Big corporations try to tap a market they have ignored - the world’s four billion poor people

July 1st, 2007

JOHANNESBURG: The worlds biggest corporations are scrambling to tap a market they have largely ignored for decades - the worlds four billion poor people.

From South Africa to Brazil, companies like Danone and Unilever sell individual packets of yogurt and soap in rural villages and urban open-air markets. In the telecommunications sector, the biggest growth area is among the poor, who are snapping up cellphones.

Some 60 percent of the worlds population exists on less than $2 a day. Previously shunted aside as lacking purchasing power, they are now regarded as a buoyant growth market.

“We have to get away from thinking of the poor as a problem,” said C.K. Prahalad, author of the book “The Fortune at the Bottom of the Pyramid.”

“Part of the problem is that people have not had a full understanding of the size of the opportunity,” he said in a recent presentation in Johannesburg.

Prahalad, a business consultant and professor at the University of Michigan, said the purchasing power of poor people seemed small expressed in dollars, but carries more clout in emerging market economies, where goods cost less.

The worlds four billion poor are estimated to have $5 trillion of annual purchasing power parity, a measure that tries to translate local buying strength into another currency based on common goods.

Prahalad sees the move by big firms as a win-win situation, with companies increasing sales while low-income consumers get access to low-cost, quality goods and new technology.

To tap the market, though, innovation is the key. Firms have to develop new, affordable products and devise novel ways of selling them.

In India, where the trend got off the ground several years ago, the local unit of the Anglo-Dutch consumer products group Unilever developed a detergent that requires less water for poor rural customers.

The unit, Hindustan Lever, also put together a rural selling network, Shakti (meaning “strength”), which employs about 31,000 women to sell soap, shampoo, detergent and other products door-to-door in more than 100,000 villages.

“Rural consumers incomes are rising, and for a consumer goods company, women are at the heart of what we do,” a spokesman for Lever said.

While Unilever has rolled out its Shakti model of direct selling in Sri Lanka, Bangladesh and Mozambique, other firms are also seeking to duplicate Unilevers model.

In Brazil, the Swiss food group Nestlй opened a factory this year to produce small packets of powdered milk, biscuits and coffee to be sold door-to-door or in small shops.

In South Africa, the French food group Danone and a local dairy group, Clover, have started a project selling individual pots of vitamin-enriched Danimal yogurt for 1 rand, or 14 cents, by a network of women in townships.

Danone created a new business model, set up a new distribution network and promoted the product in schools with a show that teaches the benefits of nutrition.

“We also wanted to cut out as much as possible any kind of middleman to make the product really affordable to the end consumer. If this product was to go into the normal chain, it would never cost 1 rand,” said Maria Pretorius, a Danone marketing manager.

It recruited women like Joyce Daka, 50, who was struggling to survive in Orange Farm, a sprawling township west of Johannesburg. Now she is a thriving entrepreneur earning around 2,000 rand, or $287, per month.

“In the morning I go house to house, and then in the afternoon I find a busy spot,” said Daka, sitting under a yellow Danone umbrella in her brightly colored Danimal T-shirt.

On a busy day she can sell over 700 pots of yogurt, but the average is around half of that. The saleswomen keep a profit of 20 South African cents from each yogurt pot they sell.

“Its made a huge difference in my situation,” said Daka, who is taking care of two orphaned relatives in addition to her own children.

After less than two years, sales by volume of the new low-cost product, so far only rolled out in the Johannesburg area, are outstripping some of the firms major national brands.

The trend has spread into a host of other sectors, ranging from banking to medicine.

In India, the Aravind Eye Care System made cataract operations affordable to the masses by slashing the cost to the equivalent of $50 to $300 compared with $2,500 in the United States. It now is the largest eye care facility in the world, performing 200,000 operations a year.

In Kenya, Equity Bank was created to provide low-cost bank accounts for people who could not afford traditional services and has become so profitable it listed on the Nairobi stock exchange last year. Earnings per share more than doubled last year.

Google Buys Feed Distributor FeedBurner

July 1st, 2007

(06-01) 13:36 PDT New York (AP) —

Online search leader Google Inc. said Friday it purchased FeedBurner, which helps bloggers and podcasters syndicate and make money from their online content, for an undisclosed sum.

Chicago-based FeedBurner “delivers feeds to millions of users around the world and offers unique and useful tools for publishers to analyze, optimize, and monetize their content,” wrote Susan Wojcicki, Google’s vice president of product management, in announcing the deal on Google’s official blog.

FeedBurner also offers a tool for pushing ads through feeds, generating advertising revenue.

Shares of Mountain View, Calif.-based Google rose $2.49 to $500.40 Friday.

Scamming the e-mail scammers

July 1st, 2007

PARIS: Ever been tempted to respond to that e-mail message offering untold millions from the relatives of a deposed African dictator?

For some, replying is a rewarding hobby.

Interpol says these e-mail messages - which offer a large reward in exchange for a small advance payment - cajole, threaten and ultimately defraud billions of dollars each year from an increasing number of greedy, naпve and frightened Internet surfers.

“These e-mail-based scams are growing as quickly as the Internet itself,” said Ralf Zimmermann, a crime intelligence officer in the financial and high-tech crimes division of Interpol, who is based in Lyon, France. “Every new user of the Internet is a potential victim.”

Interpol has recently observed West African scammers moving to base their activities in Europe, and a relatively new breed of scam - love fraud - is coming out of the Baltic countries. Love fraud victims are conned into sending money for airline flights to a nonexistent lover encountered online.

In response, the national authorities have beefed up enforcement. The Netherlands, for example, created a 30-member police task force early this year.

Now, ordinary citizens have started taking justice into their own hands. Calling themselves scambaiters, these individuals from around the world trade tips, tales and “trophies” on thriving discussion boards at 419eater.com, scamorama.com and aa419.org.

Scambaiters turn the tables and scam the scammer. They antagonize, humiliate and frustrate scammers who think they have an unwary victim.

“My reason for scambaiting is to waste the time and resources of the scammer,” said Scam Patroller, who declined to provide any identification beyond an e-mail address.

“Each minute a scammer spends on my bait cannot be used to scam a real victim.”

Their motives may be altruistic, but not all law enforcement officials approve of their tactics, which can include entrapment and the public humiliation of having embarrassing photographs posted on the Internet.

“At first you might smile and think the trophy photographs are funny, but I have seen some with fraudsters in highly degrading positions,” said Zimmermann of Interpol. “They are fraudsters and they are not good people, but they have their human rights.”

To Jason dinAlt, a scambaiter interviewed in an online chat, the scammers are criminals who deserve any ridicule they receive.

The humiliations delivered by scambaiters can be as elaborate as the scams themselves, and they range from photographs with silly signs to complex and expensive trips to pick up nonexistent payoffs.

“My most prized trophies are not physical ones, they are events,” dinAlt said. “My lad traveled 300 kilometers four times to pick up money that didnt exist and he was physically thrown out of the moneygram office and told to never come back.”

Prized scambaiter trophies include photographs of the scammers and their accomplices holding signs intended to humiliate them, saying things like “I am a bad person” or other statements unsuitable for print. The site 419eater.com uses photographs of scammers holding signs as navigation tools for the Web site.

Other images involve embarrassing additions to the photograph, like a scammer holding a fish on his head or hugging a goat, an animal considered filthy in the Muslim countries where much scamming originates.

One scambait video that turned into a YouTube hit shows scammers in a Lagos grocery store acting out the Dead Parrot sketch from the television series “Monty Pythons Flying Circus.”

Over the course of a lengthy correspondence, the scammers had been persuaded that the video would be entered into a contest offering a cash prize.

The creator of that scambait, who identifies himself as Michael Berry, published a book of his favorite scambaits, titled “Greetings in Jesus Name! The Scambaiter Letters.”

In another bait, Berry persuaded a scammer to carve a full-scale wooden replica of a Commodore 64 computer keyboard.

Like all scambaiters interviewed for this article, Berry, the founder of 419eater.com, declined to speak on the phone or provide a verifiable identity.

“I wont give out my home number to anyone for obvious reasons of anonymity and safety,” Scam Patroller said in an e-mail exchange, adding that his companion did not fully approve of his hobby. “She often worries about me baiting criminals.”

Cloaking themselves in digital anonymity through proxy servers and fake e-mail addresses, scambaiters invent multiple personalities and sprinkle e-mail addresses in Web site comments as bait.

“I usually limit myself to 10 different personalities at a time,” said dinAlt. “Beyond that it gets too confusing to keep up with each story line.”

Responding to e-mail solicitations from scammers, the scambaiters start an exchange with the aim of moving up the hierarchy of the scam operation.