How could Reebok sell trainers for $1?

Sporting giant Adidas is developing a type of Reebok training shoe to sell cheaply in rural India, possibly for as little as a dollar. How? In many parts of the world, a standard Reebok trainer can cost anything between $50 (£32) and $100 (£64). But in India, they could soon be on sale for as little as $1. After being the test market for the so-called cheapest car and cheapest tablet computer, the Indian consumer is about to be tempted with what would be one of the cheapest pairs of branded trainers anywhere. It’s been a long time in the planning. In 2008, Adidas chief executive Herbert Hainer began talks with Bangladesh’s respected economist Professor Muhammad Yunus about providing very low cost footwear in Bangladesh. The idea was to create a “social business” that would stimulate the local economy.

That led to a pilot project last year, in which parent company Adidas sold 5,000 Reebok shoes in three Bangladeshi villages, reportedly for the equivalent of between $1.14 and $1.70. The next phase of the plan is now under way, namely to develop trainers on a larger scale in rural India, at a price that local people can afford. The goal of the project, the firm says, is not to maximise profits but to “tackle social issues” by creating jobs.

“It does sound incredibly cheap but if you have a billion people, the volume means that as long as you’re making a small profit [on each pair] then that can be quite considerable.”

Operating like a cottage industry, with rural production sites, means overheads, marketing costs and wage bills would be relatively low, compared to those of a regular big business.

“Excuse the pun, but they’re getting a foothold in a market that is set to grow, and they’re getting in at the bottom.

Edited from How could Reebok sell trainers for $1?.

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