GrowSari: Digitizing corner stores in the Philippines

This interview was conducted and transcribed by Timothy Motte.

Biography

Shiv Choudhury is the co-founder of GrowSari, a startup helping Filipino “sari-sari” stores (independent corner stores) with fulfillment, digital tools, financing and more.

GrowSari works with over 100,000 stores in more than 400 Filipino municipalities.

In 2022, GrowSari raised a $77.5M Series C.

You have unique experience in the retail sector. What problems did you encounter and wanted GrowSari to solve?

I’ve observed the retail space through three lenses: my family business, a fast-moving-consumer-good (FMCG) multinational (P&G) and a consulting firm (BCG).

The insights my partners and I have triangulated boil down to a simple fact: the sari-sari owners’ supreme importance to the community. A FMCG company can spend millions on marketing, but nothing replaces the store owner’s recommendation.

Winning at this game thus requires serving as many sari-sari owners as possible and building a close relationship with them. That has been hard to do because sari-sari stores are dispersed, lack working capital and aren’t digitized… This is the market GrowSari taps into.

Another insight is that while these stores look the same, they are actually segmented. There are large stores FMCG companies serve and small ones they don’t, because order sizes are minuscule. GrowSari is focused on these small stores. The difficulty is crafting an efficient, economically sensible supply chain serving these small stores.

This segmentation discouraged us from building a marketplace. There is little value in connecting these small stores to suppliers. There’s a reason FMCG companies don’t bother with them in the first place. Instead, we help these stores order what they need and we deliver them fast. The value resides in the delivery efficiency.

Doesn’t the rise of e-commerce and supermarket chains threaten these stores?

We haven’t seen that happen. Their sales even increased by 20% last year. The basket size they convey ($20/month/customer) isn’t necessarily the remit of e-commerce platforms. As for supermarkets, the use case isn’t the same. Sari-sari stores are convenient, ubiquitous and sell in tiny quantities. There are 1.3 million of them in the Philippines.

Your first product, mPOS, was a failure. What was it and what did it teach you?

We initially wanted to help these stores digitize. We developed a mobile point-of-sale (POS) device, which we tested in around 1,000 stores. Usage was sporadic. After speaking to store owners, we realized that they had a bigger problem.

Namely, that they had to close their stores to venture out and stock up on inventory. This was a heftier concern than a supposed desire to “digitize”. It inspired our second product. We developed an app where store owners could order what they needed and have it delivered to their store. They could restock without closing their store.

Ironically, we are now relaunching a POS product for which 10% of our stores have signed up.

Other founders in the space claim that margins from the ordering product aren’t high enough. What do you think?