BEYOND THE FOUR WALLS: The Direct Selling Economy

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MALAYBALAY CITY (MindaNews / Dec 13) – There is a need to think about the practice of direct selling as a new dimension of e-commerce in the Philippines, thanks to our drive to recover from COVID-19.

It’s a good ally for enterprising Pinoys, except that there are concerns that could potentially put consumers at risk in selling through social media.

Granted, this idea arose after hearing a live salesperson complain about customers “exploiting” items with no intention of buying. This practice is called joy mining, which seems to be one of the many risks of direct selling. It’s part of reality now.

Selling live on social media is nothing new. It appears to be a guerrilla strategy in e-commerce due to COVID. We see a lot of these events on Facebook, which has a free platform that allows direct networking easily multiplied with the share button. It is a lucrative business with minimal cost.

The loss of livelihood brought on by COVID prompted ordinary citizens, even those who did not have a registered business entity, to undertake their projects on social media.

It has also provided activities to delivery platforms modeled on Food Panda. Delivery people have taken advantage of this online explosion. Many of them were among those dislocated by COVID. As part of Mindanao, some were former habal-habal or motorbike drivers.

Now that the pandemic restrictions have been lifted, at least before the Omicron strikes, direct selling remains.

The lockdowns have not stopped economic activities. For people with the right budget and the right gadgets, it was simply a matter of switching from traditional shopping to shopping online.

Research into emerging Facebook trends among 12,500 people in 14 countries, including the Philippines, showed that one in four respondents said they had browsed direct selling online on social media. Data showed that at least 85% said they expected their online shopping to increase this year.

The survey showed that Filipinos prefer convenience, direct selling and mobile payments when shopping online.

Physical or traditional stores and online gamers should remain part of the evolution of the way of doing business – possible transition to providing omnichannel channels or offering full options for buyers to approach sellers.

A survey by the United Nations Conference on Trade and Development (UNCTAD) of around 3,700 consumers in nine emerging and developed economies found that more than half of those surveyed now shop online more frequently and trust them. more Internet for news, health information. and digital entertainment.

UNCTAD has indicated that in the post-COVID-19 period, the unprecedented growth of e-commerce will disrupt domestic and international retail frameworks, which is why policymakers should adopt concrete measures to facilitate the adoption of the trade. electronics by small and medium-sized enterprises.

Direct selling is therefore one of the trends that requires special attention. We used to see live sales only on late night free TV, after the late night news and talk shows. Now it’s being broadcast live in our news feeds at any strategic point possible. In fact, established traditional retailers are already using the direct selling strategy to re-attract buyers they lost due to lockdowns.

Certainly, COVID-related fears will not go away overnight. People will go for e-commerce, including direct selling, as long as it is available and the benefits outweigh the risks.

Buyers of course prefer its convenience, the wide choice it offers and even the perceived savings. Sellers see more exposure for their products because they can demonstrate that they exist and show how they are used; they use it because it is interactive; they can save on advertising because it’s free anyway; among many others.

On the other hand, a general criticism among customers is the issue of trade-off in case of unfulfilled quality expectations from their online sellers. This is especially true for sellers with trust issues. It could also be one of the reasons sellers have a perception of “joy mining”.

There is also the issue of privacy for buyers and sellers. This poses a threat to data privacy – privacy as a whole, including cyber fraud. If the videos remain online and can be shared from friend to friend, it somehow compromises participants’ privacy. Add to that the degree of spontaneity, anything could happen especially for salespeople who could make or break their business.

The indirect effects are also there.

Think about promoting impulse buying. Sometimes people buy not because they need it, but because it is available and offered inexpensively by a convincing seller. A study from the South China University of Technology found that direct selling improves the feeling of immediacy among viewers. This could make them decide to buy after feeling the reliability of the seller.

“The liveliness, interactivity and authenticity of live video improve the purchase intention of consumers by affecting the sense of immediacy and confidence of consumers,” says one of the findings of the study. 2017 on the effect of live webcasting on consumers’ willingness to buy.

Some people have shopping addiction issues, including online shopping. This imperfect consumerist behavior could lead to long-term deficit spending, resorting to unnecessary debt.

The availability of a product or service through live social media is a consumer stimulus. Someone does not buy an ice cream bar being marketed in a village because it is not placed locally. Once available in the store, it increases demand. The willingness of buyers to buy it instead of the local brand or other products is high – as long as they have the capacity to do so.

In a way, that’s one of the impacts of direct selling – being pressured into buying something because it’s available – or cheap. Of course, that too is a potential research topic.

The list could be longer. Some may call it paranoia. Others simply cannot put out the fire presented by the bases.

Consumerism could be good for the recovery phase after the pandemic. This could stimulate production and trade in goods and services. But the deeper meaning of consumerism also prevails – the perception that a person’s well-being and happiness fundamentally depends on obtaining consumer goods and material goods, as Investopedia puts it.

UNCTAD describes the digital economy and electronic commerce in general “as central to the achievement of the Sustainable Development Goals”. It offers opportunities such as better access to global markets for goods and services, an increased share of online retailing and accelerating digital transformation.

But the challenges cannot be dismissed either. In addition to widening digital divides, there are increasing income inequalities, the elimination of jobs and tasks due to automation, and consumer protection, data privacy and cybercrime. Locally, can I add the possible neglect of the local creative industries?

Now it’s more important to consider how to handle issues as simple as extracting joy to trust issues with sellers.

College students might ask themselves these questions: Who among the living sellers has a business license? If they have, are they allowed to engage in that particular activity? Without intending to be mean to otherwise resilient workers, is the government making revenue from these transactions? Are direct sellers currently covered by the trade and industry guidelines? How are consumers protected in what appears to be an informal version of e-commerce?

If done right, selling online live could be a potential force in helping people and government move from COVID response to recovery.

By all means, it’s time the government thought about possible regulation – so as not to discourage emerging entrepreneurs. This is called consumer welfare.

(MindaViews is the opinion section of MindaNews. Walter I. Balane is a faculty member in the economics department of a state university. The opinions he has presented here represent only his personal ideas)

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