Fairmail

Calculated in print runs of 4000 cards (4 to 6 printruns a year) the price breakdown per card (doublesided, with envelope and wrap) is:

Cost of sales 0.05 for export sale/ 0.01 for sale in Peru
Materials and Operations 0.05
Staff costs * 0.22
Travel costs 0.01 (only for export sale)
Office costs 0.02
Total costs per card Peru sale 0.31
Total costs per card export sale 0.35

Customerprice Peru 0.70 (one third of sale)
Retailprice Peru: 0.40 (two thirds of sale)
Average price Peru: 0.50
Average profit margin Peru: 0.50/0.31= 1.61
Average profit per card **: 0.50-0.31=0,19
50% of profit to teenager fund per card: 0.10
Net profit for Fairmail per card: 0.09

Customerprice in The Netherlands: 2.50 (one third of sale)
Retailprice The Netherlands: 1.50 (two thirds of sale)
Average price Netherlands: 1.83
Average profit margin Netherlands: 1.83/0.35= 5.23
Average profit per card**: 1.83-0.35=1.48
50% of profit to teenager fund: 0.74
Net profit for Fairmail per card: 0.74

*- The hourwage of the teenage packers is 0.70 euro an hour, which is 12 % higher then the official minimum wage (that is 125 euro for 48 hours a week =0.62 euro an hour). They will work an average of 4 hours a week with additionaly 4 hours of training a week (during which they don´t earn a wage). Not more because they all have school — and family obligations to fullfill. On top of their salary the participants have access to a monthly insurance savings of 12,5 euro, get a balanced meal every work day and they can participate in English classes in the local language school.
- The hourwage of the manager (me) is 1.50 euro an hour, which is a reasonable salary for a beginning entrepreneur in Peru (as restaurant manager I earn about the same).

**The profit goes to two different investmentfunds:
1) 50 % of the profit is put apart in a growth fund for the participating teenagers. Each participant builds up savings in an individual fund based on working hours. Fairmail manages these funds but the teenagers can withdraw money to spend on their education or other personal growth activities as long as they work for Fairmail. If targeted sale is reached, this fund gets about 2240 euros on the first year, 3670 in the second and 6810 euro in the third year (for details see financial plan in other attachments).
2) The 50 % profit that is left is used by Fairmail to extend its market through extra marketing and promotion, to pay back start up costs and to design and produce other Fairmail products like Tshirts, framed pictures, handmade envelopes of recycled paper, agendas, calenders, cardset presents etc.

In Peru the postcards reach the customers through selling points in Huanchaco and Trujillo, starting with my own restaurant in Huanchaco. Hotels, restaurants, tour agencies, souvenir & gift shops and museums are offered a free card stand if they don´t have one yet to motivate them to become a selling point.
In the Netherlands, I have planned a market orientation in october 2006 to identify different target groups and distribution channels. I need that orientation to specify the exact product and its marketing for the different channels. Potential channels are card- and gift shops, (traditional) bookstores, TNT postoffices, fairtrade shops, development organisations, (organic) groceries and supermarkets. I also see possibilities for special projects like providing companies and/or events special Christmas cards, making personalized cards for weddings, companyparties etc.
In other western countries, Fairmail will enter the market firstly through the volunteers of Otra Cosa who will use their own personal networks to sell the cards. Secondly, Fairmail will start a marketing campaign through internet for Canada, USA and other European countries. For the networking needed in this campaign we will select international volunteers with specific marketing skills and useful connections.

About the competition:
Postcards in Peru are mostly printed in Lima (found 3 companies) and distributed over the country. In Huanchaco and Trujillo you can find cards in about 15 shops in total, all with pictures of Trujillo, archeological sites and Cuzco. After research among local shopowners I concluded that they are interested in Fairmail cards if they are original, attractive and profitable enough for themselves. I can fulfill these conditions.
In the Netherlands and other western countries Fairmail is a new concept. The Western market for products from developing countries is growing and I expect to find enough entrances among the many different potential distribution channels.

About business partners and start-up funding:
My financial partner is my own restaurant Otra Cosa, which provides me with a loan, working space for the packing process and a selling point. Our volunteer agency is Fairmail´s partner in providing expert volunteers for the training and guidance part.
Two other important local partnerorganisations of Fairmail are the Association of Garbage Recyclers and boy´s home Mundo de Ninos, as those are the organisations I will recruit the teenagers from.

The basic start-up funding can be paid from restaurant savings (as a loan to Fairmail). Kodak, Canada, has donated a digital camera with printer and printing paper, we are still negotiating further cooperation. Further needed investments won´t be made until most of this loan can be paid back with the income from sale. In other words, the sale figures will determine the velocity of the further investments. Fairmail will first have to prove its success.
If Fairmail wins BiD prize money I will be able to do extra investments in the first year (in stead of the second or third) so that Fairmail can start up more professional and grow faster.

In the first 2 years the Fairmail team will exist of 8 to 14 teenage photographers, 1local (adult) employee and myself. In the first 3 years Fairmail will provide for:
- training, language classes and parttime work (4 to 6 hours a week) for 10-20 deprived teenagers, earning an average parttime income of 30 euros a month (including the insurancefund). (to compare: the minimumwage in Peru is 125 euro a month for 48 hours a week)
-individual education funds for the teenager participants earned out of the profits from sale. If targeted sale is reached, in the first 3 years a total amount of 12.720 euros can be spent on the education that the teenagers need.
- parttime work (average of 5 hours a week) for 1 local adult (IT and/or marketing & PR) earning an average income of 30 euros a month (including insurance).
- regular work for 3-6 persons in a local printing shop.
- a contribution to the income of local providers of envelopes, wraps, cardstands, chairs, tables, etc.
- a contribution to the income of owners of 15-20 local selling points we will work with.
- community development as the community will democratically decide and invest 25 % of profits in their community.
- a rise in quality of living standards as the participating youth will have:
x more money to spend in their families, on education and health;
x medical insurance and free English classes;
x stimulation to re-appreciate the local environment: to focus on the positive and use local beauty to earn money
x broadening of their horizons and lifeworlds through photographic excursions
- development of skills and knowledge in/on: photography, computerskills, communication skills & cooperation, jobexperience, practical skills and entrepreneurial thinking.
- inspiration about how to start up a business like Fairmail, how to use local resources to earn money. Inspired, the participants will develop their own futureplans to work on.
- a different perspective on the environment: through the fairmailproject the local youth and their involved fellow community members will realise that a dirty beach and a road full of plastic wraps is not what benefits them. This changed perspective will lead to more environmentally friendly attitude and this will influence their families and/or the NGO´s where they live as well.

On the long term I expect spin-off small businesses in Peru started up by Fairmail participants. After 10 years, 10 talented Peruvians will have started up their own small business in Peru, using a simple but succesfull formula like Fairmail.