For many of us, there’s nothing as quintessentially Filipino as going to the neighborhood sari-sari store. Whether it was to buy afternoon merienda, a pack of pancit canton, “ice tubig” or a soft drink in a plastic bag; sundries, such as soap and shampoo in sachets or in more recent times, load for phones, these small mom and pop stores are part of our daily lives.
Nostalgia aside, however, the truth is that running a sari-sari store is a tough business. Most owners simply get their stock from grocery stores, meaning that they can only add only the thinnest of margins to the products they sell.
This means that sari-sari stores aren’t really able to compete with other stores, such as convenience stores and groceries, that can get supplies at much lower prices from the manufacturers themselves.
It’s no surprise then that convenience stores have slowly but surely supplanted sari-sari stores in a lot of places. But one company has been working to change that using technology: GrowSari.
With a name that’s a portmanteau of “grow” and “sari” (from sari-sari) as well as a pun on “grocery,” it should be easy to guess what GrowSari is about. The company, founded in 2016, aims to provide sari-sari stores with a more cost-effective and more efficient way of obtaining their stock.
To learn more about GrowSari and the challenges of using modern technology to give sari-sari stores a fighting chance, we sat down with its founder and CEO Reymund “ER” Rollan.
According to Rollan, who spent over a decade working in the fast-moving consumer goods (FMCG) space in South East Asia, the concept came to him when he realized how pervasive mom and pop stores, such as sari-sari stores (as well as warungs in Indonesia, mamaks in Singapore, etc.) were in the region.
“I think 80 percent of all mom and pop stores are based in the APAC,” says Rollan. “So I think it’s really an Asian thing.”
Rollan adds that even today, between 40 to 60 percent of most consumer goods are sold through sari-sari stores.
But, that number belies the threat that these stores face from bigger, more efficient operations. It’s to address this that GrowSari was founded.
Rollan and the rest of the team behind GrowSari believed that if they could consolidate the sari-sari stores’ supply chain, they would be able to create savings that would then be passed back to these stores. At the same time, this service would also create a data platform for companies “to have a more efficient route to market model.”
Of course, doing all that was easier said than done. When GrowSari first started in 2016, their team was so small that even Rollan was driving around and delivering inventory to the sari-sari stores. By doing this, however, Rollan was better able to understand the pain points of the sari-sari stores which then helped GrowSari figure out the best way to techify their supply chain.
“That was important for us,” he says of the experience.”Because that’s what’s going to help us understand if we were to techify this entire supply chain, we needed to do the work ourselves just to see where the biggest digitization opportunities are.”
While it was hard and costly work at first—at the start, GrowSari even had to subsidize some of the cost of procuring inventory for the sari-sari stores—but eventually, the company was able to build a network of supply hubs while increasing their sales. As part of this, the company developed an asset-light model where, instead of building their own warehouses, certain retailers acted as their supply hubs. This model helped give them a scale advantage that they could then leverage to manufacturers.
“Everything is outsourced,” Rollan explains. “We have a network of retail stores that serve as our warehouses where we plug in our tech so that they know how to process our orders. ”
In addition, Rollan adds that the company has a network of “over 200 independent truck and van owners” that it uses to make deliveries to the stores.
It’s with this asset-light model that technology has helped a lot. Without the use of the internet and technology, GrowSari would have had to put out more capital to put ut their own facilities and build a fleet of vehicles.
Rollan likens it to companies such as Ninja Van, Lalamove or Transportify that leverage existing vehicle owners to provide efficient delivery services. Without this, Rollan says that the “sheer capital barrier” would have been quite high.
“It would have definitely made it a lot tougher for us if we had to build all the asset bases ourselves.”
With how much technology has helped the company, it should come as no surprise that technology is what the company turns to when problems arise.
“One of the core approaches that we’ve stayed with over the past couple of years is to try to always solve operational problems with tech.”
This is most evident in what the company calls its “control tower” system, which is inspired by the actual control towers in airports. This system was designed so that every single datapoint in their system could be viewed by the team. This capability allows them to identify issues even before they happen.
“You know if we would have done these things manually, it would take a lot of time and would be very expensive,” he says. “But by setting up a data infrastructure … the tech infrastructure to address them, we believe that we’re coming at them more efficiently, and more sustainably.”
GrowSari’s tech-driven approach brings a breath of fresh air to the FMCG sector. Despite being one of the biggest and oldest business sectors in the Philippines, it is still one the is the least digitized in the country.
While this would imply a sector resistant to change, still clinging on to old models, Rollan says that this actually makes it open to disruption. He states that as long as inefficiency exists in a sector, then models like GrowSari will also exist. As the world technology continues to evolve, old ways of doing business will continually be challenged.
“Because there is still a lot of inefficiency in FMCG, I believe there will continue to be a high reception for models like this.”
Talking to Rollan, it’s clear that tech is going to be what drives not just GrowSari, but any new ideas and businesses looking to disrupt the current models and push the FMCG sector, and sari-sari stores into the digital age.
“I think tech is always going to be there as an advantage in terms of continuing to give us operational savings,” Rollan adds. “Tech is always going to be there also in terms of continuing to innovate on data services and products that we take back to the manufacturing companies that we work with. And technology is always going to be there to look for smarter ways to serve these stores.”
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