Startup firm secures P3.5 million DOST funding

CEBU, Philippines — The Department of Science and Technology (DOST) has provided funding to Packworks, a Filipino startup that offers a business-to-business (B2B) marketplace for fast-moving consumer goods (FMCG) aimed at sari-sari stores.

This initiative leverages Artificial Intelligence (AI) to equip over 1.3 million sari-sari stores nationwide with data-driven inventory management tools, thereby enhancing their business growth.

A P3.5 million research funding from the DOST- Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD) Startup Grant Fund (SGF) Program will support Packworks' P1.5 million allocation to develop a machine-learning-powered precision marketing model, offering sari-sari stores customized recommendations on sellable items and promotions from Packworks' FMCG partners.

“Our mission at DOST is to build an integrated, inclusive and sustainable startup ecosystem.  We hope to support startups at every stage of development, from formation to validation, until growth,” said DOST secretary Renato U. Solidum, Jr.

The SGF Program aims to support technology-based startups by transforming early-stage technologies into market-ready products.

Now in its second cycle, the program continues to foster innovation across various sectors, including sustainable industries, education, creative industries, data-driven technologies, climate change, and productivity enhancement tools. Since July 2022, DOST has supported 123 startups in the country through the SGF program.

Sari-sari stores, despite serving as the primary source of daily essentials for around 94 percent of Filipinos, are often faced with challenges such as inadequate financial management, lack of actionable customer insights, and ineffective promotional campaigns.

The current absence of a streamlined approach for receiving high-quality promotions, such as discounts or personalized item packages from FMCG manufacturers, restricts store owners from enticing and retaining customers effectively.

“Through this AI-powered model we will develop in partnership with DOST, we aim to equip small entrepreneurs with data-driven insights and targeted strategies for enhanced business success and expansion," said Packworks Chief Data Officer and project lead Andoy Montiel.

Sari-sari stores are part of micro, small, and medium-sized enterprises (MSMEs) in the Philippines, which account for an overwhelming 99.5 percent of all business establishments. Of those, around 500,000 are in the wholesale and retail industry.

The AI-powered capability will be launched as an in-app service on Packworks’ Sari.PH Pro app and is expected to benefit its network of over 270,000 sari-sari stores across the Philippines.

"We are thrilled to partner with Packworks in this groundbreaking initiative to support the sari-sari store sector, a vital pillar of the Philippine economy. This collaboration exemplifies the government’s commitment to fostering technological advancement and economic growth through strategic public-private partnerships, as outlined in the Innovative Startup Act. We look forward to witnessing the transformative impact of this partnership on the grassroots retail industry towards driving inclusive growth and innovation across the Philippines,” DOST-PCIEERD Executive Director Dr. Enrico Paringit said.

Aligned with Republic Act (RA) No. 11337, or the Innovative Startup Act (ISA), the initiative underscores the government's commitment to enhancing the country's startup ecosystem towards driving economic growth and technological advancement.

" This public-private partnership will be instrumental in addressing the unique challenges faced by sari-sari stores, providing them with the tools and insights needed to thrive in a competitive and increasingly digitized market. We look forward to leveraging AI-driven solutions to empower these stores, enhance their operational efficiency, and drive economic growth at the grassroots level," said Packworks chief executive officer (CEO) Bing Tan.

Launched in 2018 as a solution for multinational companies with only a handful of sari-sari store partners, Packworks has rapidly expanded as a B2B platform that enables growth and success throughout all stakeholders in the supply chain ecosystem, from small sari-sari store owners to wholesalers, distributors, and renowned FMCG companies and brands. Through the Sari.PH Pro app, sari-sari store owners can access pricing tools, inventory management, sales and revenue tracking, and working capital loans.

In 2022, the startup launched Sari IQ, a business intelligence tool offering real-time and historical consumer expenditure data to help retailers and brands gain visibility into sari-sari stores and expand their reach to more customers. Analysis through the platform also helps them make data-driven decisions to boost the sales of sari-sari store owners by understanding and predicting consumer demand within their area.

The collaboration with DOST, which will run for 18 months, aims to reach more micro-retail stores across the country, enhancing their digital capabilities and fostering entrepreneurial growth and success.