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BEYOND THE FOUR WALLS: Economics of live selling

20211213 083826 0000

MALAYBALAY CITY (MindaNews / 13 December) — There is a need to mind the practice of live selling as a new dimension of e-commerce in the Philippines, thanks to our drive for COVID-19 recovery.

It is a good ally for enterprising Pinoys except that there are concerns that could possibly put consumers at risk in vending via social media.

I admit this idea was born after I heard a live seller rant about customers who “mine” items without intent to buy. The practice is called joy mining, which appears to be among the many risks of live selling.  This is part of reality now.

Social media live selling is not 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 endeavor with minimal cost.

Loss of livelihood brought by COVID pushed ordinary citizens, even those who did not have registered business entities, to take to social media their ventures.

It has also provided business to delivery platforms patterned after Food Panda. Delivery riders gained from this online blast. Many of them were among those dislocated by COVID. In the Mindanao setting, some were former habal-habal or motorcycle drivers.

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

The lockdowns did not stop economic activities. For people with the right budget and gadgets, it was just a shift from traditional to online shopping.

Facebook’s Emerging Trends Research among 12,500 individuals in 14 countries, including the Philippines, showed that one in four people surveyed said they have browsed through online live selling on social media. Data showed that at least 85 percent said they expect their live shopping to increase this year.

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

‘Both brick and mortar’ or traditional stores and online players are projected to stay as part of the evolving way of doing business – possible transition to providing omni-channels or providing all options for buyers to approach sellers.

A survey by the UN Conference on Trade and Development (UNCTAD) of about 3,700 consumers in nine emerging and developed economies, showed that more than half of the respondents now shop online more frequently and rely on the internet more for news, health-related information and digital entertainment.

The UNCTAD cited that in post-COVID-19, the unparalleled growth of e-commerce will disrupt national and international retail frameworks that’s why policymakers should adopt concrete measures to facilitate e-commerce adoption among small and medium enterprises.

So live selling is part of the trends requiring attention. We used to see live selling only on late night free television, after late night news and talks shows. Now it is streaming live in our news feeds any strategic time possible. In fact, established traditional retailers are already using the live selling strategy to entice back buyers they lost to the lockdowns.

Certainly, COVID fears will not be gone overnight. People will opt for e-commerce, live selling included, for as long as it is available and the benefits outweigh the risks.

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

On the other hand, one general criticism among clients is the issue of exchange in case of unmet expectations in quality from their online sellers. This is true especially for sellers with trust issues. This could also be one reason why sellers have perceptions of ‘joy mining.’

There is also the issue of privacy for both buyers and sellers. There is danger it poses on data privacy – privacy as a whole, including cyber fraud. If the videos stay online and can be shared from a friend to another, then somehow it compromises the privacy of participants. Add to it the degree of spontaneity, anything could happen especially for sellers that could make or break their enterprise.

The indirect effects are also there.

Think of the promotion of impulsive buying. Sometimes people buy not because they need it but because it is available and is offered at a lower cost by a convincing salesperson. A South China University of Technology study found that live selling enhances the sense of immediacy among viewers. This could prompt them to decide to buy after sensing the trustworthiness of the seller.

The “vividness, interactivity and authenticity of live video enhance consumers’ purchasing intention by affecting consumers’ sense of immediacy and trust,” says one of the findings of the 2017 study on the Effect of Web Live Broadcast on Consumers’ Willingness to Purchase.

There are some people who have issues with borderline addiction to buying, online shopping included. This flawed consumerist behavior could lead to deficit spending in the long run, resorting to unnecessary debts.

Availability of a product or service via live social media is one stimulant of consumption. Someone does not buy a commercially promoted ice cream bar in a village because it is not placed locally. Once it becomes available in the store – it raises demand. The willingness of buyers to buy it instead of the local brand or other goods is high – as long as they have the capacity to do it.

Somehow this is one of the impacts of live selling – being driven to buy something because it is available – or cheap. Of course, this too, is a potential research subject.

The list could be longer. Some may call this paranoia. The others just can’t put out the fire presented by the bases.

Consumerism could be good for the recovery phase from the pandemic. It could stimulate production and trading of goods and services. But the deeper sense of consumerism also prevails – the perception that a person’s wellbeing and happiness depend fundamentally on obtaining consumer goods and material possessions, as Investopedia puts it.

The UNCTAD describes the digital economy and e-commerce in general “are at the heart of the attainment of sustainable development goals”. It brings forth opportunities like better access to global markets for goods and services, increased share of online retail, and acceleration of the digital transformation.

But the challenges cannot also be dismissed. Aside from widening digital divides is increased income inequality, elimination of jobs and tasks due to automation, and consumer protection, data privacy and cyber-crime.  Locally, may I add the possible neglect of the local creative industries?

Now there is greater need to look at how to mind issues from as simple as joy mining to trust issues with sellers.

College students could ask these questions: who among live sellers have business permits? If they have, are they authorized to engage in this particular business? Without intending to be mean to otherwise resilient income earners, does the government earn revenue from these transactions? Are live sellers presently covered by trade and industry guidelines? How are consumers protected in what appears to be an informal version of e-commerce?

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

By all means, it is about time government minds possible regulation – not to discourage emerging entrepreneurs. It’s called consumers’ welfare.

(MindaViews is the opinion section of MindaNews. Walter I. Balane is a faculty member of a state university’s economics department. The views he presented here represent only his personal insights)


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