Lebanon’s ongoing economic crisis—an indicator of which is the increased cost of living at a time when many are unemployed or have seen their salaries lose a chunk of their value due to the increase in the foreign exchange rate and price inflation—has highlighted Lebanon’s fragility when it comes to food sufficiency, defined by the Food and Agriculture Organization as “a country producing a proportion of its own food needs that approaches or exceeds 100 percent of its food consumption.” (See Executive’s previous coverage on food security and sufficiency).
In response, several initiatives have been launched by civil society in the past several months to encourage Lebanese to grow their own fresh food or to support local producers and farmers in gaining market access or securing their farming needs. One such initiative is From the Villages, an e-commerce platform that connects local food producers and artisans from the south Lebanese village of Deir Mimas and neighboring villages to consumers in Beirut.
The story behind the initiative is a classic example of the saying ‘everything happens for a reason.’ For Ziad Hourani, co-founder of From the Villages, getting stranded in Lebanon with his wife Nai and newborn child because of the COVID-19-related airport closure—and so not being able to fly back to New York, USA, where he worked as advisor to the board of directors at MIT DesignX accelerator and as mentor and advisor to several startups—may have seemed like a stroke of bad luck.
Had it not been for that turn of events, however, Hourani would have not have ended up in his native village of Deir Mimas where he leveraged his five years of experience with startups and his over 20 year career in various managerial positions in the UAE to develop From the Villages.
In less than two months, the e-commerce startup has grown into a platform that showcases 88 products from 33 producers and artisans located in seven villages (mainly in south Lebanon). Executive spoke with Hourani to learn more about the story of the growth of From the Villages.
How did the idea for From the Villages come about?
We came to Deir Mimas from Beirut in April. This is when we started seeing all the amazing food they produce here and the works of the artisans which they sell very little of and [even] then mainly to each other and to the people that used to come up from Beirut occasionally.
We also started noticing the misery in the villages, which tends to be hidden because the people here are proud. They usually own their house, which is great since they don’t have to pay rent, but at the same they are struggling to have any income; some households have zero income and they are four or five in the family, including young graduates with no jobs and nothing to do.
Some of these people had small businesses such as small shops that sell clothes or books or little jobs they used to do. Those also lost their job or closed their business because of the coronavirus lockdown, basically. And then the dollar started climbing [up] day after day and they could no longer afford the businesses they had.
So my wife, my cousin (Hani Touma), and I were sitting around one night and my wife asked us why we don’t try to sell the locally produced goods in Beirut—[we] started the next morning.
When was this?
On May 7. We had promised we would make the first delivery within ten days of building the website and we did.
In the span of ten days, we had acquired fifteen suppliers from three villages (Deir Mimas, Kfarkila, and Marjeyoun) and had about 25 products. We took all the pictures of the products with our phones, wrote the description of the items, did the pricing and benchmarks, everything.
We launched it online and we started getting orders almost immediately.
And what was the feedback?
We shared it on all our WhatsApp groups and [among] friends and we did some minimal social media posts because, at that [point], we were not ready for high demand.
We got seven orders in total the first week, three from people we know and four from those we didn’t, which was very encouraging.
The first week, the operating model was ‘let’s figure out the operating model’ (laughs). Getting the deliveries to the consumers was the challenge. The first time I did the deliveries myself and it was the first time I did something like that. I wanted to talk to the consumers that had ordered and understand why and what they liked about the platform and products, and I also wanted to optimize the process of the delivery.
The next week we had fourteen orders, some of whom were repeat customers, which is proof that they enjoyed the concept.
What did you do then?
We realized that there is potential here and that we need to get more people on board. We started speaking to a couple of people here [in Deir Mimas] one of whom was Toufic Jarawan, who is also a co-founder, and is in the advertisement and marketing and social media space. Funnily enough, he was taking a course on how to optimize e-commerce platforms so I suggested that he come and have a real life experience with us.
At the same time that we were growing the website and the products and deliveries, we started getting more people on board and it grew very quickly. People liked the idea of being in their village and being able to work with a startup.
We also got two young people (one girl and one guy) who came to us and volunteered to do the delivery.
So they are not paid?
Nobody [in the team] is paid.
We are fifteen people now involved in everything from technology, to social media, marketing, supplier acquisition, supplier management, delivery, and the relationship with the delivery company. All of us are volunteers.
What they are getting out of this is a real life startup experience from someone who has done it before and has a lot of experience in the field. While we are working together, I am coaching them on how to automate, optimize the processes, deal with people, deal with things.
Some of these kids are so talented but they are sitting here doing nothing and when you give them the opportunity, the skills, the talents and the personality came out. It was an explosion of creativity; I was so impressed.
What did you do in regards to delivery?
As the number of orders started growing, we decided that we need to deal with a distribution company in Beirut. Toufic said Dana Hamra from Marjeyoun is involved in Wakilni, a delivery service across Lebanon.
So we partnered with them and we basically take our stuff from here on Friday evenings to their warehouse in Bourj Hammoud and we put it in their fridges and the next day in the morning, they deliver the products.
What is the payment formula you have established with Wakilni?
We pay them for each delivery. We struck a deal where we have one price for all of Lebanon. For now, though, most of the deliveries are in Beirut.
How do you pay your suppliers?
We usually pay our suppliers after we sell their stuff because we don’t have cash at hand. So they have to trust us and they do.
We pay the producers and artisans weekly, every Sunday, and not monthly. The idea is that, because they have zero income, they cannot wait for a month [to receive their payments].
Do you take a percentage of sales from them or how does it work?
We charge a markup to cover all the cost, especially the delivery. It is not enough anyways and we are losing money at this stage. This is why we need to scale.
Do you support the producers in setting their price?
We do in some cases to help them be competitive and make a profit. We did that with a couple of people at first but now we are going to do it with all suppliers, a kind of a financial advisor to them.
What is the biggest issue that the producers are facing nowadays?
Because of the dollar conversion rate etcetera, the biggest issue they have is the [cost of] glass and the packaging, which are imported. Because otherwise the ingredients are largely from their gardens.
So what we did is minimize the packaging because a lot of consumers nowadays want to buy the food but they don’t want to pay for the brand and the nice packaging and the shop in Beirut and all these things that add a lot of cost on your goods. So we said ‘minimum packaging, maximum authenticity.’ We are going to sell you the stuff the way they come from the producers in their homes in their villages. Some [producers] scribble the name of the product on the jar itself using a marker.
What has been the response so far?
People are loving the idea to be honest because it also has another aspect to it, which is the environment. You are saving on paper, labels, and a lot of things that are not really needed at this stage.
Taking that idea to another level, we thought of encouraging reusing. We want to reuse glass jars and bottles and are promoting this idea. The first thing we did was ask our friends to give us empty wine bottles and we collected close to a 100. Wine bottles are thick and dark, in most cases, so perfect to use for olive oil.
We also started asking our repeat customers to give us any glass packages they have and to give back the packages from the stuff we sell them. The suppliers here love it because we are helping them reduce their cost. The consumer is also benefiting from this because producers don’t need to increase their prices.
At the beginning we did not get a lot of these jars back, but now it is picking up.
What has it been like dealing with producers and artisans?
You need to be patient [in dealing with them] because there is a lot of education that needs to happen with the suppliers over time. Also they are not very tech savvy and they are not precise. They tell you, for example, that they have 10 jam jars but then they sell two independently while we have indicated on our platform that there are 10 jars available for purchasing. So what we do now is we call suppliers every other day to update the inventory.
Going forward, our two coders are automating through WhatsApp, which is widely used here. So basically suppliers will get automated messages to enter the inventory and we give them the final tally on the orders they got so they can prepare them through WhatsApp too.
You mentioned before that you want to scale this startup. How do you plan on doing that?
I want it to be sustainable and I also want it to be profitable so I can hire the people who have been working here for six weeks. We are going to raise funds until we can scale. But I didn’t want to start doing that before I could show that the concept works and it can make money with actual numbers, revenues, and costing.
Can you share some of these numbers with me?
Maybe when I develop the pitch pack in the coming six weeks, I will send it to you.
There are a lot of things that can be done to manage costs and scale. When you have more visibility on the size of the demand, these women can produce larger quantities in a smaller period of time. For example, if we know that we have demand for a hundred jars of strawberry jam, we can buy in bulk the ingredients they will use. Here, we can save on cost.
The reuse idea, if we push it further and it picks up, is another way of making the initiative sustainable because they can control their pricing, which means the consumers will continue buying in Beirut.
For our business model, we need funding at the beginning. I don’t have the break-even point yet because we are starting to work on the financial model. We want to see how many suppliers and products we need etcetera and the pricing strategy to determine when the break-even will happen and when we become profitable.
Which region would you expand to next?
We are still expanding in the south as there are many villages in the area. We can also go toward vegetables and fruits also from the south.
The next area we are thinking about is Keserwan and we started in Chouf on a small scale (one supplier with one product) and we have one supplier with one product in Hemlaya in Metn.
The idea is to have people from the area there manage multiple villages around them, exactly like we are doing here. It becomes much easier because you know the people so there is the trust element and the community element.
What has been your experience operating under these conditions of economic crisis?
Great ideas come from crisis because, at the end of the day, you are trying to solve a real-life problem.
What I am telling the team is that if they survive the crisis, they become the most resilient startup because you need to be financially very disciplined. You also need to find solutions to multiple issues you face every day beyond the issues typically faced by start-ups.
A delivery startup in New York for example, does not think about road closures but we had to last week (when protestors blocked the highway in Nehmeh). For us, for example, to try and solve this issue moving forward, we are going to try and put a lot of the products in Beirut already. I have a cousin who has a catering company—obviously his work is not as solid as before—and he offered his space for free.
Solidarity is the only way forward. For this to work, everybody has to contribute one way or another.