Survive, Adapt, and Evolve! The E-COMMERCE Edition - Third Pillar

How do you run a business without ever shaking hands? How do you build solid relationships without ever meeting in person? The post-pandemic world limits your contact with your employees, your partners, and, most importantly, your customers. Whether it’s handling your product, interacting with your customers, or even simple payment, “contactless” is the name of the game. For both safety and peace-of-mind, businesses have to minimize or outright eliminate physical contact when it comes to COVID-19.

Enter, E-Commerce.

On May 22, Third Pillar invited notable figures from around the industry to share their thoughts and insights into the various aspects of e-commerce. Moderated by Quintin Pastrana of ANC’s On the Money and EntrepLab, our guests spent the hour discussing the e-commerce landscape, and here are some of the things they had to say.

• Petrus Carbonell of Lazada Philippines emphasized that trust was the most important aspect for customers, and in line with that, it’s paramount you keep channels open 24/7 to assist your customers with any concerns.

• James Bradford of myWorld International highlighted that the circumstances brought about by COVID-19 is going to fast-track the adoption of online tools and e-commerce platforms, and companies are beginning to realize they need these tools to stay ahead.

• Mark De Joya of Max’s Group of Companies shared the company’s insights that the key to making successful digital transformation was effectively translating the old analog habits. These analog habits built customer value in the first place, and if your customers felt these through your online channels, they’re more likely to stay on with your product or service.

Catch the rest of what they had to say here:

For a transcript of the forum, continue reading below.

Transcript Summary

1. You all represent different segments in different stages of the e-commerce ecosystem. I’d like to get your input on how you still had to make adjustments in this digitization imperative. How has this changed your business model?

• Petrus mentioned that during these times, e-commerce has become very exciting to be involved in now due to the growth of the industry due to the ECQ. Lazada Philippines was currently focusing on essentials at that time and worked on innovations to be able to get their customers’ hands on products and to help out their sellers.

• Mark talks about how the situation has been a very auxiliary thing for those in the food industry. Having a large scale of restaurants, the mindset began to shift from managing restaurants towards the refocusing to food. He also emphasized that with this new environment, it really is a trying time and that this has been an opportunity for Max’s Group to reinvent who they are.

2. James, what’s interesting about your business model is that you’re really there to enable small and medium enterprises, especially when taking into account that over 99% of Philippine-registered enterprises are MSMEs. While they still represent the majority and a good source of employment, they’re only 1/3rd of GDP and a lot of that has to do with adaptability to the digital world in terms of reaching out to a larger market. How does your firm help with empowering that and where are you in terms of helping them adjust to this brave, new world?

• James talks about how this situation has become an exciting time for myWorld due to their experience in the digital world and how it is already a part of their company’s DNA. myWorld has fast-tracked their pre-COVID-19 projects and have introduced a new delivery facility to be able to easily support MSMEs that are looking to make the transition to the digital world.

3. As a household name, how have you been able to adjust in managing your expectations and to help sellers through their supply chain issues?

• Petrus discusses the numerous adjustments that have been made on Lazada Philippines’ end. Logistics-wise, coordination between barangays and LGUs have helped make life easier for everyone. On the tech side, Lazada has taken a look at their tech, what they are currently doing, and what categories of products are available for sale. When it comes to the supply chain, they are seeing how many local businesses, especially the MSMEs, are starting to get a hand of getting to go to online selling. They’ve also created more campaigns to give sellers more visibility so that these sellers would have better revenues and have a greater reach towards customers. Overall, Petrus says that they are trying their best to enable more sellers and to get them back online.

• Quintin follows with some points: Has there been a backlog on international orders due to ECQ and lockdown on their side? How have you overcome that and manage the expectations of your customers?

• Petrus discusses how the Lazada Philippines app now indicates the change in lead time to adjust customer expectations. Everyday, they are trying to evolve and improve their service. In terms of their sellers and their inventories, they are still seeing a lot of businesses still having their inventories in their homes. To combat this, they have started a program called Bounce Back wherein they get everyone to go back online by trying to offer different services to their sellers. They have also contacted third parties to help both old and new sellers out via loans and other services.

4. Mark, we mentioned earlier the asset-heavy structure that serves really well to a consuming economy wherein 70% of the Philippine GDP is from personal consumption. However, in a lockdown and strict social distancing environment, how have you had to take this setback and reposition it where you’re still serving your customers?

• Mark emphasizes the continuous usage of the word service as it encapsulates the shift from a commercial responsibility to the human aspect of what the food industry offers. He goes on to talk about how the frontliners that man the boundaries happen to be located near several of their own branches and how it became an inspiration to serve and nourish even without and commercial impression. In their first week, Max’s Group had served about 15,000 meals across the frontliners and mentioned how this was a great opportunity to help others and to highlight that food is meant to nourish, whether or not there is a commercial interest. Max’s Group had paused their operations during the first couple of weeks during ECQ to take 48 hours to build and launch their very first digital pledging portals where customers could donate and about 53,000 meals were given out to hospital frontliners.

• Mark goes on to discuss that there are many things that a food brand can service given the existing infrastructure. Vertical integration was determined to be an interesting thing for a food company to space and scope. It was also mentioned that people will always look for food but in times of crisis, the sources of food will change. To address this, Max’s Group has expanded their digital front ends to be able to serve ready-to-cook frozen goods that customers can purchase to stock up their homes. It was highlighted that chain restaurants will no longer be the only competitors of a restaurant but also supermarkets due to the expansion of the product lines. Mark then emphasizes that it isn’t about being a restaurant, it’s about being a food company.

• Quintin follows with another question: How have your commissaries been digitized and equipped to this new product line and offerings?

• Marks answers by emphasizing Max’s Group’s care for food quality. He mentions how this concern goes further than production capacity and how it focuses on inventory management, business analytics, and responsiveness to local demand areas. A commissary is not just a production line, it is the heart of a business and if one is thinking of digital transformation, it is not just about the front ends, it’s how the commissary links to demand and analytics.

5. How has myWorld adjusted their business model for MSMEs wherein they are more incentivized to take advantage of the tools and platform that myWorld can offer?

• James mentions that there has been a massive learning curve wherein sellers are experiencing difficulties on what the next step would be coming into COVID-19. He highlights that one of myWorld’s missions is to create a shopping ecosystem wherein on-board merchants can enable themselves to use tools that aren’t difficult to grasp, especially with myWorld moving their training and knowledge using online channels. This has made the transition easier because myWorld is not presenting something challenging to use while simultaneously enabling consumers with the cashback world card to have better transacting experiences with these MSMEs.

6. At the end of the day, Lazada is a virtual platform. The tangibility of goods ends up requiring a leap of faith from the customer. How do you make vendors become more accountable, especially when it comes to counterfeits and refunds?

• Petrus emphasizes that when it comes to online transactions, trust is the most important thing for customers. He mentions that Lazada has multiple channels that are open to customers such as bots that can chat with customers 24/7 and customer care that is ready to answer any concerns. Petrus goes on to mention the numerous policies that aim to protect both sellers and customers which ensures the top-notch quality of experience for customers while simultaneously protecting legitimate sellers. Lazada Philippines also has a business risk team and a platform governance team wherein both help to help make examples and to sweep the platform everyday by taking a look at products and pricing to find points for improvement. Customers are also protected via free returns that can be found in-app.

7. How would you build MSME confidence when it comes to getting the first suite of myWorld tools on their dashboard, ready for use, so that their product goes online seamlessly?

• James discusses how MSMEs have become curious about how these tools work and how they would benefit their business. He mentions that during the first few conversations, the focus would be on what the specifics of the platform are, how it works, and how it can improve relations with the consumers via cashworld card. myWorld also offers marketing support and resources, allowing them to step-in and to play the role of support and assist to MSMEs.

8. How are you taking care of your “suki” (regular customers)? You’ve got a lot of diners who’ve done this first second and third generation. A lot of people you want to keep returning to your restaurants. What are some programs you’ve done to keep them?

• Mark emphasized that as people shift towards digital, they tend to “throw away the relics of the past”. These are the analog habits and rituals that built their consumer value in the first place. As Max’s Group began the online shift of its interactions with customers, whether by itself or through its partners, the priority became translating the old analog ways into that digital interaction. For example, residential areas see the highest demand, so there was no way Max was going to let the interaction exist purely on a virtual storefront. Two initiatives were immediately forwarded, the first being a “digital concierge”. Using data analytics, they identified their most valuable customers and developed a pool of talent to replicate the experience of going to a brick and mortar store. Small things like basic kumustahan (greeting), remembering what they liked, remembering what they ordered last time, all lead to a more human and personal interaction online. Another point Mark made was that brands had to acknowledge that national marketing was dead, and in response, Max’s Group was focusing on more personal channels.

9. What are you seeing now in terms of trends? What are people buying more of now? What has the market been telling you based on the analytics and how have you been adjusting?

• Petrus began by highlighting the fact that they were listening to the customers intensely. Previously, their relationship with customers was purely transactional, but they’ve noticed that it’s slowly heading towards a lifestyle relationship. They have programs like LazTalent and QuaranTV that are seeing increased traffic. Livestream technologies and trends are transitioning very well. In terms of products, essential items were obviously in high demand, food especially. Listening to consumers, Lazada opened food and “delivered by seller” options. Restaurants and communities can now use the app to plug-in and be part of the ecosystems. Lazada has actually been observing these trends before the ECQ, but quarantined has accelerated them like never before.

10. With a customer base on the B2B side, thinking of design-thinking and empathy, how do you get your customers to calibrate the kind of tools for the stage they’re in?

• James mentioned that the underlying theme was analytics. When they introduce the platform, they go through the interactions between the card-holders and the merchants as well as an overview of the ecosystem. For merchants in particular however, myWorld highlights the various ways they can interact with their loyalty-members in a far more efficient way and how they can bring more relevant content to these members. As they go over the tools, they go through the process of bringing in consumers, how they reduce the marketing noise, and how they can focus these factors into bringing in relevant people into the business.

• Quintin follows with some points: Looking at the tools you’ve invested in, you have that platform, and you’ve ironed out the kinks. Now you’re sharing that with first-time merchants who want to get more sophisticated in the digital space.

• James agreed and discussed the rapid growth of myWorld’s ecosystems while attributing it to businesses looking for change.

11. There’s nothing like the in-house dining experience you’ve created in restaurants, but these restaurants have obviously had capital expenses. How have you been able to manage overheads? That’s a critical piece of advice for entrepreneurs, what advice would you give them?

• Mark has discussed this with different people in the industry, and he specifies that overhead is indeed one of the biggest cost-components of a restaurant. He continues that a lot of brands who use models built on sheer volume, like fast-foods. Looking at the casual dining space however, many people see space as baggage. Max’s Group sees it differently. In today’s pandemic, the company doesn’t believe that social distancing is simply going to vanish once the quarantine relaxes. It instead looks for ways to use excess space as an asset. Mark himself sees that excess space is a guarantee of social distance and therefore safety. He calls back to what James said earlier on empathy and imagination, and that with a little bit of brain power, they can transform that “baggage” into assets.

• If you look at the Max’s Group of the future, you’re pivoting this as a more intimate and secure environment to make customers feel safe. You’re creating an environment where they can dine in peace, and that is a good selling point. The question though for entrepreneurs, how do you do that and keep prices just as reasonable and sustainable? How does the digital space off-set that loss. How have you worked out that calculus?

• Mark affirms that it’s definitely calculus and not simple addition. One key point looking at productivity-of-space is that there are an incredible amount of potential partner categories that you can invite into your space. Fundamentally, when people go out to dine, it’s not just food, but they’re buying the ambiance and experience. Many of these entrepreneurs have the space and mechanisms, and Mark has seen some of these become community hubs for services naturally attached to their products. He brings up a steak-and-wine restaurant that switched their wine to flowers to provide romantic dinners for their customers. He further stressed that if you need to break out of your pre-defined product category, so be it. There’s so much that goes around food if you know who your allies are, and this helps the process.

12. When we talk about the vendors, how do businesses get into your platforms digitally? Take us through the process. How do you get them comfortable, what kind of tools do you give them on day one, and how do you keep them in the system?

• James begins with the fact the on-boarding process for merchants is simple. Most of the process happens behind-the-scenes. Once they’re on board, there are numerous knowledge spaces online and support from in-country to help new businesses through the learning curve. With the move into the virtual world, business owners are looking at products and services such as analytics, communication tools more intently. Previously, these things weren’t such a priority in a brick and mortar store. It’s a lot of time and effort. Now, the paradigm has shifted, MSE owners are realizing they have to commit to tools like these to show success. The tools myWorld has empowers merchants to connect with other merchants as well. Now with COVID-19, people are realizing the power of these tools, so introducing them to this has become easy.

• Quintin remarks that the assurance is that the suite of tools is tailored to where these MSEs are at the moment and where they want to be. These are calibrated to be affordable and to scale with the business.

• James replies that there are definitely upgrades for the platform on the way.

• Quintin brings the question back to Petrus. What are some of the advantages to getting on board with the Lazada platform?

• Petrus stresses just how easy it is to go online on Lazada. Within 5 minutes, someone already has an account. It’s fast. It’s easy. It’s free. A simple google search will give you everything you need to get it online. As long as you have your government IDs, and business documents if you’re a company, you’re good to go in no time. He highlights the options on Lazada and other platforms. Everything is available for all the buyers out there. For new sellers, Lazada has a program called Incubation. If you upload a product, someone will call you and there are automated emails and tutorials. There’s even Lazada University which covers a wide-range of learning videos. These lessons range from how to fulfill to how to take a picture if you don’t have a studio at home. All you need to know is how to use a computer. Petrus remarks that the message is to treat this like opening a new sales channel, and that the investments pay off in skills and learning.

13. How have your payment platforms evolved to be more secure? How have they become more convenient as well?

• Mark begins by citing expert opinions that the Philippines is most likely the least mature country in Southeast Asia when it comes to e-payments and online wallets. It’s really been the current situation that’s driven the sudden development in this category, the need for contactless payment. Max’s Group was very lucky to have different online platforms integrated into their systems, and this has been much safer when it comes to cash-handling. Mark mentions that there’s discontent with the fees associated with these online payment platforms, but the safety and convenience are well worth the cost.

• Petrus mentions that the theme is to offer more options for consumers and buyers. On the Lazada wallet alone, the company is constantly trying to add new partners to the platform. He highlights that COD is still the biggest form of payment right now, but he’s confident that people will begin to switch due to the demand for physical distancing, the ease of transaction, and the ease of refunds. The convenience should help consumers transition into these cashless transactions. With recent investments, they’ve been able to give more and more options to consumers and to refine systems to be safer and more convenient.

• James starts with the fact that the payment platform is primarily on a merchant-to-merchant basis, so they can pick what’s best. From a holistic view, myWorld is in a fantastic space in Southeast Asia, especially in the Philippines. E-cash and e-wallets are a huge step up and an integral part of the market moving forward. As the platforms are developed with these new conditions, the e-cash and e-wallet situation will improve and they’ll be looking for new ways on-boarding their own gateways.

• Quintin mentions that the environment not only has to, but has wanted to develop digitally.