Selling LPG from your store: what it actually takes

LPG looks like an attractive thing to add to a sari-sari store or hardware shop. Everyone cooks, demand does not really fall in a downturn, and customers come back on a predictable cycle. All of that is true. What follows is the part people usually find out after they have spent the money.

The margin is thinner than you think

Retail LPG is a volume business with a modest mark-up per cylinder. The figure varies with your supplier, your area and your volume, but it is small enough that a handful of cylinders a week will not pay for your time. The businesses that make it work are moving dozens a month and treating gas as the thing that brings people through the door for everything else.

Before you commit, do this on paper: take the dealer price your supplier quotes, subtract it from what shops near you actually charge, and multiply by the number of cylinders you honestly believe you will sell in a month. If that number does not comfortably cover your extra effort and the risk below, the answer is no, and finding that out on paper is free.

Working capital is the real barrier

Gas is sold for cash and bought for cash, at least at first. To trade you need stock on the floor, and stock means both the gas and a float of cylinders. A dozen 11 kg cylinders plus their deposits is a meaningful amount of money tied up in steel that earns nothing while it sits there.

This is where a supplier relationship matters more than price. We lend dealers a cylinder float rather than making them buy one outright, and we move established dealers onto credit terms once we have traded for a while. Ask any supplier you talk to about both. A quote for the cheapest per-cylinder price from someone who wants full cash up front can easily be the more expensive offer.

The paperwork, roughly

Requirements differ by city and change over time, so treat this as a map and not a checklist — your city hall and the local Bureau of Fire Protection office are the authorities, not a blog post.

• Barangay clearance for the location.
• DTI business name registration if you are a sole proprietor, or SEC registration for a corporation.
• Mayor's / business permit from your LGU, with LPG retailing on it.
• BIR registration, books, and official receipts you actually issue.
• Fire safety inspection certificate from the BFP for the storage area.
• Department of Energy requirements for LPG retail, which have tightened in recent years.

A supplier worth dealing with will walk you through this rather than shrug. One who tells you not to bother is telling you something about how they treat safety generally.

Storage is where most applications fail

You need somewhere dry and genuinely ventilated, at or above ground level, away from drains, stairwells and anything that sparks. LPG is heavier than air, so a leak in an enclosed low space pools instead of dispersing — which is why a storeroom under the stairs is not an option however convenient it looks.

In practice, you want:

• cylinders upright, always, including the empties;
• empties and fulls stored separately so nobody loads the wrong ones;
• a cross-ventilated area, open walls or high and low vents;
• no electrical sockets, switches or fuse boxes at floor level nearby;
• an ABC dry chemical extinguisher, within reach but not inside the store;
• a clear route out that does not pass the cylinders.

Risks nobody mentions in the sales pitch

1. Cylinder shrinkage. Tanks get lost, stolen, or walk off with customers who never come back. Each one is a deposit you may never recover. Record who has which cylinder.
2. Price movement on stock. When the monthly contract price falls, the stock you bought last month is suddenly worth less and your customers know it. Keep stock tight.
3. Liability. You are selling a flammable product to the public. Sell a cylinder with a damaged valve or hand over a perished hose and you own part of what happens next. Check every cylinder before it leaves.
4. The illegal competition. Someone nearby will undercut you by decanting between cylinders or refilling out-of-date tanks. You cannot match their price and you should not try. Compete on being the shop whose gas is safe and whose seal is intact.

If you still want to do it

It is a sound little business, run properly — steady, repeat, cash-generating, and complementary to almost any other retail. The ones that fail nearly always failed on working capital or on storage, both of which are knowable in advance.

We supply dealers across Davao del Norte with wholesale pricing, a cylinder float, scheduled drops and credit terms once we know each other. There is no joining fee and no monthly fee, and anybody who asks you for one is not us.

See the dealer programme and apply →