projecteverest

Work Update

[JULY 18] [COLLECTION] Bag Pay On the Way

This week marks the operational trial of ERS’s new BagPay system!          

Previously, ERS has targeted large, expat owned businesses who can afford our service and who understand our purpose. These businesses served as the innovators and champions of our message; it was their cooperation and belief in our ideas that established ERS as a player in the Dili ecosystem. Now that the service has been established and proven to be capable of autonomous operation, the time for expansion has arrived.

BagPay is our new, lighter iteration of the ERS service. The primary objective for our new BagPay service is to unlock a wider market segment by using a stripped-down service model. Many businesses we met with expressed an interest in our collection service but did not produce the volume of waste necessary to support a large scale weekly pickup. BagPay is designed to be cheaper and simpler for the clients to manage but does provide a less comprehensive service. A comparison table of BagPay to our Premium service is provided.

We initially investigated previous months’ empathising results but decided to conduct further market research. The pie chart depicts the results of empathising sessions in July. Previous data was not included in our analysis because it was determined to be skewed. In saying this, previous data was crucial in being able to quickly identify those businesses that have already expressed EOI’s. Of the customers approached this month; 17.6% signed on immediately, 35.3% found the service to be too expensive, 23.5% did not understand the value in recycling and 23.5% did not have enough recyclables to justify our pickups.

The businesses which signed on are:

  • Samuana Restaurant

  • LÓsteria Italiana

  • Proema Restaurant School

Bagpay currently costs the customers 4 dollars. This price point becomes possible due to the much smaller volume of waste collected and the streamlined process of collection. The service currently consists of supplying customers with three 30kg rice bags; one for PET products, one for glass bottles and one for aluminum cans. Our truck visits the businesses and swaps the three full bags of recyclables for three empty bags ready for the next week. This process cuts down on collection times and segregation efforts, meaning we can access more customers within a similar timeframe. The rice bags we use are a cheap lightweight storage option as opposed to bins. They are collected from local businesses who would otherwise dispose of the bags by burning or in the usual waste collection, meaning this solution subscribes to our lean business model. Usual weekly pickups are then scheduled into our pickup timetable on Monday and Thursday mornings.

Initial projections for the cost-benefit analysis of BagPay are much simpler than for those of the premium service. This is due to the nature of locking in customers for a weekly pickup with no options for extra pickups and full price penalty for a failed pickup. Therefore, each customer represents a clear $16/month. Revenue streams for the BagPay model exist in the same form as the Premium stream. The only additional costs consist of the added time spent by employees organising pickups, collecting and segregating the waste. Since our employee contracts have moved from an hourly rate to a daily rate this month, this cost is mitigated. However, in the long run, as more BagPay customers are acquired, the time spent by the drivers and segregators would increase. Eventually, these employees would demand a higher daily rate as their workload increases. We have had issues negotiating wages with various employees and it is safe to assume that these discussions will continue. Three customers are a strong start for the service and will serve as a valuable learning point across the next 4 months of our absence.

The BagPay rollout plan can be separated into three stages

First Stage

  • Empathising to determine if there would be a demand for a smaller-scale option of ERS’ existing service

  • sales on already established $10 collection route or very close to it. The existing service is now referred to as the “premium” service.

Second Stage

  • Expansion into routes away from the premium service

Third Stage

  • The rest of Dili and surrounding areas.

 

ERS’ BagPay Model is still in its first stage. In February, the ERS team went empathising near the premium route. However, there were three key points that guided our July team to make the decision to empathise again.

  1. Price Point: The price point mentioned to businesses was $1USD. This figure was simply unfeasible due to the cost of time and labour in regards to utilising our truck drivers, segregators, and manager.

  2. Types of Bags: There was no specification on the size, durability, and price of the intended “bags” used for BagPay. This provides logistical (especially for glass) and costing uncertainty both on our end and the potential customer’s.

  3. Policy Contradiction: Can we rely on ERS, a champion for environmental sustainability, justify its own use of plastic bags every single time? From an Impact Assessment point of view, the intent of ERS can be questioned as well as its social and environmental impact.

To address issues 2 & 3, rice bags were suggested as an alternative to providing plastic bags. Rice bags are cheap, can come in multiple sizes and are easily accessible to the public.

To address issue 1, a cost analysis was performed, two tables can be seen below with one assuming that wage demands would increase in the long run and one assuming that the daily rate of wage would remain constant in the short run.

The team decided that a $4 price point would be suitable. This represents at least a 50-70% markup as well as a realistic target for new customers in order to stay profitable.

However, after reflection on empathising results, the need to possibly reassess exactly which customer segments BagPay benefits the most has been touted. Initially, BagPay was set up to target small locally owned businesses. Although the three businesses that have been signed up are all classified as “small” they are still quite financially able and rely on money coming in from expats and tourists. 2 out of 3 of those businesses are also expat-owned. Eventually, in the second and third stages, businesses such as these would be harder to come by.

Furthermore, 55% of answers involved worries with the $4 price and lack of recyclables to dispose of weekly. Considering that BagPay was created in an effort to tailor ERS’ service for people that do not have excessive waste and/or could not afford it, this could be a worrying sign. Perhaps an even smaller model of BagPay could be considered in the future.

A difficult aspect of this new service model is testing our decisions in practice. To solve this, an impact assessment was conducted amongst the team and a few key testing points were determined. Customer feedback, customer growth, and a collection audit will all be used to determine the relative efficacy of BagPay versus our Premium service. In December, careful consideration will need to be given to our new BagPay customers and their opinions vs our Premium customers opinions. Customer growth will be measured by the ability of the December team to collect new customers, it may necessary at this point to tweak the service specifics. The collection audit will measure the raw collection values of BagPay by comparing them to the values measured in the February to July period.

Please let us know what you think. We are always looking for feedback on our ideas.

 

edited on 29th January 2019, 00:01 by Rose Gooding

Jimmy Bayssari 7 months ago

"Making use of empathising results and market data from previous months, supplemented by our own findings, potential customers were approached, and conversations began."

It would be really good to see a post with these exact results to justify the implementation of this service.

Further to this, if you could edit this post to reflect the exact difference between your $4 service and $10 service. What makes the $4 service more accessible, while still profitable?

Additionally, a few posts regarding your customer segments and how you plan to target each segment through what channels, linked to the revenue streams would be great.

Please don't forget to post up the results of the new BagPay system!

Reply 1

Jimmy Bayssari 7 months ago

Status label added: Work Update

I can label this as: "Experiment Adopted': if you outline exactly what you intend to learn from this experiment and how you intend to measure your results and; 'Revenue Stream': if you give me a clear indication of how this revenue stream is applicable to your identified customer segment, how it differs from the current revenue stream and how it works exactly (diagrams help!).

Reply 1

Chris Zancanaro 7 months ago

Hey Jimmy, thanks for the feedback. We've gone back over and added a lot of detail. Market data quantified, expansion outlined and testing proposed. Let us know what you think!

Reply 0

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