Taking a Risk on Remote Toilet Sales
An enterprising man
Om John has always been a risk-taker. In his mid-thirties, John has been variously the owner of a mid-sized rice milling plant, a motorcycle and car mechanic, a wholesale wood seller and most recently a pre-cast concrete manufacturer. Some businesses have had more success than others (John’s wood selling business went bust after 1 year), but all have involved a lot of hard work and willingness to take business risks. Om John moved to his current location in the remote reaches of Kampong Speu’s Phnom Sreuch district almost 20 years ago. He began a small business making pre-cast concrete water storage jars in 2001 and in 2008 added concrete rings to his product line. In 2010, his daughter, the eldest of his 9 children, started a small road-side construction material supply shop next to his concrete work site. Further back on the same land, sits the small house where John lives with his wife and eight dependent children.
The WASH-M team first came to visit Om John in May 2010 to see if he would be interested in the low-cost sanitation business opportunity. At that time, John was selling concrete rings, water jars and stumps, construction raw materials, and toilet components including tiled toilet slabs and ceramic squatting pan sets. He could sell about 5 toilets per month. These were made to order, and usually included bricks, cement and other materials for the toilet ‘chamber’ and shelter. John estimates that customers would pay an average of USD 500 for all the materials, delivery, masonry work and installation of this ‘high-end’ latrine model.
Building up a toilet business
After a couple of weeks of consideration, John decided to join the project, mainly attracted by the opportunity to increase his volume sales by lowering the price of the toilet products he offered. He was also keen to add the new pre-cast toilet ‘chamber box’, which eliminated the need for brick and masonry work, to his product line. John increased his equipment from 7 ring molds to 8, and bought 3 new pre-cast chamber box molds. He dropped the price of each of his toilet components, and began selling a complete self-installable toilet set (without shelter) for around USD 40, including home delivery.
John took the advice of the WASH-M project team and began experimenting with a new style of promotion and sales. He began with one commissioned sales agent working in one commune, but quickly expanded his sales force to 3 sales agents working in 3 communes. Toilet sales increased exponentially and soon surpassed rainwater jars as John’s most profitable business line. He notes that seasons have a big impact on his latrine sales, with the highest monthly sales in the post-harvest months of January and February. Overall, John estimates that toilet sales have moved from comprising 20-30% of his overall business to nearly 60% of his business.
An ‘installation innovation’ boosts profits
When he first started delivering the new low-cost toilets, John noticed that some people did not install their latrine straight away. Seeing an opportunity, John began offering an add-on installation service. For an additional 10-12 USD, his workers dig the pit and fully install the latrine on the day the toilet is delivered. For John’s rural consumer base, this service was very attractive. He notes, ‘It is difficult for the people in the village. If I deliver and they are busy out in the rice field, they don’t have time to install it and sometimes they might change their mind.’ John estimates that up to 80% of his clientele opt for the installation option. Not only does this increase his profit, he also believes it helps encourage his customers to complete payment for their latrine faster. John believes that the installation option is a key strategy that gives him a competitive edge over other business selling toilets in the area.
Reaching the poorest through ‘rice futures’
John’s installation service ‘upselling’ strategy helps him to increase profits by providing added value to those who can afford to pay. But he has also devised strategies to help him reach the lowest market segments. Realizing that there are many households in his area that really want a toilet but do not have the money to pay, John has begun taking payment in rice. His method is simple: he provides the toilet on credit and consumers pay the equivalent cost in rice when their harvest comes in. John estimates that 10% of his customers pay in this way. While most customers pay in cash upon delivery, John also offers up to one month credit. He estimates that an additional 20% of his customers take the credit option. So far, John has not had any problems with tracking or collecting outstanding payments.
Investing in growth, investing in marketing
About 5 months after he began selling the new toilets, John took a microfinance loan, USD 2000 of which he invested in toilet stock. The extra stock investment has helped him meet growing demand and avoid cash flow problems. John plans to invest the profits from his toilet sales into further business expansion, and is currently scoping new districts where the market for toilets might be good. In addition to broadening his customer base, John is also devising strategies to ‘deepen’ his relationship with existing customers. He estimates that about 5% of those who purchase a toilet set also buy other materials for the construction of their toilet shelters. On toilet delivery, he has an opportunity to tell consumers about his other non-toilet related products like rainwater jars and concrete house stumps.
John recognizes that engagement with the WASH-M project has helped him to build his reputation and develop relationships with local authorities at the commune and village level. After almost one year of working with the WASH-M project team, John is confident he can continue profitably selling toilets and expand into new areas without further project support. He insists, ‘I can still use the marketing materials, I can print them by myself. Even if I expand to a new area, I will get a good sales agent…’ John can see it pays to invest in marketing. Let’s see where his investment takes him.