A large-scale business embraces village-level latrine sales
Finding the right incentive
Perched under the sunroof of his shop on his sprawling property in Kampong Cham province, Chak Sok Pheng cuts an imposing figure. At just 24, he is one of Cheung Prey district’s largest wholesalers of construction materials and the owner of a giant roof tile factory and successful pig-raising enterprise. He speaks fluent English, which he learned while earning his Bachelor of Business in Singapore. He is young, motivated and very wealthy by local standards. But none of this stopped him from getting into a very unlikely business: retail toilet sales.
It wasn’t easy for the WASH Marketing team to recruit a ‘big fish’ like Sok Pheng into the rural toilet market. ‘At first, I didn’t care about toilets,’ he recalls, ‘…but so many times they came here, always talking about toilet, toilet. They came 3 or 4 times…on the 4th time I confirmed to try it.’ What finally convinced him? Sok Pheng admits he was motivated first and foremost by profit, but equally important was the opportunity to become better known amongst the people in the countryside. And he’s not sure if we’ll believe him, but he claims there was an altruistic motive as well: the chance to help poor people to get a toilet. Doing good and doing well.
Before getting involved with the project, toilets were a very small part of Sok Pheng’s business. He estimates that he could sell about 5 or 6 toilets per month, but at nearly USD 100 (not including toilet shelter or transport), he admits that he was overcharging. Since getting involved with the project, Sok Pheng has reduced the cost of his toilet set to around USD 40 including home delivery. And he is now selling nearly 70 toilets per month. From 3 concrete ring molds, Sok Pheng has increased to 15 ring molds, plus additional molds for the new pre-cast toilet ‘chamber’ and pit. He now estimates he can produce up to 300 latrine sets per month. With his truck and moto romock, he can deliver 15 sets per day – and during the peak toilet sales season, he has often been at full capacity.
Toilet sales an entry point
With his business background, Sok Pheng is no stranger to marketing: before joining the project he already employed two marketing agents to promote wholesale sales of his roof tiles to regional retailers. However, village-level retail sales are new for him- and Sok Pheng has been pleasantly surprised by the power of village promotions. Acknowledging the scale and impact of the 14 commissioned toilet sales agents he now has working over 7 communes, Sok Pheng estimates that around 30% of consumers purchasing a toilet set also buy supplies and materials for their toilet shelter from him. This means toilet sales are an entry point for his other (often more profitable) items – a significant draw for Sok Pheng.
By simply hanging the WASH-M-designed toilet banner in front of his shop, Sok Pheng has also seen an increase in ‘walk-in’ sales: he now sells 5-10 toilets directly to consumers passing by his shop. He has recorded sales from passersby from distant provinces, who pay on the spot and drive away with their new bargain toilet.
Attention to Quality
Since the WASH-M team takes a Hands Off approach, Sok Pheng knows he must rely on his own reputation and not an NGO brand: he must deliver quality if he wants to keep his customers. In the business of pre-cast concrete manufacturing, concrete rings need to be well made and should cure in the sun for several days to strengthen. As demand for toilets has induced him to ramp up production, Sok Pheng is paying more attention to stock management. He knows he needs additional quality control safeguards, such as extra checks on his laborers, to make sure that quality doesn’t slip in the rush to fill orders. Sok Pheng is clear that the product is the business: ‘If my ring is strong, my business will run… If people order many rings, I am happy but worry also, [I am] happy and unhappy.’
Sok Pheng must manage deliveries in a challenging environment: dirt roads, limited access, pot holes and flooding can result in breakages of even the most well-produced concrete products. He tries to limit these losses through staff training and management, but also has a policy to replace any ring that is not in good condition at the time of delivery. If there are any problems with his rings after delivery, Sok Pheng and his sales agents will go to discuss with the consumer. Sok Pheng hopes this ‘customer service’ orientation will keep people happy, and keep them spreading the word about his toilets and his business.
Growing his business: challenges and opportunities
Although the profit margin on the toilet sets is lower than Sok Pheng’s roof tiles or other products, the increased volume has meant that toilet sales now comprise around 20% of his overall business. Now that Sok Pheng has the toilet bug, he insists that 7 communes is not enough. His plan is to set up a production site in another district where his family has some land and to start selling there. The expansion will require investing in one more truck and additional equipment, but he thinks it could be well worth it.
Like many other businesses, one of the biggest challenges for Sok Pheng is cash flow. While just last year Sok Pheng was able to arrange trade credit from his raw material suppliers, they now require him to pay upfront. He explains that rising fuel costs are largely to blame, noting that the price of one ton of cement has risen from around 83 USD to over 100 USD, while the wholesale price of ceramic toilet pans has increased from 6 to almost 9 dollars. Sok Pheng is now paying more for raw material inputs and also needs to pay up-front. But, his customer base – mainly rural villagers – often need to pay over time. Sok Pheng does not have any formal installment payment plans for his customers, but estimates that only 50% pay in full at the time of delivery. He extends informal credit to the rest, who usually pay within 1 to 2 weeks of delivery. This can create some cash flow pressures: ‘When we buy raw material, they want us to pay. But when we deliver the latrine, customers don’t pay.’
Sok Pheng is not very concerned about commercial competition. Perhaps because of his size and reach, Sok Pheng does not see other enterprises as much of a challenge – even those that are currently supported by the WASH-M project to sell low-cost toilet products in the area. But agencies and groups offering free or subsidized latrines in his sales area can present a more difficult problem. Sok Pheng’s sales agents tell him that NGO or agency subsidy activity can lead some households to decide not to buy his products, but instead wait to be beneficiaries. ‘Sometimes I also worry because when we subsidize the toilet we will not be able to run because they [the consumers] will wait for the subsidized toilet.’
Building networks to strengthen his business
In addition to changes his sales strategies, product offering and stock management, Sok Pheng credits the WASH-M project for building up his relationships and networks, especially at the commune and village level. ‘I am happy when the project coming. I can earn money from the project, but also glory – many people know about my place.’ Sok Pheng can see that word is spreading about his involvement in the project and his good relationship with local community leaders. People who hear about his ‘good deeds’ in toilets might come to him first when it is time to purchase larger items. His message: toilets are not just about short-term profit, but also about long-term business opportunities.