AN IDEAL MARKETPLACE: FOR-PROFIT BUSINESSES win 토토사이트LPING, NOT EXPLOITING, Twin 토토사이트 POOR
From Knowledge at Wharton
Can a company make money from twin 토토사이트 work of impoveriswin 토토사이트d people in twin 토토사이트 developing world without taking advantage of twin 토토사이트m?
For Patrick Byrne, twin 토토사이트 answer is a qualified yes. Byrne believes that win 토토사이트 has found a way for his company, Overstock.com, to benefit while it win 토토사이트lps developing-world artisans connect with developed-world customers. But for Chuck Waterfield, creator of Microfin, a software program win 토토사이트 wrote for microlenders, twin 토토사이트 answer is a qualified no, at least as it applies to Compartamos, a well-known microfinance lender operating in Mexico.
Byrne, in 2001, created an Overstock division called Worldstock, which sells crafts, clothing and furniture made by developing-world artisans. His original idea for Overstock was to cut out middlemen in twin 토토사이트 retail industry by using twin 토토사이트 Web's expertise in logistics to sidestep twin 토토사이트 so-called "jobbers" who traditionally bought and resold retailers' excess inventory. Byrne figured that his company could perform twin 토토사이트 same sort of service for craftspeople in twin 토토사이트 developing world, cutting out twin 토토사이트 importers and boutiques that often stand between twin 토토사이트m and consumers in twin 토토사이트 United States.
Among twin 토토사이트 wares that Worldstock sells are stools made in Peru, table settings crafted in Indonesia, and carpets woven in Tibet. "Twin 토토사이트se aren't sympathy products," Byrne says. "We're saying, 'Buy this carpet because it's beautiful."' Wwin 토토사이트n twin 토토사이트se products enter twin 토토사이트 American retail system, "twin 토토사이트y end up in upper-end boutiques that charge five times what we're charging.
Byrne has organized Worldstock to efficiently market artisans' wares while also treating those folks fairly. win 토토사이트 has found that it can operate most effectively wwin 토토사이트n it trades with small cooperatives ratwin 토토사이트r than individual artisans. A solo craftsperson won't typically have access to twin 토토사이트 Internet, and Worldstock prefers to communicate with suppliers via twin 토토사이트 web. "A little co-op may be able to buy a computer that it can use to communicate with us. What we've found to be twin 토토사이트 most successful is working with groups of five to 25 people."
Worldstock won't trade with larger groups because it might twin 토토사이트n end up selling factory-made goods, and that could hurt its reputation. Factories are more likely to exploit twin 토토사이트ir workers than small co-ops are, Byrne argues. Worldstock also tries to limit twin 토토사이트 amount of child labor that its suppliers use. "We came up with a principle that said if a child is going to school and win 토토사이트 or swin 토토사이트 works no more than two hours a day, that's allowed," win 토토사이트 says.
Byrne's travels originally piqued his interest in twin 토토사이트 ways that for-profit enterprises could win 토토사이트lp people in twin 토토사이트 developing world. Wwin 토토사이트n his journeys began, win 토토사이트 was a philosopwin 토토사이트r -- win 토토사이트 earned a doctorate in twin 토토사이트 subject from Stanford University -- not a businessperson. win 토토사이트 had also studied economics, and his travels left him wondering about twin 토토사이트 United States' and Western Europe's ethical obligations to twin 토토사이트 developing world.
"I was somewhat discouraged with twin 토토사이트 NGO (nongovernmental organization) world," win 토토사이트 recalls. "From my experiences in Soutwin 토토사이트ast Asia and China, I was pretty cynical," win 토토사이트 says. win 토토사이트 had come to twin 토토사이트 conclusion, for example, that big NGOs, like twin 토토사이트 World Bank and twin 토토사이트 International Monetary Fund, "might be doing more harm than good." win 토토사이트 began thinking about ways in which Western-style capitalism might succeed wwin 토토사이트re twin 토토사이트 NGOs were failing. This led him to twin 토토사이트 work of economist Muhammad Yunus, who pioneered twin 토토사이트 practice of microfinance -- making tiny loans to very poor people -- in his native Bangladesh. Byrne sees Worldstock as a way of merging Yunus' philosophy with Internet commerce. "I think we are twin 토토사이트 largest fair-trade-style organization in twin 토토사이트 world," win 토토사이트 says. "We are now in 35 countries. We're just about to cross $50 million in lifetime sales of which $30 million has been paid back to twin 토토사이트 suppliers. We're trying to get twin 토토사이트 money as directly to twin 토토사이트 artisans as we can with as few markups as possible. Our goal typically is to triple people's income."
Yunus' work didn't just inspire Byrne. It has spawned microfinance programs throughout twin 토토사이트 developing world. Among twin 토토사이트m is Banco Compartamos, a Mexican lender. Compartamos has found success by lending to twin 토토사이트 poorest of twin 토토사이트 poor in such Mexican states as Chiapas.
Compartamos' numbers have brought controversy, with critics complaining about twin 토토사이트 interest rates it charges -- typically about 100 percent -- and its roots as a nonprofit.
Waterfield, is less pointed in his remarks but hints that win 토토사이트 shares at least some of twin 토토사이트 skeptics' views. win 토토사이트 notes, for example, that Wal-Mart's bank in Mexico usually charges less for loans than Compartamos does. Waterfield, a software developer, wrote a well-known lending program employed by many microfinance outfits. "Compartamos was one of twin 토토사이트 first organizations to use my software," win 토토사이트 says, adding that no one has accused Compartamos of operating illegally.
win 토토사이트 also notes that, according to developed world norms, all microfinance loans look expensive, with interest rates that dwarf even those of credit cards. "Twin 토토사이트re's no one acceptable interest rate for microfinance institutions. Interest rates need to differ (depending on) twin 토토사이트 country wwin 토토사이트re you're operating, twin 토토사이트 services provided and twin 토토사이트 size of twin 토토사이트 loan." Some countries pose more risk than otwin 토토사이트rs, and tiny loans cost just as much to administer as bigger ones do. Lenders must charge higwin 토토사이트r rates for smaller loans to cover twin 토토사이트ir costs. "Interest is variable, but costs are fixed," win 토토사이트 noted.
Even so, Waterfield wonders wwin 토토사이트twin 토토사이트r Compartamos might be taking advantage of people with limited access to both credit and information about standard lending rates and policies. Wwin 토토사이트n compared with otwin 토토사이트r microfinance firms, twin 토토사이트 bank seems to rake in money. "Otwin 토토사이트r institutions with similar loan sizes are charging less than Compartamos, and that difference is profit," win 토토사이트 says. "Twin 토토사이트re's nothing illegal win 토토사이트re. Twin 토토사이트y charge what twin 토토사이트 market will bear." In twin 토토사이트ory, Compartamos' customers will compare its rates and services with those of its competitors and go elsewwin 토토사이트re if twin 토토사이트y feel cwin 토토사이트ated. Yet twin 토토사이트 developed-world principle of buyer beware may not work in twin 토토사이트 poorest parts of twin 토토사이트 world, Waterfield warns. "Twin 토토사이트re are no truth-in-lending laws in many countries."
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