By Adam J. Ang
If Baguio’s Good Shepherd nuns can adjust seamlessly to the pandemic by selling online, any business can.
The Good Shepherd setup is as traditional and artisanal as it gets —jams and bread pepared by novices and supervised by nuns, working within easy reach of some of the country’s most productive highland farms.
Over the years, the picturesque hilltop convent with the viewing deck and the signature ube jam has become a destination in itself, though in recent times its products have also found retail distributors outside of Baguio. Its jars of nostalgic Baguio goodness have also attracted the ultimate compliment — imitators and counterfeiters.
The shop is, strictly speaking, a sideline for the Religious of the Good Shepherd Catholic congregation, whose day job is educating indigenous youth in the Cordillera region.
But as with many sidelines, enterprising sellers have their pick nowadays of online platforms. The sisters, whose products carry the convent’s “Mountain Maid Training Center” branding, went with Facebook.
The social network’s Facebook Shops offering is geared at helping small businesses continue selling during the pandemic. Facebook-owned Instagram also introduced a similar feature.
“We hope these tools can relieve some of the pressure small businesses are facing right now and help businesses of all sizes prepare for the future,” Facebook said in May.
Good Shepherd is no isolated case. The number of brands that joined Lazada’s platform during the quarantine doubled over the 2019 total. Newcomers included listed food manufacturer Universal Robina Corp. and NutriAsia, Inc., a leading condiment producer.
Lazada, a unit of Alibaba Group, said activity on its platform spikes at lunchtime, suggesting that customers peruse the platform’s product lineup during work breaks.
“The current situation gives businesses, especially MSMEs (micro, small, and medium enterprises), more awareness of e-commerce and how they can take their businesses online, expanding their goods and services to a wider audience,” Lazada said.
Between March and May, online users spent an average of 15 minutes per visit on the platform, well above the previous activity levels pre-quarantine. Transactions on Lazada rose over 9%.
The impetus was a life-changing pandemic that locked down Luzon in mid-March and might prove to be a turning point in getting businesses and buyers hooked on e-commerce.
At the height of the lockdown in April, the total value of electronic payments transactions hit P53 billion, or an average of P6,130 per transaction, according to Philippine Payments Management, Inc., an industry partner of the Bangko Sentral ng Pilipinas.
On Lazada, customers are also finding entertainment in the form of LazLive, a so-called shopper-tainment feature, which draws around 70,000 views per show.
“Shopping online is no longer just a buy-and-sell transaction. The customer journey is omnichannel, so it is important to drive brand engagement and touchpoints with customers, both on online and offline channels,” it said.
One key online battleground during the lockdown was consumer essentials, which might have migrated decisively to online even beyond the emergency, with shoppers remaining wary of safety issues associated with shopping on site.
At least four in 10 digital consumers in Southeast Asia were found to have spent more on packaged and fresh groceries online this year, with at least 80% of them indicating their intention to continue purchasing groceries online in the future, according to Facebook, citing a study by Bain & Co.
In March, ride-hailing company Grab launched GrabMart in the Philippines, partnering with more than 150 stores, from big supermarkets to small retailers, with a delivery area of 17 cities in and around Metro Manila.
Its partners include convenience store chains Lawson and Family Mart, supermarket brands Robinsons Supermarket and Ultramega, fresh produce and meat sellers The Meat Market and Zagana, drugstore chains Family Doc and Generika, and telecom brands Smart and PLDT Home.
“By tapping existing technologies, our extensive delivery network, and operational footprint, we were able to quickly scale GrabMart in Metro Manila to help more Filipinos purchase their essential needs,” EJ dela Vega, Philippine head of GrabMart and GrabFood, said.
Grab’s grocery delivery operation, which is still in the beta stage, is seeking to expand its universe of customers beyond the core ride-hailing business.
GrabMart is currently available in over 50 cities across Southeast Asia.
THE PAIN OF DIGITAL TRANSFORMATION
The process of transforming to online sales is far from painless. It is also slow, and not everyone may have developed a sense of urgency to migrate despite the pandemic.
In a survey of small-business decision-makers across the region, printer company Epson noted that small businesses have “barely” started their digital transformation with the adoption of e-commerce “generally low across markets.”
The cost of new tools and technology for digitalization were cited as the most common hurdles, followed by lack of knowledge and skills.
In the Philippines, replacing old systems and processes remains a hurdle for small and medium enterprises (SME), particularly within the food and beverage companies and medium-sized manufacturers.
“Although SMEs have generally begun to adopt digital technology, more work is needed to help and encourage these companies… beyond customer-facing areas of the business,” Epson Philippines General Manager for Marketing Eduardo Bonoan said.
Global market research firm Euromonitor International said, however, that high levels of mobile e-commerce usage primes the channel for eventual expansion.
“Retailers increasingly adopted multi-channel strategies to take advantage of the growing consumer demand for the convenience provided by e-commerce, and particularly mobile e-commerce,” it said in its annual Top 100 Retailers in Asia report.
Bricks-and-mortar retailers are looking for ways to adopt online platforms, and that often requires a rethink of how they do business, a process made easier when platforms make the transition seamless.
Lazada has found that sellers with established online businesses typically “revisit their priorities in the interest of capturing new digital marketplace opportunities and (gaining) new consumer segments.”
“Through our platform, we want to ensure that their experience is easy and seamless, arming them with the tools and training that they need to start and grow their e-commerce business.”
Grab is also promising the same smooth transition to online for merchant partners. It is currently developing a self-serve platform to provide small businesses access to sales analytics, advertising tools, and more. “We will announce more of this in the coming days,” Mr. Dela Vega said.
IN-STORE SALES: NOT DEAD YET, BUT CHALLENGED
Businesses restarting with the easing of lockdown measures will have to deal with pent-up demand for physical shopping, according to Colliers International Philippines, citing the findings of a March survey.
But foot traffic will remain low for the time being as social distancing measures still apply and as the world waits for a vaccine.
The lingering fear of public places outlines the challenge to traditional retailers: Lazada is seeing an upward trend in online shopping for essential goods, which it attributed to customers seeking to avoid “unnecessary” physical contact.
“The pandemic accelerated the shift of purchasing essential goods towards e-commerce and we believe this trend will continue on as people discover the convenience and quality of goods they purchase,” Grab’s Mr. Dela Vega said.
Retailers with a strong digital presence prior to the pandemic are “likely to fare better” as customers already know them, Euromonitor found, which dovetails with a Facebook finding that online consumers prefer established online brands because their supply chains are presumably more reliable and robust.
Paul A. Santos, who chairs the Philippine Retailers Association, said e-commerce will remain complementary to in-store selling, though it will likely be dragged in unexpected directions with e-commerce serving as a “catalyst” in dictating future business priorities.
He noted that the Philippines retains a large segment of lower-income consumers, who prefer physical stores and may not have the capacity to make online payments.
“Retail will bounce back in all of its forms, but I think what it will look like in the future is different.”