I tried selling on Carousell yesterday and received some inquiries today (“Last price na po ba?”). While I don’t blame buyers for asking that (it is well within their right as customers), I can’t help but feel sorry for some small and medium-sized enterprises (SMEs) who deal with similar customers who ask for discounts that cut to the bone. And they’re not even ordering/buying in bulk.
You see, we SMEs deal with high operating expenditures (opex), taxes, and damaged goods regularly. We carry those on our books without the benefit of economies of scale. At the same time, we try to price our products and services reasonably so we can retain customers while paying salaries/opex and struggle to keep afloat.
Yes, we give discounts if it is within our means but please don’t ask unreasonable rates that they cut so deep. If you do, that means you don’t want our business.
That said, I rarely ask for deep discounts because I know how SMEs bleed, especially with the kind of business environment that we have = red tape in getting business permits, crazy tax system, and high tax rates. Really unfriendly.
Selling on Carousell triggered this within me.
You see, I was thinking of going back to selling online now that LBC Express will be launching a service that would help SMEs with their logistics. (I had drinks with their key people last week so that’s how I know). I won’t preempt them but it was something that made me think whether I can go back to it again.
In the early 2000, we used to sell items on eBay even before they thought of putting up an Ebay Philippines branch. There was no online selling platform yet at that time and Sulit.ph was just starting out. We used eBay US and had to go through the hoops of being an early adopter/user. Had to open several bank accounts due to the unfriendliness of the payment system available then (Xoom.com, Western Union, etc.) because Paypal was hard to use at that time because we needed a US bank account. I was able to set up our Paypal when the company started accepting EON by Union Bank–the first pure online/branchless banking entity (I had to give props to them on this one). Another problem with the old system before is that some of our customers do not have credit cards since we have buyers coming from Eastern Europe or Latin America or somewhere in Southeast Asia. I had to physically cut my lunch breaks to physically queue in these banks/remittance centers to get payments and go to the Post Office to ship the items.
And oh dear, the fees! The fees really do bite! We had to price them in or else we won’t have any profit at all. Ebay selling fees, listing fees, Paypal fees, etc. But those make our products expensive, on top of the expensive shipping fees.
And don’t get me started on logistics. It was (and still is) a huge headache.
Our customers complained that our local Express Mail System (EMS) is freaking expensive but that’s the only system available to us that time (tracking numbers) that ensure that our items really do arrive. Otherwise we were blind and we don’t have any assurance that our customers are not really duping us, claiming that the items did not arrive so we had to refund so the negative feedback wouldn’t gnaw out our feet. When I became a public finance reporter, I had to ask Customs/Philpost why is that our postal service is so expensive compared to Japan and the US (we bought stuff from Japan/China and their shipping costs with tracking numbers are half of ours). No one could give me a clear answer.
It was simply exhausting to the point that doing eBay was no longer an option when they changed their feedback system and increased their cuts from profits. Then there’s the logistics headache.
Then we opened our brick-and-mortar business within the fringes of the Maginhawa food hub. Half of our business was comprised of walk-in customers and being in a busy center is good. But that comes with the predatory rent rates as well so we were priced out of the area. The opex couldn’t be justified anymore.
Fast-forward, e-commerce is booming like crazy here (but we’re still lagging compared to our neighbors in ASEAN) and SMEs have all sorts of options now, from friendlier payment systems to increased online selling platforms. Websites now are easier to make too (WordPress has become friendlier to SMEs, with all sorts of widgets available).
I remember I had to deal with a cheap domain and hosting provider then but in return i got crap security so in the end I got hacked. I abandoned all ye hope for an online store at that time. Plus I had to deal with Joomla, and that one is such a pain to use since I am no computer genius. It’s not easy setting up a shopping cart and linking my Paypal account there. I had sleepless nights trying to do it by myself.
I tried Multiply (remember that one?), the blog-social-media-cum-online selling platform of the 2000s. I ordered my Lomography stuff from a girl on Multiply and a handbag from a fashionista that only lasted me three months. I tried selling on Multiply too but it had limited reach and couldn’t make money out of it since our customers are mostly international. Multiply was ahead of its time but they couldn’t figure out how to best monetize what they had. They were like the Friendster = good concept, but slow in figuring out how to make money out of something that good.
Anyway, back to being an SME. I remember somebody telling me that SMEs in the Philippines normally have a 3-year lifespan. Well, on our third year, we went bust. So much has changed, like rent rates have gotten crazier and the proprietor’s interest has waned. Keeping afloat in this environment is a struggle. You don’t have a 9-6 day. You can’t just walk away from your shop and have a two-week Christmas vacation because that is the busiest season for SMEs. Then SSS, Pag-Ibig, Philhealth…
Then you had to deal with an employee who destroys you or steals from you. And robbers taking our cellphones and other stuff. Then BIR suddenly orders a change in receipts…so we had to order PHP 3,000 worth of new receipts and ditch the old ones. Money down the drain. Then QC government came out with an order that all brick-and-mortar stores should have CCTVs installed for security or else they would not be able tos secure business permits. How come it is the SMEs who bear the burden of maintaining peace, order and security? Isn’t that what our taxes supposed to do for us? What if we couldn’t afford a PHP 6,000 CCTV system?
It was all too much to take.
So please, if you deal with SMEs, especially those who make their own products to sell, be considerate. You can ask for discounts if you order in bulk (so that way we can offset given the small economies of scale that we can have in wholesale). But not retail. Please be kind. Especially to farmers and wet market vendors. They make so little.
Remember, SMEs provide 99% of the employment in this country.