Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota
Small trading activities are a prevalent form of self-employment in developing countries, but their integration into supply value chains is not efficient, especially when it comes to perishable produce. This study tests a novel approach to improve...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/728681565630010702/Shortening-Supply-Chains-Experimental-Evidence-from-Fruit-and-Vegetable-Vendors-in-Bogota http://hdl.handle.net/10986/32270 |
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okr-10986-322702022-09-20T00:14:41Z Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota Iacovone, Leonardo McKenzie, David RETAIL SUPPLY CHAIN GLOBAL VALUE CHAIN FRUIT AND VEGETABLES MICROENTERPRISES SOCIAL ENTREPRENEURSHIP RANDOMIZED CONTROL TRIAL SELF EMPLOYMENT Small trading activities are a prevalent form of self-employment in developing countries, but their integration into supply value chains is not efficient, especially when it comes to perishable produce. This study tests a novel approach to improve their efficiency by reducing the time and cost of sourcing produce by aggregating purchases through the use of an app and centralized distribution system. Fruit and vegetable vendors in Bogotá currently travel most days to a central market to purchase produce, incurring substantial time and monetary costs. A social enterprise attempted to shorten the supply chain between farmers and vendors by aggregating orders from many small stores, sourcing directly from farmers, and delivering them to the stores. The introduction of this new service was randomized at the market block level. Initial interest was high and offering the service reduced travel time for users by almost two hours a week, reduced travel costs, and increased work-life balance for store owners. Firms offered the service saved an average of 6 to 8 percent on purchase costs, and although some of this passed through into lower prices for consumers, there was incomplete pass-through, so that markups rose. However, stores reduced their sales of products that were not originally offered by this new service, and their total sales and profits appear to have fallen in the short run, with service usage falling over time. The results highlight the potential for new technologies to solve firm coordination problems, offer a window into the nature of competition among small retailers, and point to the challenges in achieving economies of scale when disrupting centralized markets for multi-product firms. 2019-08-16T15:32:57Z 2019-08-16T15:32:57Z 2019-08 Working Paper http://documents.worldbank.org/curated/en/728681565630010702/Shortening-Supply-Chains-Experimental-Evidence-from-Fruit-and-Vegetable-Vendors-in-Bogota http://hdl.handle.net/10986/32270 English Policy Research Working Paper;No. 8977 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Colombia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
RETAIL SUPPLY CHAIN GLOBAL VALUE CHAIN FRUIT AND VEGETABLES MICROENTERPRISES SOCIAL ENTREPRENEURSHIP RANDOMIZED CONTROL TRIAL SELF EMPLOYMENT |
| spellingShingle |
RETAIL SUPPLY CHAIN GLOBAL VALUE CHAIN FRUIT AND VEGETABLES MICROENTERPRISES SOCIAL ENTREPRENEURSHIP RANDOMIZED CONTROL TRIAL SELF EMPLOYMENT Iacovone, Leonardo McKenzie, David Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota |
| geographic_facet |
Latin America & Caribbean Colombia |
| relation |
Policy Research Working Paper;No. 8977 |
| description |
Small trading activities are a prevalent
form of self-employment in developing countries, but their
integration into supply value chains is not efficient,
especially when it comes to perishable produce. This study
tests a novel approach to improve their efficiency by
reducing the time and cost of sourcing produce by
aggregating purchases through the use of an app and
centralized distribution system. Fruit and vegetable vendors
in Bogotá currently travel most days to a central market to
purchase produce, incurring substantial time and monetary
costs. A social enterprise attempted to shorten the supply
chain between farmers and vendors by aggregating orders from
many small stores, sourcing directly from farmers, and
delivering them to the stores. The introduction of this new
service was randomized at the market block level. Initial
interest was high and offering the service reduced travel
time for users by almost two hours a week, reduced travel
costs, and increased work-life balance for store owners.
Firms offered the service saved an average of 6 to 8 percent
on purchase costs, and although some of this passed through
into lower prices for consumers, there was incomplete
pass-through, so that markups rose. However, stores reduced
their sales of products that were not originally offered by
this new service, and their total sales and profits appear
to have fallen in the short run, with service usage falling
over time. The results highlight the potential for new
technologies to solve firm coordination problems, offer a
window into the nature of competition among small retailers,
and point to the challenges in achieving economies of scale
when disrupting centralized markets for multi-product firms. |
| format |
Working Paper |
| author |
Iacovone, Leonardo McKenzie, David |
| author_facet |
Iacovone, Leonardo McKenzie, David |
| author_sort |
Iacovone, Leonardo |
| title |
Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota |
| title_short |
Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota |
| title_full |
Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota |
| title_fullStr |
Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota |
| title_full_unstemmed |
Shortening Supply Chains : Experimental Evidence from Fruit and Vegetable Vendors in Bogota |
| title_sort |
shortening supply chains : experimental evidence from fruit and vegetable vendors in bogota |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/728681565630010702/Shortening-Supply-Chains-Experimental-Evidence-from-Fruit-and-Vegetable-Vendors-in-Bogota http://hdl.handle.net/10986/32270 |
| _version_ |
1764476193169473536 |