Low Touch Economy And The Impact On Philippine Businesses
The times truly have changed since the COVID-19 pandemic - yes, since 2019! In just about every way, the world has experienced a drastic shift. This is especially evident economically.
“LTE”, a term commonly associated with wireless data connectivity and download speed, takes on an entirely different meaning. From faster connection to physical distancing, LTE or Low-Touch Economy describes the incorporation of multiple changes in the economic sector as a result of the pandemic. The Low-Touch Economy has caused a huge shift in the way we do business and engage with our customers. A simple handshake is suddenly a thing of the past. Being 6 feet apart is practiced to avoid being 6 feet under.
According to Board of Innovation’s The Low Touch Economy Gold Rush Report, in the LTE, establishments have limited the number of accommodations to practice social distancing. Businesses have promoted cashless payment methods, delivery services and online shopping to reduce physical transactions. Since the implementation of checkpoints, the movement of the retail and manufacturing goods has slowed down greatly due to expected derailment in shipping.
Sari-sari stores and other small retail shops have had a hard time earning. Some were forced to close during the first wave. Others enforced window operating hours. According to a PwC Philippines survey, 38% of SMEs surveyed identified productivity loss due to low remote operation capabilities. In response to LTE, business owners have made adjustments in order to stay relevant. Many reinvented and redeveloped their business models. Large retail establishments like supermarkets and drugstores, allow only a certain number of people to enter under a designated time. Some stores started implementing limited purchase volume per customer since hoarding would occur.
Possibly the most notable response of business owners to LTE is adopting digital and online platforms into their regular business operations (e.g. website, social media, e-commerce, etc.). Anchanto, a global e-commerce and logistics platform launched in 2019, enables the seller to connect to any number of local marketplaces and process up to 50 orders in a month for free. On the other hand, PH government’s first ever e-commerce platform, OneStore.ph, aims to expand the market reach of SMEs, as well as easing their way of reaching customers. The online platform will also allow clients to display and dispatch their products with its payment and logistic partners through an Internet-based hub managed by the government.
Given the accessibility of these platforms, more retail merchants have signed up with food delivery apps like GrabFood, and FoodPanda in April 2020, according to Maybank. Philippine Payments Management Inc. (PPMI) The same month shows that e-payment transactions during the lockdown have reached a total value of PHP53 billion. Department of Trade and Industry (DTI) Secretary Ramon Lopez predicts that 500,000 MSMEs will be engaged in e-commerce by 2022 and that e-commerce will make up 50% of the country’s economy. Platforms like Shopee and Lazada have experienced an increase in online activity, with Shopee Live streams having increased 40x in 2020, and Lazada having seen around 39M online visits in June, a 15.24% increase since the previous month.
However, not every wholesale or retail outlet has opted to move into a more digital-friendly platform. Despite the results of a recent survey by Epson, which show 80% percent of Filipino SME respondents acknowledging a desire for digital technology adaptation, the process of digitizing is expensive, and at times too estranged from previous business models that some businesses are not too comfortable letting go of.
In light of the overall situation of LTE, we would like to share some tips for SMEs in delivering their Brand Stories.
1. Even if the medium of doing business has shifted, go back to your brand purpose and why you do business. Brand stories offer solutions that customers can both appreciate and support right now.
2. Continuously engage with your market even if they are not buying your products and services at the moment. Being top of mind, available and accessible are vital during this time. Don’t make your customers second guess who you are and what you do.
3. Post online what you’ve done not just for your products and services but also your people. Sharing tips with your competitors could actually be more beneficial to you as it would strengthen the market you are all part of.
The medium of doing business has not disappeared, rather, has only shifted playing fields. A Low-Touch Economy doesn’t necessarily mean low engagement too. Listen to your customers. Continue getting your message out because the need for connection is still there.