In 2015, almost two thirds of young women in the West Bank were unemployed. The mission of Child’s Cup Full (CCF) is to create economic opportunities for refugee and disadvantaged women in Palestine. Through its Darzah branch, CCF hires women to produce beautiful hand-made leather goods. In particular, Darzah specializes in Palestinian tatreez embroidery, a centuries-old art form that is traditionally passed down from mother to daughter. Each piece is hand-embroidered and celebrates Palestinian cultural heritage.
What was the problem?
Child’s Cup Full asked the Business on the Frontlines team to help scale its Darzah women’s shoe business to increase revenues and ultimately provide more job opportunities to disadvantaged women in Palestine. The problem was multifaceted. First, there was the question of how to grow sales. Darzah was currently selling on its website, in a few fair trade stores, and at trade shows and holiday fairs across the United States. How could Darzah expand its retail presence to move more shoes? Second, there was the question of how to support an increase in sales through its operations in Palestine. Darzah’s manufacturing process is complex and involved the movement of inputs and intermediate goods across the entire length of Palestine. Darzah was preparing the embroidered fabric for the shoes in the north, shipping the embroidery to shoe manufacturers in the south, and then exporting the shoes to the U.S. through Israel. Could this process be improved and could Darzah create more jobs for more women by moving the manufacturing process in-house? Moreover, was there a way to efficiently scale the export of the shoes to the U.S.? Finally, how would CCF fund and implement any expansion of its operations? These questions laid the groundwork for the Business on the Frontline’s team research prior to arriving in-country.
What did we do?
Prior to our in-country experience, our research focused on the manufacturing process and shipping. Our initial hypothesis, based on information from the partner, was that the shoes might be too expensive to make, leaving little margin to support the business. We conducted a complete value chain analysis highlighting the various expenses from design inception to shipping internationally. Based on the cost of outsourced steps of the value chain, such as assembly, we feared Darzah had not yet achieved needed economies of scale. After visiting Northern Palestine for a few days where the embroidery takes place, we headed south where leather tanning, sole making, shoe assembly, and shipping take place. Here we found that we were double counting the costs of leather and soles in the value chain, which turned out to be costs included in the assembly by master shoe makers. Most of the factories, which were really small workshops in the first floor of family homes, were working below full capacity because there was not sufficient market demand for these shoes. Everywhere we looked, the Palestinian people were eager to work more and proud to share their products with the world. Due to Israeli military law, it is extremely difficult for Palestinians to import and export. After visiting a man who was called “Palestinian FedEx,” we quickly learned that is not entirely true either. Our guy could find a legal and economical way to ship just about any size shipment we could produce. Israelis would potentially search the shipment, but they primarily limit imports to Palestine, not exports. After our in-country visit, our team needed to change direction. We turned our focus to increasing demand for the beautiful hand-made shoes, determining if bringing the show manufacturing in-house is an improved solution and generating funding for expansion and working capital needs.
What was the turning point?
Most of the team’s assumptions and analyses did not survive first contact with the field. Nearly immediately, we realized that supply capacity was not the problem. The women who already embroidered shoes could and wanted to take on more work. Moreover, there was a near infinite network of women eager to start embroidering for Darzah. About five days into the trip, we put the pieces together: Darzah does not have a supply problem, it has a demand problem. That led us to our next big discovery: shipping. A large portion of our research prior to in-country focused on shipping. With the new information about local ingenious exporting methods, scaling shipping was no longer a problem. We knew that our project needed to focus on driving demand for “Handmade in Palestine” shoes.
What was the recommendation?
Our recommendations for Darzah centers on 3 ideas: expand revenue opportunities, focus or core capabilities, and insource production. Many of Darzah’s current issues are exacerbated by low sales volumes. Exporting, production, and in-country logistics would all gain needed economies of scale as volumes increase. We suggested that Darzah expand sales channels to include large online retailers, department stores, and small boutiques. To drive traffic to their website and new retail partners, Darzah should also expand their cause-based marketing efforts through social media. Similar strategies helped propel competitors like Toms, Rothy’s, and Tieks into the mainstream. Currently, key Darzah employees spend the majority of their time working on operational tasks that are not related to their expertise. As demand increases, these tasks should be outsourced to companies that specialize in them, or newer employees should be hired to take care of them. Freeing up the founder and key employees to focus on fundraising and other managerial tasks will better serve Darzah in the long run. Outsourcing order fulfillment with Amazon Fulfillment Services will free up significant time for the founder.
Moreover, Darzah’s long-term goal is to employ and train more Palestinian women. Currently Darzah manufactures the traditional embroidery that makes their shoes unique but outsources the shoe manufacturing to other Palestinian companies. Darzah could increase the number of women that it helps by bringing these processes in-house. Darzah should not try to take on this whole task immediately. Taking a phased approach will allow Darzah to focus on the portions that build on skill sets the women already have before moving on to new tasks. Local universities like Palestine Polytechnic University already offer training programs in manufacturing. Darzah should partner with them for joint fundraising opportunities and to design training program for shoe manufacturing. To implement these solutions, Darzah will need significant outside funding. We directed Darzah to multiple possible options, and helped to craft a story that will resonate with potential donors.
What actually happened?
Our team’s recommendations were warmly welcomed by the founder of Child’s Cup Full. We are currently working on submitting a grant application to gain the initial start-up money required to invest both in the expansion of Darzah selling operations in the United States and in bringing the show manufacturing in-house in Palestine.