Innovation

Sari-sari stores are small neighborhood retail shops often established near or in an individual’s home. It is usually managed by a housewife to have additional income while fulfilling her motherly duties.

Because of its convenience to operate, sari-sari stores are usually open every single day. Most of its customers are people from the neighborhood, and store owners often know their customers personally, exchanging stories as they transact. Sari-sari stores are essential for the survival of the people belonging to the socio-economic classes C, D, and E. People from these classes cannot afford to buy in bulk from supermarkets due to their limited finances, so they purchase from a sari-sari store, a place closer to their home where they have the option to buy smaller quantities of consumer goods.

Therefore, sari-sari stores in the Philippines serve as a major economic pillar in the country. Around 1.1 million of these stores account for almost 60% percent of the sales of fast-moving consumer goods in the country, which makes these stores a valuable distribution channel for wholesalers in the Philippines (Shu, 2021). As stated by Micah Fernando during the interview, “we know that it is a sizable market here in the Philippines generating around 1.3 trillion pesos a year.”

Growsari started as a point-of-sale (POS) system for sari-sari stores in 2016. Still, several limitations changed the company’s focus to make the sari-sari stores the end customer instead. They developed a mobile app that facilitates their role as middlemen between fast-moving consumer goods (FMCG) companies and sari-sari stores. Partner sari-sari stores are given access to goods at distributor list prices, usually only enjoyed by large retailers. The sari-sari stores can order the items they need to sell in the safety of their homes and with options beneficial to the sari-sari store owner such as cash on delivery, next-day delivery, and small minimum order requirements.

The Growsari app also opens up other sources of revenue that sari-sari stores can tap into. The app lets store owners pay their utility bills such as electricity and water. It lets store owners sell mobile load to their customers and be an avenue for remittances when overseas Filipino workers (OFWs) want to send money to their relatives. The application also gives store owners access to different microfinancing services to fund and handle the costs of running a sari-sari store business.

Inspiration

When Growsari started back in 2016, the market of sari-sari stores was relatively untapped, which presented an opportunity. Since then, while the company’s business model underwent several iterations. One of the primary reasons Growsari’s innovation emerged was to help sari-sari stores grow, hence its name. These types of stores are important to the economy because they create jobs and can financially sustain a family. The company also drew inspiration from the typical struggle that sari-sari store owners go through. Before, the owners of sari-sari stores had to purchase their inventory from wholesalers whose products’ prices were already marked up. Now, these owners have more opportunities to profit and grow their business when they partner up with Growsari, enabling them to purchase goods from different FMCG companies at distributor prices.

Growsari’s vision is to double the earnings of sari-sari stores by using their proprietary technology to serve their current network of stores while expanding this network simultaneously. The company prides itself on executing its services at the highest level to ensure that they are giving their partner stores the best possible opportunity to succeed. They also continue to expand their list of suppliers and service offerings to better cater to their needs. They value every partnership they make with stores because as their partner stores grow, the company grows.

Overall impact

Throughout the years, sari-sari stores have become a staple source of income for many Filipinos. It has also become a part of many Filipinos’ lives since they can easily access these stores in their neighborhood. Looking at the purpose and overall business model of Growsari, they enabled sari-sari store owners to scale their own businesses sustainably over the long run by providing them direct access to a wide variety of products at competitive prices. As a result, the company has opened more opportunities to owners to build up their capital and bridge the income gap that exists in society today.

While Growsari assists and serves more sari-sari store owners, the company eventually grows because its business model is centered around scaling the market. Since the company earns its revenue by adding a small margin on top of these distributors' prices, having more store owners using the platform would positively impact the company. Therefore, as Growsari further grows and acquires more partners in the future, they can offer these sari-sari store owners a better overall user experience.

In the interview, Micah Fernando emphasized the importance of strong collaboration between Growsari and the sari-sari stores, stating that “As the sari-sari stores grow, we grow. We integrated them into our value chain primarily because it is economically sustainable. This way, not only can we make the business flourish, but give better opportunities to sari-sari store owners by giving them more connections and earning more.” This statement further justifies that the goals of the company and the sari-sari stores align with each other, and building a synergistic relationship between the two parties will allow both of them to thrive.

Business benefit

The partnership between Growsari and sari-sari stores has been mutually beneficial for both the business of the company and the business of the store owners. According to Growsari’s website, the company has partnered with over 50,000 sari-sari stores to date, and this has accelerated their growth, but it has helped the store owners grow their business (Growsari, n.d.). The company recently secured Series B funding, which they plan to expand their operations outside Luzon (Shu, 2021). According to Shu (2021), Growsari plans to grow its current network by reaching an additional 300,000 stores, primarily in the islands of Visayas and Mindanao. Eventually, according to their website, they plan to serve one million sari-sari store owners all over the country (Growsari, n.d.).

During the COVID-19 pandemic, the Philippine government imposed different lockdown measures, making it difficult for the residents to go outside their homes. Sari-sari store owners benefited from this because their neighborhood customers did not need to travel very far to purchase essential goods. These owners were able to benefit as well because Growsari’s next-day delivery allowed them to quickly replenish their inventory from the comfort of their own homes, minimizing the risk of getting infected by the coronavirus.

One of the main issues with the distribution of FMCGs to sari-sari stores is the exclusivity of the brands to a certain distributor. Micah Fernando, during the interview, said, “a conventional distributor would focus on exclusivity, being able to distribute a certain line of products from a particular company.” Growsari solves this issue by using the strength of its platform as leverage in getting more brands to partner with them. He added, “what we do, rather than being exclusive to a company, we are exclusive to our clients, which are sari-sari stores. We are a multi-brand distributor.” Having many choices also helps sari-sari store owners complete their orders, reducing operational costs and time filling up their inventory.

Social and environmental benefit

While Growsari's innovation has impacted their bottom line, it also had a social impact by uplifting the businesses of sari-sari store owners and their lives. Growsari thrives on bridging the gap between the sari-sari store owners and the corporations that produce these consumer goods. As stated by Micah Fernando during the interview, “We focus only on sari-sari stores because we feel that it is the best way to bridge the income inequality gap.” Since the supply chain is shortened, sari-sari store owners can purchase their inventory conveniently and with a low mark-up, decreasing their cost of goods. Furthermore, the company also provides delivery services that easily connect the sari-sari stores to customers, thus increasing their sales. Some of these store owners, especially those who have been long-time Growsari partners, have been able to buy their own houses and send their children to school while simultaneously expanding their store operations.

Growsari has enriched the lives of these owners from both a financial and non-financial aspect. By further expanding their operations to cover more sari-sari stores, Growsari, through their innovation, can help more sari-sari store owners scale their business and improve the quality of their lives. Through this, the company can hopefully reduce the income inequality gap in the country, one store at a time.

References

Growsari. (n.d.). https://growsari.com/

Shu, C. (2021, June 21). GrowSari, a B2B platform for small stores in the Philippines, adds investors like Temasek’s Pavilion Capital and Tencent. Tech Crunch. https://techcrunch.com/2021/06/21/growsari-a-b2b-platform-for-small-stores-in-the-philippines-adds-investors-like-temaseks-pavilion-capital-and-tencent/

What’s a sari-sari Store: PH’s small neighborhood retail shop. (2016, July 30). Primer. https://primer.com.ph/tips-guides/2016/07/30/expat-guide-sari-sari-stores/

Interview

Micah Fillip Fernando, Business Expansion Lead - Senior Associate