The rise of community commerce

TinaPay Online, which delivers neighborhood bakery favorites to communities in Manila, was born in the early days of the enhanced community quarantine (ECQ). It partnered with Grab riders from the neighborhood, and now it’s earning P7,000 on a good day on deliveries alone, SmartParenting.com.ph reports.

The Community Market was rolled out in cities in Metro Manila at the beginning of the ECQ. It partnered with residents from communities to bring well-known food brands closer to residents via trucks. It uses Facebook to communicate with consumers and accept inquiries on the availability of products.

Union Bank of the Philippines and Philippine National Bank rolled out their “bank on wheels” in early March to offer banking services, such as making balance inquiries, withdrawals, bills payments and fund transfers, as well as opening 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 start of the quarantine, when residents in our community were struggling to look for food and alcohol, and turned to “virtual communities” on Viber or Facebook to reach out to “friends.”

Since then, it has blossomed into a proven business model, with its users ranging from vendors organizing community markets selling food to online marketplaces that sell all sorts of products to communities. In my interviews with sellers in Facebook Marketplace, they experienced more than a 50-percent increase in sales. For some of them, it’s even more than 100 percent. These are not limited to food essentials, but also includes other products, including antiques and gadgets.

So what is a community commerce? Why did it emerge? What makes it successful?

Let’s first define what a community is. Wikipedia defines it as “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, be it an actual or virtual one.

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 current crisis is changing consumer behavior. People’s behavior is now 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, spiritual. With a global recession looming and the prospect of finding an vaccine quickly becoming bleak, coping behaviors are expected to prevail in the coming years.

With coping as a consumer need, five consumer personas emerge:

Problem solvers. They actively plan, try new things and find solutions to existing woes. The products and services they buy are everyday consumables that can be purchased conveniently in the community. They try new apps, such as those for digital banking and videoconferencing.

Emotional expressionists. They let their emotions out, as evidenced by the abundance of angry and complaint-filled posts on social media. They engage in virtual meetups and look for appeasing activities. The products and services they pay for 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 we are in and seek to learn about it. Products and services they avail themselves of are online courses, webinars, virtual coaching, documentaries on pandemics, and fitness and health care products.

Help and support seekers. They seek help and support from others to help them cope. The products and services they use are virtual coaching and spiritual advisory, financial advisory and insurance, and errands services and apps.

Problem avoiders. They look for activities to forget current problems and act as if nothing is happening. The products and services they buy are hobby items, such as those for 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 the ECQ, work-from-home schemes, and physical distancing, community commerce then becomes a compelling business model.

But would all community commerce models be successful? Drawing from the work of community psychologist Seymour Sarason, for community commerce to work, consumers, sellers and buyers in a community should have the following characteristics:

Membership. This involves clear boundaries on who is in or out of the community. One example is having clear guidelines and community policies in a Facebook group and marketplace, or a Viber group.

Influence. This refers to the ability one feels he or she has make an impact on the broader community-level and individual-level norms that guide the community’s practices. This involves having the flexibility and freedom to share, do business and engage in community commerce.

Integration and fulfillment of needs. This refers to feeling connected to a network that holds shared values, exchanges resources and meets needs. 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 in specific rituals or ceremonies. The buyer or seller in community commerce should feel that he or she is part of the community’s success. This can be done by regularly communicating with community commerce members on the impact of meeting community needs.

I observed one grocery chain that has launched an app to bring together other grocery outlets, as well as buyers. However, the buyer experience was poor, with bad feedback on stock availability, and lack of empathy from customer service. As a result, consumers 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.

 

The author is the chief executive officer of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is the chairman of the information and communications technology committee of the Financial Executives Institute of the Philippines (Finex). He is also the country representative of the Institute of Change and Transformation Professionals Asia and fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA program of De La Salle University. The author can be reached at rey.lugtu@hungryworkhorse.com.

Source: https://www.manilatimes.net/2020/05/08/business/columnists-business/the-rise-of-community-commerce/723447/

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