Bernardo M. Villegas
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ESKAPARATE.COM Addresses the Digital Divide (Part 2)

           As a professor in the field of Strategic Management, I would like to cite ESKAPARATE.COM as a role model for many other Filipino executives and entrepreneurs, young and old, who want to venture into what is called a social enterprise.  As more and more people in business are looking for a social purpose in their profit-making activities, I am encouraging especially the younger entrepreneurs to incorporate what is called the ESG (Environmental Sustainability, Social and Governance) mission into their business plans.  Those who want to contribute to the solution of some of the major challenges of Philippine society (e.g.. mass poverty, quality of education, climate change, good governance) may now increasingly shift from the usual NGO, non-profit or philanthropic mode to the social enterprise approach.  They should use their business skills to conceive of a profit-making venture,  the main purpose of which is not to maximize profit for the owners or stockholders but to solve a social problem.  Escaparate.com is a perfect example.  It is not an NGO or a philanthropic association but a business which has to generate profits, sooner or later, for long-term sustainability.  The desire to contribute to the common good must be strongly complemented by sharp business acumen in a social enterprise.  An NGO or a charitable foundation is forever begging for donations or subsidies to cover all of its expenses.

           The founders of Iskaprate.com are businessmen and professionals who have devoted a significant part of their working lives to social enterprise.  The principal founder, Joey Bermudez and his partners in Maybridge Financial have been engaged in microfinance for the last thirteen years and have been involved in development-oriented advisory engagements with various private organizations as well as multilateral and bilateral institutions, including the International Finance Corporation/World Bank Group in the areas of microfinance and rural development.  The brothers Manuel and Benjamin Avancena are the founders of the Foundation for Enterprise Management Innovation which seeks to build the growth capacity of the missing middle.  Philip Ong of Santeh Feeds Corporation is President of the Philippines Chamber of Agriculture and Food and is an active supporter of farmers’ organizations and micro-enterprises through his involvement in Agrifoodhub, Simbag sa Pag-Asenso,Inc. and his enterprise hatchery.

As any business enterprise worthy of its name, the organizers made sure that they follow strictly the rules of business planning even before they started their operations.  They went through a very thorough strategic planning exercise with its required components of mission-vision statements, environmental appraisal, SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, and strategy formulation.  The vision of Iskaparate.com is to be the e-commerce platform of the entrepreneurial poor.  Its mission is to enable the poor to participate meaningfully and profitably in the global supply chain.  When the founders assessed the relevant environment at the time they conceived the idea of Iskaparate.com, they saw the most brutal economic lockdowns that severely restricted the physical movement of people, goods, services in the first half of 2020.  Their contact with microfinance institutions gave them the feedback that more than nine million micro-enterprises were put at risk of collapsing unless the sector received meaningful assistance.  The proponents felt that the best response would be to give the micro-entrepreneurs online presence and allow them to be discovered by the markets, thereby overcoming the problems of physical immobility.

The founders were realistic In assessing the weaknesses and limitations of people they were helping.  They realized that the vast majority of them do not have the tools to actively engage in digital selling and marketing.  Compounding this weakness was the natural fear of the so-called Nanays (most of whom are 40 and above in age) for new technology.  They need to be “eased” into online selling and not painfully dragged into it.  Iskaparate.com runs online briefings for the Nanays to make them comfortable with online platforms.  In the future, the company hopes to create a digital academy for the Nanays so that they will become more adept at creating content themselves and handling online traffic.  This will remind us that a major challenge in the post-pandemic era is the reskilling, upskilling and retooling of our human resources so that they will be ready for the so-called New Normal.

           A most important requirement in the strategy formulation phase of planning is the definition of the product/service mix.  Iskaparate.com is an online platform that showcases the Nanays and their products and allows website visitors who  are interested in their products or services to complete their purchase on the platform.  A number of verticals either have been or will be erected on the platform such as store mining, online billing/payment processing, website analytics, and fulfillment support.  The “plain vanilla” offering to the Nanays is a showcase featuring her life, her products and her contact details.  Every Nanay on the platform has her dedicated page with its own online link that she can distribute to her target audience.  This plain vanilla offering comes free for the first 12 months.  Starting on the 13th month, the Nanay will pay a monthly fee of Php 100 to stay on the platform.

           The founders are very well aware of the threats or risks of the business.  The most significant is compliance risk.  Many of the Nanays are unregistered enterprises.  Iskaparate mitigates this risk by requiring that Nanays with unregistered businesses should endeavor to register with the appropriate regulatory agency within 6 months from the time they are onboarded.  The other significant risk is reputational, arising from product quality issues and delivery failure.  Since their products may not have been vetted by licensing bodies the Nanays’ output may be prone to inconsistencies in product quality which may create dissatisfaction among the visitors to the website.  Likewise, the newer entrepreneurs who are still struggling with production stability may fail to deliver products that have been ordered and paid for online.  To mitigate this risk, Iskaparate imposes two levels of vetting before a Nanay is admitted  into the platform.  The first vetting is done by the organization to which the Nanay belongs, such as the KCoop previously mentioned.  The second vetting is done by Iskaparate itself.  If the Nanay does not belong to any organization, the Iskaparate vetting is more thorough and comprehensive.   To further mitigate the reputational risk, only Nanays who have performed creditably in test events are allowed to take part in bigger online bazaars in which Iskaparate  is participating.   Likewise, the online payment processing service is made available only to Nanays who are highly recommended by their sponsoring organizations, if any.

           A special strategic move of the founders of Iskaparate.com worth commending is their openness to cooperate with other like-minded business enterprises or government initiatives with whom they can synergize for greater effectiveness.  For example, aside from providing store minding support to the micro-entrepreneurs when requested, this social enterprise also provides online invoicing and online payment support to the micro-entrepreneurs by partnering with PayMongo, one of the fastest growing payment gateways in the Philippines.  PayMongo is a recipient of seed funding from Peter Thiel, one of the founders of PayPal and Stripe, a huge global payments processor.  In addition, Iskaparate creates online selling events to give the Nanays more opportunities to sell their products.  The platform is an active collaborator with Mayani.ph (digital platform that helps small farmers to get the best prices for their products by connecting them directly to the final buyers).  With Mayani.ph, Iskaparate participates actively in the monthly Grand Bagsakan and the National Food Fair, which events are spearheaded by the Department of Trade and Industry.  In May 2021, Iskaparate and Mayani collaborated with the ice cream parlor, Caramia, in jointly running a highly successful Mother’s Day promotion where a bundle of flowers produced by the farmers of Mayani, flasks produced by the Nanays of Iskaprate and ube cake produced by Caramia, were offered to those wishing to surprise their respective mothers.  Since many of the transactions happen directly between the buyer and the micro-entrepreneur, Iskaparate does not have information  about the total amount of sales that have resulted from the creation of the platform.  However, the amount of sales that has been recorded during the online selling events hosted or co-hosted by Iskaparate.com has exceeded Php 3 million so far this year.

           Also worth noting is the collaboration of Iskaparate with the Office of the Vice President Leni Robredo.  On September 18,2020, almost from the date of establishment of the platform, the Bayanihan MartAngat Buhay Program of the Office of the VP joined the digital platform by actively assisting the Nanays in their various livelihood programs to get onboarded into the platform.

           From these brief considerations of the business strategic moves of Iskaparate.com, it should be clear that in the field of social enterprise, doing good must be accompanied by doing well.  Good intentions or the desire to contribute to the common good of society, are not enough.  Business knowhow and skills must be fully mobilized in establishing and assuring the sustainability of a social enterprise, even more than in an ordinary business that just focuses on profit making.  That is why, I am glad that Iskaparate.com was started by very experienced business executives and entrepreneurs who were able to count on their long years of business experiences in crafting and implementing the vision and mission of an enterprise that can do much to alleviate poverty and generate economic growth and employment, especially in many rural areas of the country.  The model of Iskaparate.com must be studied thoroughly by the younger generation of business executives and entrepreneurs who want to venture into the challenging sector of social entrepreneurship. May their tribe increase.  For comments, my email address is bernardo.villegas@uap.asia.