that creates an even more direct connection between the customer and the artisan: each piece of jewellery ships with the story of the woman who crafted it, linking customers emotionally to the things they wear and the people who made them. Floyd says that the products sell themselves with very little outside help. ‘The only marketing we’ve been involved in has been going to trade shows, and very limited e-commerce activities. To date, we’ve mostly grown through wholesale. To stores like Nordstrom, we offer a great story that they themselves cannot offer.’
Soko collaborates with other powerhouse brands in the social sector like Pencils of Promise, dedicating special collections to the collaboration.
This smart approach to entering the market helped to avoid huge investments in brand building in the early years. ‘Most brands start with e-commerce to be able to position themselves in the market and then go for wholesale. We have found success in building our brand through wholesale, which in the end is more cost-effective’, says Floyd.
Budgets in a competitive world
Soko, of course, has not built its brand in a vacuum, and although its brand proposition helps it to stand out in the context of a luxury department store, it still has to compete with big-name brands wielding big-name budgets. As Floyd says, ‘Most starting fashion brands will reinvest 50% of a month’s revenue back into branding and marketing for the next month, over the course of three years in order to gain a foothold in the market.’ Top-quality in-store displays help Soko to project the same aura of quality and glamour as their bigger competitors.
>>> Continue reading in Brand The Change, the guidebook!