Increasing Corner Store Profits through Inventory Microfinancing

Despite generating approximately 15 percent of Mexicos gross domestic product, neighborhood corner storeswhere many people purchase grocery and household productsoften lack access to the capital they need to purchase enough inventory to grow their businesses.

To make capital available to neighborhood retailers, the implementing partner has partnered with some of the largest companies that distribute the fast-moving consumer goods sold in neighborhood stores and developed a buy now, pay later (BNPL) tool that plugs into the purchase portal of these distributor partners.

Using a proprietary algorithm, the implementing partner identifies creditworthy retailers to receive a short-term loan offer when they check out with their distributor.

If the offer is accepted, retailers register via WhatsApp, the implementing partner pays the distributor to deliver the stock, and retailers have 15 days to repay with interest or be assessed a modest late fee.

This activity will conduct a randomized controlled trial to understand the impact of the platform on the revenues and household income of participating retailers and to test varying interest rates and late fees to determine optimal contract terms. In addition, the implementing partner aims to expand eligibility to higher-risk retailers.

Overall, the implementing partner will use grant funds to reach more retailers, which is expected to attract capital and debt investment to sustainably grow.