BUSINESS

[Feature] Complaints grow over social media influencers’ online markets

By Kim Da-sol

Consumers open their wallets despite unverified product quality, less transparent sales channel and even false advertisements

  • Published : Jun 19, 2019 - 13:49
  • Updated : Jun 20, 2019 - 16:32

For 29-year-old office worker surnamed Jang, buying a dress from a popular Instagram influencer who has some 4,000 followers was a money-losing proposition and regretful shopping experience. 

“Although the dress was not from a famous brand, it was around 200,000 won ($170). The seller said the dress is tailor-made, advertising it as a now-or-never deal to own a perfect-fit dress made with high-quality fabric,” said Jang. 

But when she received the product, the dress was different from the prenotified size and color. So she contacted the seller for a refund, but was refused because the products were “preordered.”

When Jang complained to the Korea Consumer Agency, she did not get any help. As an advisory group, it did not have the power to force but only suggest the seller to refund the customer “for mutual benefit.” 

“Getting a problematic product refunded is a customer’s right. But the consumer agency told me that these social media influencers, many of whom are unregistered business operators, are out of the legal boundary,” Jang said. 

(123RF)

Jang is one of the many online shoppers here who have been complaining about sellers on social media mainly capitalizing on having loyal followers. 

According to the Seoul Metropolitan Government, a total of 3,370 complaints on shopping through social media were reported from 2015 to March 2019. This year alone, almost 100 cases were reported each month. 

Far from the days when Instagram was just a channel to connect with friends and interact with strangers having common interests, the social media platform has become bombarded with influencer marketing. Taking a step further, Instagram in March introduced its own check-out service for the US market, although the launch of such a service in South Korea will take more time. 

According to ifFluencers, an agency that connects brands to social media influencer, social influencers or online stars make millions by posting a photo of a product and a brand name in the hashtag. The price goes up depending on the number of followers. 

An industry analysis released by Korea Trade-Investment Promotion Agency (KOTRA) on influencer marketing showed that the global influencer marketing industry was valued at 2 trillion won last year and will grow to 10.6 trillion won by 2020. 

Products that online influencers promote or sell on their accounts range from clothes to cosmetics, baby chairs, kitchen tools to food -- even soy sauce-marinated crab. Over 260,000 posts were found with the hashtag instamarket, as of June 7.


Why do people buy stuff from influencers?


The momentum behind this trend is the strong fan base created among followers of influencers, who share almost everything from their private lives to fashion tips and the moment of unboxing their favorite Chanel bag via social media.

Online influencers, who amassed thousands of loyal followers without ever having appeared on television or films, have the power to convince their fans to buy items.

A poll from consulting firm Bright Local showed that 88 percent of the consumers say they trust influencers’ recommendations as much as their close friends. 

“I enjoy looking at photos and stories of well-known Instagramers. I sometimes feel like I’m living vicariously through them, just by looking at places they visit, food they eat and things they buy,” said a 31-year-old office worker. 

A 29-year-old mother said, “(An Instagrammer who I know) is a mother of two sons. But she has a great fashion sense and also decorated her house nicely. I followed her to get information on the items she bought to decorate her house.”

What makes the fan base even stronger is the way the influencers interact with their followers. They build intimacy by communicating with followers by replying to their comments and chatting online through live stream. 

Im Ji-hyun, a first-generation social media influencer who launched her shopping mall Imvely in 2013 and raked 170 billion won in sales as of last year, also attributed her success to her “connection” with her some 800,000 followers. 

“I believe communication with customers through various different channels, including Instagram, led to Imvely’s popularity and success because we (directly) hear from them and learn what they want,” Im said in an interview with The Korea Herald in December. 

Noticing the power that social influencers have and the capacity to economically gain from the popularity, many of the big celebrities have joined the Instagram or YouTube bandwagon, to share their more intimate moments hoping to grow a wider fan base. 

Market insiders also point out that selling products on social media does not cost much to begin.

“In the past, online sellers had to care about the A to Z process including setting up an online website to managing stocks. But now, anyone with a smartphone can open a market and sell products at a reasonable price,” said Sookmyung University business professor Seo Yong-ku. 


Shady products

But unlike offline stores or online brand shops, shopping through online influencers can be risky because the products are often unverifiable, have poor quality or are sometimes falsely advertised. 

Recently, Imvely came under fire after reports emerged in April that its pumpkin juice contains mold. 

(Im Ji-hyun's Instagram)

Despite her immediate apology, angry consumers requested a full refund and began to collect data on Imvely’s false advertisements and other problematic products. Some of them even created an anti-fan Instagram account to actively boycott Imvely products and sue the company for compensation. 

Another online influencer Hong Dam-ki, who sells fashion items under her account “Madmoiselle” on Instagram with 900,000 followers, was accused of falsely claiming that a bottle of hydrogen water she sold has an antioxidant effect and slows skin aging.

“I did not see any change at all (after using the product), so I left a comment saying that the product was not up to my expectations. But she blocked me and disabled me from posting comments,” wrote an anonymous Instagrammer.

“It was awkward from the beginning because she normally sells bags and coats, but suddenly began to sell water. Influencers tend to sell anything to make money,” the user said.

According to a survey conducted by the Seoul City government on customers’ shopping experience through social media from November to December last year, 28.2 percent of people said they experienced trouble when purchasing products on social media. The majority of them reported that sellers could not be reached or refused to provide refunds or replacements. 

The Fair Trade Commission data also showed that 879 of 1,221 sellers who were warned or advised to take corrective action for false advertisements from July to September last year were social media influencers. 

Industry experts said there are no legal measures to protect consumers who purchase goods from such influencers. 

“Social media is not a platform developed for online commerce. The influencers also do not come under the country’s e-commerce regulation, so it is difficult for authorities to track their sales activities and help consumers to receive better customer service,” said Kyunghee University business professor Lee Kyung-jeon. 

“Theoretically, all online sellers, including influencers, must report their income and pay taxes. But in reality, not many countries are able to track such records,” Lee added. 

With growing calls to supervise sellers on social media, lawmakers proposed a revised regulation on e-commerce in October last year to prevent consumer damage amid the expanding social media market. But the related bill is still pending at the National Assembly. 

Some experts advise customers to be more critical in evaluating sellers’ products.

They say consumers on social media easily grow a feeling of being attached to sellers and their products, but influencers are still business owners looking for profits.

“Consumers need to consider critically before buying products online, as social network service market is where consumers should take risks for transactions,” Seo said.

“While the government’s regulation on these sellers may hamper the growth of the country’s e-commerce market, forming a supervising team to manage the influencers’ business activities will be more beneficial for the online market’s ecosystem and consumers’ rights.” 

By Kim Da-sol (ddd@heraldcorp.com)


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