Compass Money: The Entrepreneur Economy – COVID-19 and the home business boom in the Philippines
Mercato Centrale, once Manila’s bustling night food market, has transitioned online because of the pandemic. (Photo courtesy of Mr. RJ Ledesma)
With the COVID-19 pandemic shutting down restaurants and emptying shopping malls, citizens of the Philippines’ bustling capital Manila have taken it upon themselves to keep alive the exchange of goods and services. Many have become entrepreneurs, and a proliferation of home businesses have opened up the Philippine market to new economic opportunities. The emergence of new business models may serve to indicate sustained trends and shifts in commerce as the Philippine economy evolves with the pandemic.
As the country of more than 110 million people entered strict lockdowns, many primarily service-oriented businesses that relied heavily on foot traffic found themselves in uncharted waters. While the government passed the Bayanihan Act in March, which contained provisions to help small businesses, a number of businesses that could not adapt to new realities had no other choice but to shut down.
This widespread closure of businesses this year, estimated at 26 percent of all businesses in the country, impacted the food industry the most; once-loyal patrons could no longer support their favorite restaurants and brands. Food suppliers and ordinary citizens alike faced a new challenge—how to navigate food distribution amidst a pandemic.
Blood Runs Thicker
Many smaller and established food brands decided to draw from their loyal followings and pivot to a more delivery-centric model. The owners of Carmen’s Best Ice Cream, a beloved homemade ice cream producer, called upon family members to help market and sell their products. “My side of the family is the official distributor in charge of supplying the brand around Quezon City [a city within Metro Manila],” a college student and part-time sales and operations manager for Carmen’s Best who asked to remain anonymous, told the Caravel.
Their family makes up one part of a larger clan responsible for sales within a certain geographical area. A lot of their operations revolve around word-of-mouth, social media, and personal deliveries. “This shows how important family and social-circles are in Philippine society,” they said. “It really provides a picture of how family-oriented Filipinos are.”
Many Filipinos seem to agree. From produce farmers and their relatives to others setting up businesses for the first time, many have relied on family and friends to move inventory, earn income, and maintain livelihoods during the quarantine. Viber and Whatsapp chat groups solely for marketing products are everywhere, and deliveries to customers are often also excuses for social interaction.
However, reliance on social connections has its risks, especially amidst a pandemic. Our contact, who tested positive for the virus a couple months ago, has gone against many challenges following the diagnosis. “This caused a dip in sales,” she remarked, “but more importantly, we lost valuable customers who were more paranoid of the virus.” Now, having recovered from the virus, they remain optimistic. “It’s a challenge I face until now,” she says, “but I’ve been pushing forward nevertheless.”
Carmen’s Best’s business model shift, however, stands in good company with companies across the country. Other businesses, too, have developed new ways to get their products into consumers’ homes. Jamba Juice, a fruit smoothie brand, delivers pre-packaged frozen fruit mixes, which customers can blend themselves. Many ramen chains now offer pre-prepared ramen ingredient packs, with detailed instructions on how to prepare it at home. Many of these offers gain attention from meticulously marketing on social media platforms and often cater to the cravings of the country’s netizens.
Jamba Juice delivers pre-packaged fruit mixes to be blended at home. (Facebook)
Quarantine Sensations
Other Filipinos sought to recreate their favorite flavors and dishes in their homes, and found economic opportunities in the process. “I love Spanish food, and I missed eating at my favorite Spanish restaurants,” Nico Anonas, another college student, informed The Caravel. “I started cooking and selling paella to my family and friends, and it just took off from there.”
The result was Paella de Pio, now a successful brand selling the beloved rice dish with thousands of followers on Instagram. “I am really humbled and appreciative of all the support I’ve been getting,” Nico says. His paella has elicited celebrity endorsements, and was even featured on national TV. “Strangers have even approached me offering to invest in my brand,” he says. “I was overwhelmed.”
Paella de Pio, which started off as a fundraising effort for less fortunate cancer patients, sought to distinguish itself from the competition. Noting that good paella, usually only eaten during celebrations, has a hefty price tag, Nico aimed to make it more accessible to a broader market through sourcing quality ingredients for cheaper prices. Drawing from customer feedback, Nico also tries to experiment with his dishes, often topping his paellas with wagyu beef and other non-traditional ingredients.
Nico, pictured with one of Paella de Pio’s signature dishes. (Photo courtesy of Mr. Nico Anonas)
While Paella de Pio stands as a notable outlier in terms of success, it still embodies a wider trend seen throughout the metropolis. From sushi bakes to purple yam bread to Chinese dim sum, quarantine has led many Filipinos to lean on acquired cooking skills and other talents to earn some income to get by.
A New Era for (E-)Commerce?
Despite the variations in business models and selling propositions, one thing remains clear: the rapid evolution of commerce due to the pressures of the COVID-19 environment. “The silver lining in all this,” entrepreneur RJ Ledesma tells the Caravel, “is that many learned how to pivot their businesses to adapt, especially to the digital sphere. COVID-19 has really accelerated the digital transformation of the economy.” Despite acknowledging that many people used to distrust digital finance platforms, Mr. Ledesma maintains that “In this crisis, and with up-and-coming digital platforms like G-Cash (an e-wallet company) and Shopify (an online selling platform), people have no choice.” The change in spirits evidences in government data that shows a 6.6 percent growth in the communications sector since the start of quarantine, indicative of the increased demand for internet access.
Mr. Ledesma has experienced the stresses of the pandemic as well. As the founder and creative director of Mercato Centrale, one of Manila’s iconic night food markets (pictured above), he led the company’s pivot to a more digital space. He saw the pandemic as an opportunity to reinvigorate the company’s ethos. “The essence of our business is really incubating small home businesses and helping them grow,” Mr. Ledesma says. “We wanted to provide our sellers the different means to adapt and succeed in this new environment.”
To achieve this, Mr. Ledesma and his team developed an online delivery platform for the company’s many clients and consumers. “We really wanted a one-stop-shop space to connect our clients with their consumers,” he says. He has also partnered with other selling platforms and convenience stores to bring clients’ products to a wider market. “We were lucky to be able to leverage our strong brand equity,” he adds. Mercato Centrale’s reputation has given them a strong following, and has helped many small businesses thrive despite the circumstances.
While Mr. Ledesma thinks the peak of the COVID-induced home business boom has passed, he believes that these small businesses remain important to the Philippine economy in the long run. “It’s really just a matter of hand-holding them to allow growth until they are able to become part of the formal economy,” he says. “If you can get [small businesses] over the initial hurdle of paperwork and bureaucracy, they will not be discouraged and will be able to contribute in the longer-term.”
Despite rising unemployment and poverty in the pandemic-stricken Philippines, home businesses and small-scale endeavors provide hope. The democratization of commerce, brought about by digital platforms and other services, provides opportunity for the bold who pursue it. “It’s a matter of passion and talent, really,” Mr. Ledesma concludes. “If you have a unique selling proposition and marketing strategy, and if you can leverage social media and e-payment properly… you will be able to succeed in this new environment.”