TinaPay Online, which delivers neighborhood bakery favorites to communities in Manila, was born during the early days of the enhanced community quarantine (ECQ). It partnered with Grab riders from the neignborhood, and now it’s earning Php 7,000 ($140) on a good day for deliveries alone, as reported by SmartParenting.com.ph.
Likewise, The Community Market was rolled out in cities in Metro Manila at the beginning of the ECQ. It partners with residents from communities to bring well-known food brands closer to resident via truck. It uses Facebook to communicate to consumers, and accept inquiries on availability of products,
Unionbank and Philippine National Bank, on the other hand, rolled out their ‘bank on wheels’ earlier in March to provide banking services such as making balance inquiries, withdrawals, bills payments, fund transfers, as well as opening of accounts to community residents without needing to leave their residential areas.
All these point to a rise in community commerce, a new business model that has emerged as a result of the ECQ. I observed and studied this phenomenon at the onset of the ECQ, when residents in our community were struggling to look for food supply and alcohol, and turned to ‘virtual communities’ in Viber or Facebook to reach out to ‘friends’.
Since then, it has blossomed into a proven business model – from vendors organizing community markets selling food stuff, to online marketplaces that sell all sorts of products to communities. In my interviews with sellers in Facebook Marketplace, they experienced more than 50% increase in sales, and some more than a 100%; and these are not limited to food necessities but also includes other products like gardening, antiques, gadgets, and so on.
So what is a community commerce? Why did it emerge? What makes it successful?
Let’s first define what a community is. It is “a social unit (a group of living things) with commonality such as norms, religion, values, customs, or identity. Communities may share a sense of place situated in a given geographical area (e.g. a country, village, town, or neighborhood) or in virtual space through communication platforms”. Therefore, community commerce is “an exchange of goods, services or something of value, between businesses or entities” within a community, may it be physical community or virtual community.
Why community commerce emerged is explained by the concept of environmental determinism, i.e. the behavior of people is influenced by the environment. The ECQ and the air of crisis from the pandemic is changing consumer behavior. People’s behavior now is primarily influenced by the overarching need to cope with the situation. Psychologists define coping as a set of efforts to manage demands that could exceed one’s resources — financial, physical, mental, emotional, and spiritual resources. With the looming global recession, and the bleak prospect of finding an immediate vaccine, coping behaviors will prevail in the coming years.
With coping as a consumer need emerge five consumer personas:
- Problem solvers: this segment actively plans, tries new things, and finds solutions to existing woes. Examples of products and services that this segment buys are everyday consumables that can be purchased conveniently in the community; they try new apps like digital banking, videoconferencing tool, or online marketplace.
- Emotional expressionists: they let their emotions out as evidenced by the copiousness of angry and complaining posts in social media; they engage in virtual meetups, and look for appeasing activities. Examples of products and services that this segment buys are virtual coaching, self-help webinars, virtual dance parties, and self-care products like essential oils and fitness products.
- Understanding seekers: they try to understand the situation that we are in and seek to learn about it; examples of products and services they buy are online courses, webinars, virtual coaching, documentaries on pandemics, and fitness and health care products.
- Help and support seekers: this segment seeks help and support from others to enable them to cope; examples of products and services they buy are virtual coaching and spiritual advisory, financial advisory and insurance, and errands services and apps.
- Problem avoiders: this segment looks for activities to forget the current problems and they act as if nothing is happening; examples of products and services they buy are hobby products such as those in gardening and fitness, liquor, comfort food, popular coffee brands, and entertainment content.
Since these types of personas share common characteristics, and if a business want to satisfy their needs in the context of ECQ, work-from-home, and social distancing, community commerce becomes a compelling business model.
But will all community commerce models be successful? Drawing from the work of community psychologist Seymour Sarason, for community commerce to work, consumers, seller, and buyers in a community should have the following characteristics:
- Membership: this involves clear boundaries regarding who is in and who is out of the specific community. One example is having clear guidelines and community policies in Facebook group and marketplace, or Viber group.
- Influence: refers to the ability one feels one has to impact the broader community-level and individual-level norms that guide the practices of the community. This involves having flexibility and freedom to share, do business, and engage in community commerce.
- Integration and fulfilment of needs: this refer to feeling connected to a network that holds shared values, that exchanges resources, and meets needs. The community commerce should engender feeling of inclusiveness, and provide ease of transaction, payment, and delivery of products.
- Shared emotional connection: this refers to participation in the celebrations of others, and participation in specified rituals or ceremonies. The buyer or seller in a community commerce should feel that he/she is part of the community’s success. This can be done through regular communication to community commerce members on the impact of meeting community needs.
I observed one grocery chain which launched an app to bring together other grocery outlets, and bring together buyers. However, the buyer experience was poor, with bad feedback on stock availability, and lack of empathy from customer service. Consumers, hence, moved to other community commerce groups that satisfy their needs.
Entrepreneurs and businesses should look at community commerce as a business model to meet today’s consumer needs.
Originally published in Manila Times, May 8, 2020
Reynaldo Lugtu Jr is Co-Founder and CEO of Hungry Workhorse, a digital and culture transformation consulting firm. And has engaged with several companies and organizations on digital transformation and innovation.
He is a digital and culture transformation thought & action leader, a sought-after public speaker, and an accomplished educator, author, business columnist, and innovation coach. And is a business columnist and writer for Manila Times, Manila Bulletin, and Business World.
Ray is the Country Representative of the Institute of Change and Transformation Professionals Asia (ICTPA). He is also Professorial Lecturer in the MBA program of De La Salle University and Lecturer on Digital Transformation, Leadership and Management in the Benilde – School of Professional and Continuing Education.