Social commerce: A lifeline for Filipinos amid crises

By Miguel Hanz L. Antivola

SOCIAL COMMERCE, which involves leveraging social connections for e-commerce, has emerged as a viable income source for individuals impacted by crises, according to experts.

“It was something that was growing quite rapidly in other parts of the globe — in China, Indonesia, and India,” said Brian P. Cu, chief executive officer and co-founder of hyperlocal e-grocery platform SariSuki, in an interview with BusinessWorld.

“Why not create a platform that can provide broader access?” he added, addressing current issues related to community access to mobility, basic needs, and income.

In April 2021, when SariSuki was launched, the national statistics agency reported a record-high unemployment rate of 17.7%, corresponding to 7.3 million unemployed Filipinos in the labor force. This starkly demonstrated the repercussions of the economic shutdown caused by the coronavirus pandemic on the labor market in the Philippines.

Farmers and individuals residing in rural areas remained two of the poorest sectors in terms of poverty incidence in 2021, with 30% and 25.7%, respectively.

According to the Asian Development Bank, digital transformation and remote working will transform business processes and jobs in response to lockdown measures caused by the pandemic, but they will also exacerbate the skills mismatch in the labor market.

SariSuki said that it aims to address these challenges by rethinking the grocery platform in the country, providing a social commerce model that helps partners in earning extra income while working from home.

The startup initially drew inspiration from pasabuy and sell groups online, involving Mr. Cu’s wife, who began her own community selling venture in January 2021. In this model, she consolidated orders through social media platforms and arranged product deliveries to her customers.

“It started growing bit by bit with friends and family, then increased to referrals from those customers,” Mr. Cu said.

“We saw that there was an opportunity… Through social selling, we can sort of take out the middlemen,” said Manuel “Bam” Florencio Aurelio Mejia IV, chief commercial officer and co-founder of SariSuki.

“I know it’s a lot, but we were able to take the margins out to give a living to our community sellers, and also provide good quality and lower price items to their customers,” he added.

PUTTING TRUTHS TOGETHER
When creating a business idea, it is crucial to first have a firm grasp of realities rather than constantly seeking what has not been done before, Mr. Mejia said.

“I would call it a sound business idea… I wouldn’t say that’s an innovation, but that’s more on putting truths together and making a bigger sum out of those two parts.”

“It’s just hitting on the common threads of a human being,” he added. “A human being wants to earn, and other consumers don’t trust e-commerce platforms.”

“You go to Alfonso, Cavite… It’s a rough road, we have a seller there that goes around selling rice. There are similarities, but it’s a different setting.”

While the roots of SariSuki came about personally through Mr. Cu’s wife, this eventually led to collating the issues and needs of the people into one solid business idea.

“The personal and the social aspect of the business can never be separated. It’s always one, and one flows from the other,” Mr. Mejia said on personal and community aspects coming together in business.

PREPAREDNESS
However, more than the flows, the pandemic lockdown also caused ebbs for startups like SariSuki as mobility became limited, work-from-home setups had to be accepted early on, and preparedness needed to be equipped at all times.

“Those senses need to be heightened. You need to be extra prepared. Before you had a plan B, now you have to have a plan C and plan D, so there’s a lot more work,” Mr. Cu noted.

Preparedness also comes with worry for businesses born during a crisis. “Are you just a pandemic business? What happens when mobility gets released, gets opened up again?” he said.

Revisiting objectives and addressing them in every forward step can help a business stay afloat amid unexpected circumstances and inevitable difficulties, he added.

GAINING TRUST FROM STAKEHOLDERS
A bulk of the challenges startups like SariSuki face is building the foundation and trust for stakeholders to participate in their model.

“It’s not easy. Of course, when you’re a startup, people don’t trust that you’ll be there for the long term, especially farmers. Farmers have worked with traders for decades, and they know the person’s always there,” Mr. Cu said.

Being involved in the agriculture industry, farmers and prices of goods are observed to be volatile to abuse by retailers and traders, he noted.

Ideally, Republic Act No. 758, or the Price Act of 1992, gives the Trade department the authority to set price ceilings for basic goods via a table of suggested retail prices (SRPs) prescribing to retailers a maximum selling price for individual products frequently purchased by ordinary consumers, also capping prices during emergencies.

“But the farmers are also risk-averse. They don’t want to just get rid of that relationship even though [it is] — I wouldn’t say abusive, but not in their favor,” Mr. Cu said.

“It’s not that just because you’re there and you’ll offer money, they’ll jump and start selling to you.”

Mr. Cu also highlighted the disparity between the industry and that of fast-moving consumer goods (FMCG), where e-commerce is considered a prevailing trend.

“So it takes time. Sometimes capital can help you leapfrog and shorten time, but not always. It’s still a lot of hardwork, a lot of on-the-ground persistence.”

Building a sense of kinship with stakeholders and earning their trust over repeated transactions become key actions for businesses aiming to establish themselves.

“It’s a delicate balance, but it’s not unsolvable. It’s a balance that can be struck, achieved, but it takes a lot of hardwork. There’s no secret.”

“There’s no magic sauce. It’s incremental compounding every single day, every single week. You’re there with them. They know who you are. You build a relationship. Para kang nanliligaw (It’s like you’re courting someone).”

TECHNOLOGY AND USER ENGAGEMENT
Similar to courtship, there are certain aspects to people being wooed that can be taken for granted or overestimated. In SariSuki’s case, it is the technology that binds its processes.

“A lot of the communities that we work with — simply pinning their address on a map, they don’t know how,” Mr. Cu said. “So we had to make it as simple as possible.”

Understanding the user demographic and having a good product manager become important strategies for businesses to leverage technology while also making it easy for stakeholders to adopt.

However, it can boil down to the people themselves who are shy to reach out to more customers for growth as well. This was also the case for SariSuki where community leaders find it difficult to gear the tech itself.

“We’ve had community leaders who have grown their business multiple fold. They’ll start with P10,000-20,000 a month in sales and grow that to P500,000 in six months because they’re able to leverage social media and connections they have in their little barangay,” Mr. Cu said.

“But we also supplement that with lessons. So we’ll give them social media marketing lessons, financial literacy lessons in order to strengthen their personal toolkit to improve the way they run a business,” he added.

If fully leveraged by 2030, digital technologies could create up to P5 trillion in economic value, equivalent to about 27% of the country’s gross domestic product in 2020, according to a study conducted by global tech advisory firm Access Partnership and commissioned by Google.

This requires the Philippines to enhance digital skills training and education, accelerate digital adoption and innovation, and promote digital trade opportunities.

“I think that’s the beauty of it. That’s the challenge. It’s a hard thing to do — to have tech adoption be done by a startup,” Mr. Mejia said.

“There’s desire. You just need to tap that desire,” he added. “We try to make it fun for them to sell and see what they earn. I think that’s what we want to really focus on.”

SUSTAINABILITY
The true north for startups is profitability without heavy reliance on funding. “It’s a lot of internal, inward-looking questions on how you can improve,” Mr. Cu said.

He also emphasized the importance of providing a valuable product or service to customers and taking care of stakeholders. However, he also noted that startups today have fewer options and flexibility compared to the previous decade.

The Philippines has been identified as the most challenging country to launch a startup, according to a study conducted by B2B performance marketing conglomerate Adventrum.

“It’s very turbulent. It’s not stable. It’s not for everyone,” Mr. Cu said regarding aspiring entrepreneurs. “It’s good to feel scared because if you’re scared, it means you care.”

Strengthening community ties becomes an evergreen priority for the business, both internally and externally.

“Have good partners that you can talk to. Have good mentors that you can consult with,” Mr. Cu said. “A lot of it is dealing with your own emotions and finding people you can surround yourself with that can complement what you’re strong at.”

“We have to manage our energy and our team’s energy, so we’re running at a good fast pace but not a crazy pace where everyone is tied down,” Mr. Mejia said.