Proximity Designs business model
Helping rural families in Myanmar
Social Impact Mission
To begin with, what is the social change that Proximity Designs aims to foster and magnify? Just like we previously discussed, the firm aims to increase incomes of Burmese smallholders and supports them moving out of poverty. According to its research, thanks to its products/services Proximity manages indeed to provide farmers with an average annual income increase of 30%. Astonishing percentage, right?
As said before, Proximity sells directly to its beneficiaries. Therefore, low-income, farmers, smallholders and rural families are also Proximity main customers. In particular, the company has customers living in regions such as Lowe Myanmas, Ayeyarwady Delta, Lower Myanmar and the Shan hills.
Core Interventions + Value for Beneficiaries/Customers
Products and services sold by Proximity Designs can follow in 3 main categories: farm technologies, agronomy services and finance solutions. Obviously, each has its own value proposition.
Let’s start with farm technologies. Proximity developed a wide array of agricultural products and solutions. Water sprays, pumps, automated watering-can-style irrigation systems – just to name a few. If considered as a whole, this product line creates value to its target in several ways. For instance, it reduces labor time (and costs) required to haul water from the well to the fields. Also, it increases yields, boosting productivity and sustainability of farmlands. Ultimately, products are practical and affordable, unlike expensive, inaccessible alternatives.
When it comes to agronomy services, the ultimate intention is to provide vital agronomy knowledge to farmers. In order to do that, Proximity runs different programs to share best practices and new farming techniques. Agronomy services may thus include rice seed selection, fertilizer management, as well as soil health diagnostic service. Once again, all these services contribute expanding smallholders’ agronomy knowledge, improving yields and reducing risks of losing crops.
Finally, finance solutions are meant to help rural families get access to the capital. As a matter of fact, these part of the population is usually unable to access financing options through traditional channels. Eventually, these people end up taking out loans from informal moneylenders. In light of that, Proximity Designs decided to “bring finance to the farms“, creating accessible, low-interest loan products that can adjust to each farmer’s necessities. In 2021, the loan portfolio is estimated for approximately $77 million.
Key Activities + Key Resources
To successfully deliver products and services, Proximity handles at least 3 main activities. First is product and service design. As a matter of fact, the firm strongly believes in the importance of co-designing with farmers and building/testing prototypes with them. Along time, this approach lead to setting up “Proximity Labs“, a multidisciplinary team specifically dedicated to product/service design.
Secondly, there’s manufacturing. In fact, Proximity produces and manufactures all its products locally, employing Burmese people. Last but not least, distribution. When the company first started, it sold its water pumps through agro-dealers working in small towns near active-trade spots. Eventually, Proximity created its own sales force to directly and more easily reach out to rural people.
All things considered, team/personnel (made of engineers, designers, ethnographers and agronomists), core competence and methodologies (user research, product/service design, rapid prototyping), as well as the local network and philanthropic capital should be considered as Proximity’s most strategic resources.
Key Partners + Channels
Truth to be told, financial sustainability wouldn’t be possible without key partners providing donations and grants. Because of that, mission-aligned, impact investors are not the only key partners for Proximity. Among such entities, we cannot forget to mention development banks (i.e. FMO), corporations (i.e. Autodesk), philanthropic foundations (i.e. Skoll) and, finally, local authorities/governments.
Now it’s time to look at the main channels used to reach out to the public. Apart from publications and minor events organized alongside some of the key partners we just quoted, the company uses four channels to distribute and sell its products and services. 1) Mobile/online (i.e. chatbot for agronomy services delivery), 2) Agro-dealers, 3) Network of village agents and 4) Direct field staff.
Cost Structure + Revenue Engines
When it comes to the revenue model, Proximity has three main revenue engines. The first one is direct sales of products and services (including rent-to-own programs). The second one includes principal fees and interest incomes paid by farmers in exchange for loan solutions. Third and last engine, the aforementioned grants and donations, counting for roughly 40% of the firm’s overall revenues as of December 2020. Thanks to all these income streams, the company is able to cover maintain its cost structure, mostly consisting in costs of goods sold, personnel (salaries and wages), contract service expenses and allocated shared service centre expenses. As of today, it seems that the firm will use its surplus in training and upskilling the staff through a project called “Proximity School”.
Since 2004, Proximity Designs is tackling rural poverty and helping Burmese increasing their incomes.
As a matter of fact, thanks to a combination of philanthropic capital and earned revenues, the firm manufactures, distributes and sells low-cost, affordable agricultural products and solutions to local smallholders. Thanks to its propositions, the company manages to create solid value for its target in different ways. Improved agronomy knowledge, affordability, reduced labor time and costs, enhanced yields are only few aspects of what’s in it for farmers using Proximity products and services.
For years, the firm has been featured in the news for its praiseworthy results (over 900,000 farm families reached from more than 10,000 villages). Yet, we believe what makes Proximity truly unique is the human-centered approach its team constantly adopts. Going to the field and designing effective solutions for and with beneficiaries in order to maximize social benefit…That is the true power of proximity!
About the Author
I’m Marco, an Italian business practitioner with previous study and work experiences across Australia, Netherlands, Spain and Vietnam. Having a background in economics and business management, since 2018 I’m happy to support social entrepreneurs and impact startuppers refine their businesses and scale social impact.
At Social Business Design, I mostly write about business design, financial modeling and growth hacking, sharing useful tools and insights gathered during 5+ years of on-field experiences.
Apart from talking about social business, I love hiking, reading, eating Asian food and taking pictures while I’m traveling. If interested, feel free to get in touch with me through my channels! 🙂
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