WHAT IS SOCIAL ENTREPRENEURSHIP?
With the rise in dynamic global problems such as an increasing population, global warming, lack of access to basic human needs, food and water distribution problems, social injustices etc, it is imperative for people to often step into the roles of Governments and provide solutions to pressing current challenges which are beyond the scope of Governmental abilities.
As of now, there is no universally agreed upon definition for what social entrepreneurship is. However, in essence, it is a business model which exists to solve current ‘social’ issues. Of course, what is considered a ‘social’ problem to one may not be considered to another, however, it can be generally agreed upon that problems such as poverty and gender inequality are extremely pressing social challenges, which need to be eradicated.
Over the past few years, the world has seen a massive increase in ‘social entrepreneurs’ who aim to find solutions to the problems they are passionate about. Social enterprises can be found to exist in various forms; be it non governmental organizations, for profits, non-profits, etc.
A very common social enterprise model,a form of the ‘For Profit’ model, equips underprivileged sections of society with certain skills and commercializes these skills to benefit these underprivileged segments of society. Such examples can be found across numerous countries and this article will expand upon the use of e-commerce for benefiting these specific models of social enterprises.
SUCCESSFUL SOCIAL ENTERPRISES: WHAT MAKES THEM DIFFERENT?
Let’s begin by looking at the Philippines, a nation very similar to India. It has a growing economy, huge income inequality and pressing social challenges. Now, let’s talk about the company which is making heads turn. Rags2Riches, a social enterprise started by Therese ‘Reese’ Fernandez Ruiz, trains impoverished Filipino women to use scrap material in order to make carpets, doormats, fashion items such as bags, etc. Their mission is to “lift Filipino artisans out of poverty” and their vision is that “one day, a Filipino born in poverty will not have to live in poverty.”
A project initiated in 2007, the company has grown tremendously and has shown a consistent 100% annual growth rate during the first five years. Ruiz has recently been featured in Forbes Magazine’s “30 Social Entrepreneurs Under 30,” and been named “Entrepreneur of the Year” by the World Entrepreneurship Forum.
But how did a tiny social enterprise reach such jaw dropping levels of success and manage not only to bring around impressive profit margins, but also help hundreds of underprivileged women and their families out of poverty? Well, it’s simple really. They set up a website and decided to ship worldwide.
An average bag on Rags2Riches sells for $200 USD. The cost of making this bag is almost negligible. Rags2Riches grew on the purchasing power of consumers from developed countries. Today, designers such as Oliver Talentino and Rajo Laurel endorse it’s products and purchase it for sale under their own brand name.
Had the company decided to sell only through traditional channels, it’s fate could have been very different from what it is today.
Now, let’s look at Anwisha, an NGO which operates out of Bhubaneswar, Orissa. The biggest challenge for the NGO was to find a market for the handicrafts made by the community. They soon set up their own e-commerce operations and are now selling a significant number of artifacts a month. Although progress is slow, it is still faster than the traditional methods of retailing.
E-COMMERCE: THE FUTURE DIRECTION FOR SOCIAL ENTERPRISES
The Indian handicraft industry is valued at 43,000 crores or approximately $7 billion USD. However, the industry is highly fragmented and unorganized. Sellers and middlemen are often lost in terms of which market segment to target and thus, are often unable to expand. E-commerce can provide a solution to these problems.
This is where e-commerce platforms can help those social enterprises and entrepreneurs who aim to sell goods made by the segments of people they are aiming to bring out of poverty.
By putting products online:
- One eliminates the middleman, who often tends to charge a higher premium, thereby decreasing the disposable income in the hands of the artifact maker
- The enterprise or seller also benefits in terms of being able to reach a more global audience with lower barriers of entry to international markets.
- Instead of chasing customers and trying to figure out which market segment to target, one attracts customers by virtue of how the internet works, which is, that customers are attracted to websites or pages due to their interests.
- There are also numerous other benefits such as operating a 24 hour store at little to no cost, no storage cost, a larger customer base, a larger base for spreading information via word-of-mouth and reviews, etc.
The fact is, that by setting up a shop online, the scope for expansion increases manifold. However, the key factor to success is connectivity. In order to find customers online, you must have the ability to be found.
Not all social enterprises have the ability, resources or skills to set up and maintain all online sales marketing and operations through personal websites. Such enterprises can choose to undertake commercial activities through larger e-commerce platforms that can host and promote their products, either for bulk sales to businesses or individual sales to consumers.
As of now, when one talks about ‘e-commerce’, it is with reference to business to consumer or business to business transactions. However, there is large potential for social enterprises and entrepreneurs to use these channels which were traditionally meant for business transactions and change it into a platform which can also be used for social change through economic empowerment.