Mohamed Mehdi Abdefettah
Al Akhawayn University
Mary Grace Neville
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A cooperative network among multiple stages of the value chain empowers a variety of workers to have sustainable employment, while the network itself helps to bring a Moroccan national treasure (argan oil) affordably into the hands of diverse people. The network begins with a women's cooperative farm, extends through a now health-certified production center, and then distributes through a commission-based grassroots network.
Argan trees grow across Morocco; the argan fruit's oil has ancient health and beauty benefits that high end cosmetic producers mass market across the Middle East. Prices can be quite high for the end user. Therefore, local Moroccans were often disenfranchised from access to the product in its luxury-goods market because they could not afford the high end oil products.
24 year old Zacharia Fathani believed that Morroco's natural resources ought to have potential for locals. He was able to identify a women's cooperative in a rural area of Morocco already hand-grinding argan fruit for oil but currently selling at a low margin to exporters. He could buy their raw oil above the price of the exporters, but below the cost necessary to keep his own domestic pricing structure low. Then, he brought some friends together to help him build a business plan, and to find start-up funding for researching and developing particular oil blends with other fruits and compounds. Simultaneously, he imagined a distribution network of direct-sales, commission-based people, especially powerful if he concentrated on recruiting and training people who were involved in their communities but currently unemployed. For that, he started "Learn and Earn."
Over 3 years, the Moroccan entrepreneur changed the industry's domestic landscape. He secured health-department certification for processing and packaging the oil into consumer-ready blends and products so that the products could be widely and commercially sold; he had established a distribution network of nearly 40,000 people receiving various forms of commission for their sales and for recruiting additional sales people. And he had traditional compounds blending argan oil and exotic Morrocan fruits priced to sell within the earning potential of the masses.
Learn and Earn's president was unemployed for eight months before he considered starting a company. But with no capital and no product, his options were limited. Then, when a friend told him how expensive argan oil was abroad, in part because foreign companies were paying high export taxes on the natural treasure oil. Fathani realized he could secure the raw oil at a fare price and still create a profit if he kept his costs low.
The biggest challenge his team faced was how to cover their extensive research and development costs for blending the raw oil with exotic fruits that consistently had the health and beauty benefits. They began with one product line, and used that revenue to construct new blends. Over time, they recruited investors and continued to expand.
Fathani sources all of his raw materials from rural cooperatives and pays fair wages. He then transports materials to a production facility in Casablanca where his production processes are all now approved by the Department of Health. Control over the research and development process, as well as over the production facilities, means that he has achieved certified Halal and ISO 22716 status for his products, and none are tested on animals. These practices have increased the products' attractiveness. The production and sales enterprise now employ 150 people full time, who earn up to 10% bonuses on the company's revenues.
The distribution network, Learn and Earn, now creates income for and additional 40,000 people. These people have attended Learn and Earn Academy to become familiar with the products, the health benefits of argan oils, and the selling process, and then the new trainees purchase an initial supply of products. They sell products on commission basis, reinvesting some of their proceeds in additional inventory. These front line sales people work out of their homes and receive 5% commission on their sales. The commission matrix provides an incentive to recruit new trainees because a recruiter can earn 4% commission on their recruits' sales.
The company's choice to use commission based, direct-sales through a pyramid of people who train at the Learn and Earn Academy, has made it possible for the company to grow exponentially in a short period of time. The president explained, “The company employs mostly people that are unemployed or are paid minimum wage or less. Because sales are commission based, the company is able to price their products between 35 Moroccan dirhams (MAD) and 130 MAD, compared to the competitors prices which start at about 200 MAD."
The company started in 2013 and now has approximately 45 million MAD (equivalence of about $4.6 million U.S.), selling about 25,000 units per day.
The Learn and Earn employment and commission scheme empowers otherwise unskilled workers. And the products leverage natural resources and ancient blends for modern health and beauty care.
The collective power and direct sales network keep the company's costs low enough that the price point remains accessible to people across the bottom of the economic pyramid. The network's activity has ensured fare wages for cooperatives, helped people of the regions create employment, reconnected Moroccans without purchasing power to natural, affordable, indigenous health and beauty products.
Blends are made with natural Moroccan exotic fruits such as prickly pear. The company's research and development does not allow animal testing and all raw materials are natural. The cosmetic products are packaged in reusable and recyclable materials like glass bottles or paper wrappers. And culture is honored as the ancient healing properties of the nation's natural resource are available to all.
All full-time employees are partners in the company. Employees get paid by a percentage of their sales fixed at 10%, they also benefit from the sponsorship system meaning that employees get an additional percentage of the sales of others who they recruit into the sales-network.
The company's growth has improved people's life style in rural areas where inflation is going up every year. There has been a decrease of the migration from rural to urban areas as people migrate searching for jobs.
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Zakaria Fathani, Genious Entrepreneur
