Can a sari-sari (store/shop) make money in the Philippines?

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Its a conversation I have had many times with people and there are plenty of people who would say don’t waste your time or money. In reality its about how its run more than marketing or location.

Most stores are under funded due to poor investment and price controls stopping people being able to buy at “Real” wholesale prices. Leaving the big boys to control the supermarkets and department stores as a Sari-Sari has little opportunity to even come close to that size purely because of a biast market. Ok now I have covered the negative lets take a look at the positives.Firstly having a chest freezer puts you ahead of most of your competition you can not only supply frozen meats, chilled water and ice but also ice cold beer and soft drinks. Probably thinking its not that big a thing but this is the Philippines a well chilled beer supplier is always in demand. The reason I took marketing and location out of the scenario is that generally things move word of mouth more than anything else here which is why everything takes so long to establish. Location isn’t always relative especially in this game as having regular reliable stocks is something most of your competition don’t do. As they are already fighting off nearby competition or haven’t got the capital to carry more stock. Either way the nearby competition push each other into a stalemate that works to your advantage. Why? because the whole point is its not your only route of income it is for many others. As you can see from the photo above our Sari-Sari has not only grown its also well stocked. Anyone asks for something we get it, which results in people knowing to come to you first as they know going to others its 50/50 if they have it or not. Lars another expat dropped by probably around six weeks ago when the Sari-Sari was just starting to take shape. Back then it was probably doing a few hundred pesos a day currently its doing around a thousand a day. Not a big leap in income your thinking but as Lars seen its not exactly work your sat there anyway. I am either in the netcafe writing posts like this or I am sat outside chatting with friends. Why not get paid to stick your hand through a wall every few minutes? A lot of people will say you can’t make money out of a Sari-Sari but here we are showing you can. Next step is water filtration and opening our own mini plant. Not a big business but at the end of the day we are in a country with a growing population and in an environment that is pushing forward even if it doesn’t want to. There is an increasing demand for daily supplies. If you look at just our road and how its changed since December. The netcafe and apartment block went up and opposite other apartments are now being built by neighbours. We have also planted bushes along the side of the road and just waiting for them to grow before looking to get stone chips down to turn it from a mud track into something passable in the wet.

9 comments for “Can a sari-sari (store/shop) make money in the Philippines?

  1. Tropicalpenpals
    July 11, 2010 at 1:14 pm

    It all comes down to management though and the store being “bolt on”. We run the Sari-Sari alongside apartment rental, Netcafe and a financial business. There is always someone there relating to one of the other businesses which means the cost of running staff wise isn't really an issue because its absorbed e.g. if someone is running they can do both. Same as if im working in the netcafe online I can do both. Eating through the stocks your right it can be a problem but we haven't got it. My main idea for the sari-sari was 2 fold. 1. to help Aprils parents and 2. have a free beer tab it does both. We don't do utang either the store that we are next to closed down for exactly that reason “bad debts”. Easy to say no when you say its the foreigners budget. People don't lose face. We have no rodent issues as things like rice are contained in large plastic drums the majority of goods you see hanging are shampoos and the odd coffees. The freezer does pay for itself due to the turnover of alcohol and ice-pops I was a bit shocked with the last electric bill but it seems that a lot of it was welding work that was ongoing as the bill is halved this month. Which at P4,000 for an internet cafe, one house, one apartment and a freezer isn't bad going. Icepops sell around 150 in 2-3 days which is P150 profit. Beer and RC cokes have gone from a delivery once a week to every 2 days and the delivery quantities are near enough doubled (e.g. the old weekly delivery is now roughly half the size of one of the deliveries every 2 days).
    Transportation for collecting stock also isn't an issue as we have business in the town every day as well so the work is done in the town and the stocks are collected near the market. If I was going to Makro for example which is near SM mall it wouldn't make any sense as taking a multicab would cost P150 in fuel so would need to do it weekly monthly. But the setup we have its pretty much all taken care of from other stuff we are doing at the same time. Profit wise its around P200 – P400 a day but tie that with the netcafe which I am busy sorting out its probably around P700 every day (profit) for the two businesses. The point in relation to the P200 to P1000 was that its growing and is already filling up the space we originally set aside and now looking at adding in vegetables and fruit but at a controlled rate as to have nothing spoil. There is also opportunity to do food once I find out if our neighbour is still doing cooking herself (relative and friends) if not we will expand into that.

  2. Tomdean34
    July 11, 2010 at 12:53 pm

    About family run Sari-Sari stores. The main problem is the family using the stock for their own needs, or taking more than the profits to cover other expenses. After several months of that, the store has no money to replace stock, and the road to bankruptcy is soon in sight.
    The problem with having a freezer or fridge, is the added electrical expense. Can you sell enough items from the freezer at a price that allows a profit and to cover the additional electricity expense?
    Filipinos are good at “forgetting” exactly how much it costs to stock a store. the forget to factor in many expenses, such as transportation in buying the stock, loss due to spoilage & rodents, Utang that doesn't get paid.
    I also assume that your 1000 peso per day is gross, and not profit. Yes, if you are there anyways, then maybe you do not need to count your time, but a sari-sari store must be manned, and time is money.

  3. Tropicalpenpals
    July 13, 2010 at 1:21 pm

    My control over the business is still in development as the expansion has grown quicker than I anticipated so now its a matter of working out where to take it. I don't want to go down the route of EPOS as it just ends up costing me more per hour than I need. At the same time I will need to tighten up the financial controls as I need everything maximised for the next projects we are working on. Time management is one of the key elements to any success here as you see vendors etc. sat on a plastic chair doing nothing waiting for customers for me it means the store is too small as I should be hearing peoples complaints of how their feet hurt after running around after customers all day. The Sari-Sari does that already and the new gaming machines going into the netcafe will no doubt increase revenues on both. I have been a bit dubious on investing more into the netcafe as it doesn't make as much as I would like but at the same time sticking another P30,000 in will be sink or swim at worst the netcafe will be ripped out and turned to an apartment but I quite like the scenario we have now where I have re-jigged the room into two so I can use one half as an office to generate extra revenue at the same time as monitoring the Sari-Sari and the netcafe. We have also started selling branded goods which has taken off a lot better than expected. Which we are now capping temporary to start recouping funds (they are on pay day credit). May sound a bit wild to give credit on the items but its all reliable people at places like call centres. It will no doubt be the start of a continous development there is other ongoing work which will be finished by December. After that it will be time to recoup the money to buy another nearby lot so we can develop it into a small rental block of around 10 – 12 apartments 1-2 bedroom complete with laundry and guard services.

    The Philippines can be a nightmare to work within and I hit my head against brick walls regularly and finds its more of a chipping away at things than being able to do what I really want to do. Eventually the result is the same just a lot more time consuming and longer time scale than I would like but as many say “welcome to the Philippines”. Which pretty much sums it up as I even explain things sometimes and the logical points don't get taken on board as people are used to a specific way. But what can you do..lol

    Thanks for the well wishes are you in the Philippines too?

    • Bacolodzt
      December 27, 2010 at 6:30 am

      Hi There, congratulations in making good business in the Philippines! I always wanted to do small business in the Philippines, but just what Tomdean34 mentioned on his comment it’s not easy esp. if sari-sari store with family around, usually it’s not really gonna do good, if not personal needs but utang which most of the time u can’t really say “no”. Do u have any suggestion how to make money in the philippines without having store? Any small business ideas u can share, would really appreciate it. Thanks! and Best wishes to all your business venture in the Philippines.

  4. Tomdean34
    July 13, 2010 at 1:03 pm

    Matt
    It seems you have the management of your store well under control.
    I admire your attitude and tenacity in making a living in a country that can seem quite hard to do.
    Wish you the best.

  5. Bill Bonadio
    July 24, 2011 at 2:57 am

    Hello to all , The running of a sari sari seem ok at first . The people in the barangay seem to always be in competition with each other . Always taking each other out of business or slowing the business of others . They take out loans they can not pay back on the profits they make.My wife and I are right now in the middle of such a war right now .just seems funny to me how they do this .How is it possible the can make a profit ? The suppliers here of beer and soft drinks are getting the profit and will not give discounts if you buy more product . We can not find wholesale items such as food , drinks . To me the market does not allow for competition .everyone pays the same price for the same products . Thanks

    • Profile photo of OLDARTICLES
      July 24, 2011 at 8:37 am

      Are you selling anything they aren’t? you can also go direct for alcohol and soft drinks bypassing the middle man (we have 2 main distributors nearby). We also do not give Utang (credit) which is the one thing that is guaranteed to collapse a business.

      Firewood is a product we have negotiated a price on as well as many other products the other stores can’t stock such as frozen or chilled goods. We also freight stuff in depending on who the clients are such as prawns and shrimp from Bohol. There is plenty of market for development its working at it and finding what they cannot get as well as things that are a regular way to make money such as mobile phone load and beer. There is no point getting into a price war as you both lose better to sit it out as eventually they will run out of funds. Peso-peso water machines and computers are also good earners depending on your location. If you have internet I would get a computer peso-peso single unit and see how it goes.

  6. tigressndistress
    July 25, 2011 at 3:38 am

    hi, i’ve just read all your inputs here and i like the idea of you having two businesses to run in 1 location, i believe it’s quite convenient and time saving.. I too have a sari-sari store and the competition here in my place is hilarious! i have long been thinking of how i could expand or transform my business, i’m a mom of 4 and i think i can’t provide decent things for my kids because of the scarce income of the store…help? may i ask how you started your netcafe and how much was your initial capital.. tnx in advance and God Bless!

    • Profile photo of OLDARTICLES
      July 25, 2011 at 3:57 am

      tigressndistress – I would advise going for a single peso peso machine if you already have an internet connection and see how that goes as you can expand as any when you need to. Buying a lot of computers isn’t a good idea with internet becoming cheap. But if the one machine is busy buying another a month or two later you can see how busy you are and just add as you go.

      Mobile phone load is another income stream, I also do my internet blogging while here which is another sideline as well as 2 apartments we rent out. On top of that you could also add doing things like noodles or other hot meals but keep it simple to begin with. Best thing all in all is to ask your customers what they want and need, most people are already aware of what they would like in an area so using it to build up a business with a multitude of things gives good time management and maximises the business potential.