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VisionSpring: Successful Scaling Of A Microfranchise (Part 1)

Posted on Saturday, Sep 12th 2009

By Guest Author Praneetha Manthravadi

[Praneetha’s article is both a profile of an organization for microentrepreneurship and a call to action. Read on to find out what VisionSpring does and how you can get involved.]

VisionSpring, previously known as the Scojo Foundation, was started in 2001 by Dr. Jordan Kassalow. The organization was started from a revelation Dr. Kassalow had after visiting developing countries around the world with a team of doctors on eye care missions. The majority of patients simply needed a pair of non-prescription reading glasses, rather than complicated procedures. These glasses typically cost less than $10 in US drugstores. Dr. Kassalow felt that the missions were not a good use of the time and resources of the American doctors, and the problem was really a question of distribution.  People in the villages just didn’t have access to the glasses. It struck him that the real problem was really a market failure for eyeglasses, and he came up with the idea of training local women, whom he saw as the keys to ending the poverty spiral that entrapped many of his patients. Dr. Kassalow came up with the concept of a “Business in a Bag”, which is the microfranchise kit that VisionSpring has today. These kits, which contain different styles and strengths of glasses combined with the training needed to sell the glasses, empower thousands of microentrepreneurs around the world today.

VisionSpring started its program through microfinancing. But over time, they found two issues with this model. The first was that people saw it as a barrier to entry into microfranchising, as they did not feel confident enough to try out something new by taking a loan. The second issue was that VisionSpring found itself spending a great deal of time managing these loans, time which could otherwise be spent selling glasses. That’s when they decided to switch to a micro consignment model.  With this model, VisionSpring lends the Business in a Bag kit, along with 20 pairs of glasses, to the microentrepreneurs and provides three full days of training. With this approach, the majority of the risk is borne by VisionSpring rather than by the microentrepreneur. People return the Business in a Bag kits if they are not successful in selling. Ongoing mentorship is provided through bimonthly meetings to make sure that entrepreneurs’ businesses continue to run smoothly.

VisionSpring uses three distribution channels to reach consumers. First is the direct channel, which is similar to a corporate-owned franchise. This is where VisionSpring uses the direct consignment model. VisionSpring likes to limit this channel to fewer than 200 Vision Entrepreneurs in India and El Salvador. It is primarily used as a learning laboratory to test new products and new sales strategies.

The second channel, which is the biggest one, is called the franchise channel. This channel takes the entire business model and franchises it to the partner organizations such as microfinance institutions and community health organizations. Through this channel, VisionSpring provides training, Business in a Bag kits and glasses to local partners. These local partners in turn train and manage the local microentrepreneurs.  This is where VisionSpring foresees the largest growth all over the world.

The third channel is like a traditional wholesale channel. This is currently the least developed of the three. Through this channel, VisionSpring sells the glasses to pharmacy chains and retail outlets in the developing areas such as  Africa and India. VisionSpring is working with Population Services International in Africa and Apollo Pharmacies in India to reach the vast network of retail outlet pharmacies. VisionSpring’s potential to grow in this area depends on the level of consolidation that is possible  in the pharmacy industry in developing countries around the world.

VisionSpring is able to keep the cost of glasses relatively low by manufacturing them in China. To date VisionSpring has successfully replicated about 2,500 microfranchises. A majority of that number, about 2,000, comes through their partnership with BRAC in Bangladesh. Working with BRAC is a success story of scaling for VisionSpring.  BRAC already has a network of community health volunteers who have been selling basic health and hygiene products for many years. VisionSpring started tapping into this network of entrepreneurs. What started in 2006 as a small operation with 50 women grew into a network of 2,000 entrepreneurs by2009. The number keeps growing, and the organization plans to be able to scale up to 80,000 entrepreneurs in the next couple of years. In partnership with VisionSpring, BRAC developed a 10-year financial model and raised 1.5 million in debt capital to finance this model and they are planning to sell over 13 million pairs of glasses in 10 years. BRAC foresees this project becoming operationally sustainable in four years and profitable in seven years. VisionSpring is hoping to replicate this success with other partners around the world and they are continuously looking for Franchise Partners in other developing countries. As of now, scaling or location doesn’t seem to be an issue for VisionSpring, finding the right partner is.

Tomorrow’s post discusses the microentrepreneurs’ profits, marketing strategies and plans for the future.

This segment is part 1 in the series : VisionSpring: Successful Scaling Of A Microfranchise
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Great story, very inspiring!

Sarabjeet Singh Saturday, September 12, 2009 at 11:42 AM PT