Koolboks, a sustainable cooling company founded in France in 2018, is on a mission to provide accessible cold storage solutions to businesses across Africa. Led by Nigerian-born CEO Ayoola Dominic, Koolboks recognises the critical need for reliable refrigeration in Nigeria, particularly among fish traders operating in open-air markets and small kiosks.
The lack of reliable refrigeration across the country leads to approximately 30% of fish products going to waste. Intermittent grid connections and the high cost of backup diesel generators leave fish traders without power for extended periods, resulting in rapid spoilage of perishable goods and significant impacts on sales and profitability.
To address this pressing issue, Koolboks has developed Koolhome, an off-grid solar-powered unit that serves as both a refrigerator and freezer. This innovative technology can maintain a cool temperature for up to four days, even without power or sunlight. The units also feature LED lighting bulbs and USB ports for mobile phone charging.
In 2021, with funding from PREO, Koolboks set out to develop a sustainable B2C (direct to consumer) business model specifically for low-income female fish traders in Nigeria. Through partnerships with local organisations in Lagos, Koolboks introduced a lease-to-own product package, enabling traders to pay in instalments for affordable solar-powered refrigerators. This project enabled Koolboks to assess consumer response and evaluate the broader social and economic impact of solar refrigeration.
Following the completion of the project at the end of 2022, PREO had the opportunity to interview Natalie Casey, the Chief Business Officer at Koolboks, to gain insights into the valuable lessons learned during the project’s implementation and to explore the company’s ambitions for scaling up across sub-Saharan Africa.
Q: Please outline the project background and the initial targets it set out to achieve
This PREO-funded project aimed to create a sustainable business model to empower female fish traders and provide them with affordable cooling solutions to store fish and other frozen goods (i.e. chicken, etc.) in Lagos, where there is a high demand for solar refrigeration products. Our ultimate goal was to empower over 200 female fish traders with 300 solar-powered Koolhome refrigerators across 12 markets in Lagos.
Since in other countries we sell to businesses, which then sell it on to their customers on a lease-to-own basis, this project gave us the opportunity to also pilot and demonstrate a business to customer (B2C) model for financing our Koolhome refrigerators where we deal directly with our end users. Our primary focus was to pilot, demonstrate viability and to grow our B2C business model case.
Q: What strategy was employed to achieve those targets?
In our efforts to maximise customer outreach and engagement, we adopted several strategies. Firstly, we prioritised launching numerous market activations, aiming to connect with as many potential customers as possible. By casting a wider net and funnelling customers towards our offerings, we sought to increase the onboarding rate significantly.
Recognising the importance of educating and empowering our customers, we invested effort in creating comprehensive product manuals and conducting customer training sessions. These efforts served to enlighten customers about the long-term environmental and financial benefits associated with our Koolboks products. Through these initiatives, we aimed to foster a deeper understanding and appreciation of our offerings among our clientele.
Acknowledging the pivotal role of innovation in driving customer satisfaction, we decided to boost our Research and Development (R&D) budget. By committing more resources to R&D, we sought to ensure that our customers receive nothing but the best products, consistently meeting their expectations.
Moreover, we understood the vital role our sales agents and engineers play in shaping the customer experience. As they directly interact with customers, we emphasised the importance of comprehensive training for these teams. Equipping them with in-depth product knowledge and the ability to address any customer queries effectively, we aimed to instil confidence and trust in our customers’ minds.
Q: What were the biggest challenges faced during the project implementation?
During the project implementation, several challenges emerged, each requiring careful attention and proactive measures to overcome.
One notable factor that impacted the implementation cost was the occurrence of additional expenses beyond the initially budgeted amount. These unforeseen costs encompassed various aspects such as permit fees for activation points, logistics for transporting freezers, accommodation arrangements, transportation expenses, as well as carriage and shipping costs. Careful financial management was crucial to address these additional expenditures, especially at the early stage of testing the business case.
The transition from a limited number of B2B distributors to a B2C approach marked a significant shift for our company. The resulting increase in client volume and the demands of intense customer acquisition efforts posed a formidable challenge. Building the necessary capacity to support these efforts and establish a robust sales pipeline required strategic planning and resource allocation.
As our operations expanded, the availability of adequate office space became a pressing concern. The introduction of new roles, the growth in staff numbers, and the evolving needs of our team necessitated resourceful solutions to overcome space limitations and ensure a suitable working environment.
A sudden surge in maintenance requests and other post-sale service activities created initial delays in our service capacity, presenting an additional challenge to be addressed during the project implementation.
Furthermore, the shift from a primarily B2B model to a B2C model introduced challenges related to cash flow management. While the previous B2B approach involved upfront payment collection, the B2C model required offering payment plans extending up to 24 months. This transition significantly increased our working capital requirements, emphasising the need for meticulous financial planning and effective cash flow management strategies.
Q: What pivots, if any, did the company undertake to overcome the challenges?
To generate early traction and stimulate demand, we expanded our product offerings to include a smaller 208L capacity refrigerator alongside the originally planned 538L capacity model. Additionally, we adjusted our profit margins to offer our products at more affordable prices, enabling us to cater to a wider customer base.
To ensure prompt resolution of client issues, we established a dedicated rapid response maintenance squad capable of addressing all concerns within 24 hours. Complementing this initiative, we set up a customer service point to proactively address any emerging issues. Moreover, we placed emphasis on empowering our customers through comprehensive product manuals and training programmes, enabling them to address minor issues independently.
To streamline operations, we made significant technology investments, building a robust centralised backend system capable of handling customer lifecycle processes efficiently. Additionally, we expanded our physical infrastructure, including office space, to accommodate the increased capacity requirements.
In order to maintain timely loan repayments, we scaled up our monitoring and recovery team, fostering regular communication and strong relationships with our customers. These efforts ensured a smoother and more consistent payment collection process, contributing to the overall success of our project.
Q: What were the ultimate accomplishments of the project, both for Koolboks as a company and for the community it served?
One of our proudest achievements was successfully overcoming the challenges inherent in developing a completely new business model. Despite the obstacles, we were able to complete the project within the designated timeline, selling a total of 300 Koolhome freezers.
Throughout the project, we embarked on an expansive activation campaign, reaching out to 20 Local Government Areas, 30 Local Council Development Areas, and 25 major markets in Lagos and surrounding villages facing electricity challenges. This marked a significant milestone for us, as we had never before undertaken such a large-scale market campaign.
The project’s success instilled a sense of promise for future scalability, prompting us to expand our warehouse capacity to accommodate up to 2000 units at a time. This expansion signifies our confidence in the potential for further growth and reflects our commitment to meeting the increasing demand for our products.
Q: What were the most significant lessons that the company and the sector can learn from the project?
Throughout the project, several valuable insights emerged, offering important lessons for both the company and the sector.
- One important realisation was that implementing more flexible pricing strategies, tailored to meet the needs and capacities of our clients, could significantly expand our customer base.
- The challenge of an unreliable power supply presented a unique opportunity for our product. By intensifying efforts through activation programmes and leveraging social media platforms, the reach of the product can be extended, resulting in a three-fold increase in patronage.
- Customer satisfaction proved to be a powerful catalyst for business growth. We learned that a satisfied client is a valuable advocate for our brand, spreading positive word-of-mouth recommendations to others in their communities.
- Focusing a significant portion of our efforts on off-grid areas proved to be a strategic move, as these regions accounted for 70% of our sales figures and revenue. By catering to the specific needs of these underserved areas, we tapped into a high-potential market segment.
- Employing a strategy of placing our equipment as a test for sceptical clients allowed us to win their loyalty in the long run. Allowing potential customers to experience the effectiveness of our products first-hand was a successful approach in building trust.
- Extending our reach and engagement efforts directly correlated with increased sales. The more we expanded our market presence, the more opportunities arose for customer interactions and conversions.
- We found that when the product performs as expected, the rate of default in repayment is remarkably low, standing at less than 2%. This highlights the significance of delivering a reliable and effective solution to customers, which in turn contributes to a higher repayment rate.
- Offering customers a variety of products provided them with more options and autonomy in making purchase decisions.
- Providing larger storage capacity of fridges – for instance 538 Liters – is key to attracting commercial users
- Informing customers about the available options and possibilities to make the most of our products positively impacted customer satisfaction. Awareness and clear communication of product features and benefits enhanced the overall customer experience.
Q: What are the future ambitions of the company following the completion of the PREO project?
Following the successful completion of the PREO project, we have gained valuable insights that have enabled us to enhance our operations and expand into various markets in Nigeria and other countries in sub-Saharan Africa. We have recently established a subsidiary in Kenya with the aim of penetrating different regions within the country. However, as scaling up our business requires substantial capital investment, we are actively seeking funding opportunities. Our target is to secure $33 million in our upcoming series A funding. These funds will be allocated towards critical areas such as inventory expansion, capacity building, knowledge transfer, local assembly infrastructure, strategic partnerships, research and development initiatives, as well as marketing efforts.