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Coronavirus pummels technology-illiterate Filipino entrepreneurs

By Angelica Y. Yang

THIRTY-THREE-YEAR-OLD Liezel S. Silva, who sells phone cases and other mobile gadgets inside the Greenhills Shopping Center in San Juan City near the Philippine capital, has yet to find a way to sell her wares online amid a coronavirus pandemic.

Quite ironic given her business line. As a result, her sales in December — normally a month when entrepreneurs experience skyrocketing sales — plunged by 40% from a year earlier. She doesn’t expect her small business to recover soon.

BW Bullseye 2020-focus“Sales were anemic compared with the previous year,” Ms. Silva, who’s been selling digital accessories for two decades, said in a mobile phone message. “We were really badly affected by the pandemic.”

Her case highlights the need for small business owners to adapt to the new normal by having an online presence, according to Robert Dan J. Roces, chief economist at Security Bank Corp.

“Small business owners must find new ways to get their products to the customers, and the scale of production usually isn’t huge,” he said in an e-mail.

Pauline D. Lagdameo, 52, started selling cakes online a year ago, and she was ready when the COVID-19 virus came.

Her online baking business Chef P’s managed to increase profit during the pandemic even if she had fewer customers, she said in a text message. “I had fewer orders but higher profit because the cakes I sold were more expensive,” she pointed out.

In 2019, she sold small choco stirrers for as cheap as P60 apiece, so more people ordered. During the pandemic, she mainly sold whole cakes such as Basque Burnt Cheesecake for as much as P1,500.

“Some entrepreneurs adapted easily to the new normal of doing business by having an online presence, making them more accessible to customers who are hesitant to go out,” Mr. Roces said.

Some merchants of online shopping company Lazada Group in the Philippines more than doubled their sales during the pandemic even if they started only this year, Chief Executive Officer Raymond N. Alimurung said.

Rival Shopee Pte Ltd. sold 12 million items in less than 30 minutes during its Dec. 12 sale, with as many as a million products bought within a minute, according to ABS-CBN News.

John Patrick Cua, managing director at Nielsen Retail Intelligence, had predicted higher sales of baking products and the usual Christmas items such as ham, all-purpose cream, pasta and canned goods.

Fitch Solutions had projected an 8% contraction in Philippine household spending for 2020 because of the pandemic, worse than the 2.9% during the 2008-2009 global financial crisis.

Household spending, which accounts for about 70% of economic output, would probably grow by 5.7% this year, it said in an October report.

Household spending shrank by 9.3 % year on year in the third quarter, slower than 15.3% a quarter earlier, according to the local statistics agency. Household spending and gross domestic product data are due for release this month.

Some companies though probably don’t need to boost their online presence to increase sales — canned good makers, for example.

Sales at Mega Global Corp., known for its brand of canned sardines and tuna, likely fell by 5% last quarter from a year earlier, though revenue from its canned fruits and vegetables surged by 43%, according to Chief Operating Officer Michelle Tiu Lim-Chan.

“Since there are still restrictions in place, in-home celebrations during the holidays were highly encouraged, which gave us better sales growth for our Mega Prime product line,” she said in an e-mailed reply to questions.

FILIPINO RESILIENCE
Ms. Chan said Mega was one of a few companies that benefited from the global health crisis as people locked at home consumed more canned foods. Mega canned products were also a prominent feature of government relief goods.

The seasonally adjusted consumer price index for all items climbed by 0.7% in December from a month earlier, slower than 0.9% in November, according to the Philippine Statistics Authority.

Slower month-on-month increments were observed in the seasonally adjusted index for food and nonalcoholic beverages at 1.4% from 2% in November; 1% for alcoholic beverages and tobacco from 2.3%; and 0.1% for clothing and footwear from 0.2%, it added.

During the health crisis, Filipino resilience has been in full display, said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc.

“I see this in times of storms and other natural disasters,” he said in an e-mail. “When times are dire and the pocket is shrinking, Filipinos are still smiling and accepting of their lot and respond to the challenging situation at hand.”

While it’s difficult to generalize resilience when it comes to micro, small and medium enterprises, “it can be said that the Filipino spirit is there and they will respond for the right reasons,” Mr. Asuncion said.

The economist also noted how dollars sent home by migrant Filipino workers could help small businesses survive during the pandemic, noting that remittances remain vital for a consumption-driven economy like the Philippines.

“We did expect a larger decline in 2020, but it has performed better than-expected,” Mr. Asuncion said.

“Remittance inflows are important for the consumption-driven Philippine economy and with its still robust flows despite the pandemic, I wouldn’t be surprised if small businesses continue to thrive,” he added.

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