If you’ve read the policies and procedures your company provided you when you joined your company, you probably already know you’re not allowed to participate in online auctions, on sites like Ebay. (Don’t believe me? Go check. I’ll wait…) I don’t know of a single direct selling company that allows its products to be sold through online auctions (I’ve read a LOT of policies!), and the consequences can be serious, up to and including losing your business.
So I was pretty disturbed when I recently learned that there is a new site being launched that caters exclusively to direct sellers, allowing them to do online auctions! Um, are you kidding me? Have you read your policies and procedures? NO ONE is allowed to do that. And I fear that some well-meaning consultants, not realizing that this is prohibited, will get involved in these sites, only to lose their businesses because they’re in violation. Now you know that I love you guys, and I try to look out for you. Today’s post is designed to make sure that YOU are not one of those people.
Because I believe that understanding is the first step towards falling in love with your policies (okay so maybe I’m overstating things just a wee bit here…), I turned to one of my FAVORITE lawyers in the direct selling industry, Ashley Good from Arbonne International, to find out more about why online auctions and direct selling just aren’t a good mix.
First, I asked Ashley if she could give us a good idea of what an “online auction” actually is. She told me that the narrow definition of an online auction is the selling of products online through bidding. But she stressed that the concern for direct selling companies is broader than that, and actually includes any online site outside of the corporate or personal website that your company provides to you. Even if you use the “buy it now” feature of these outside sites, there are several problems with selling through them, and they can harm both the consumer, as well as other consultants in your company.
You see, one of the things that makes direct selling so special, Ashley says, is the touch of the independent consultant. As a consultant, you don’t just provide products. Instead, you provide education, a relationship, and a deep understanding of both what a customer needs, and the products you offer that will best meet those needs. You simply can’t get that through another site.
Personal websites provided by your company are designed to help preserve that experience. Your customers connect with your name, picture and/or personal story right on your site, which they use to contact you with questions. You get the customer’s information and can follow up to be sure they’re happy. The best way to purchase, outside of a face to face or phone transaction, is through that personal website. Personal websites don’t replace the personal touch, says Ashley, but rather they enhance relationships by giving your customers a convenient additional way to shop and gain information. Relationships are built first, then the sale happens through the personal website or in person.
Like Arbonne, your company may also require you to have a personal website to benefit from new leads generated through your company’s website. Even if the sale happens first, you may not get repeat orders or referrals from that lead unless you take the time to continue to develop that new relationship through personal contact. Bidding sites are just about the lowest price.
Another advantage of the personal website is the consistency of the branding. Companies and consultants are partners as brand ambassadors, and the personal website ensures that the consumer has a consistent experience, no matter who they are shopping with. Not to mention the fact that your personal website has all the legal language required for direct sellers. Direct selling is a regulated industry (did you know that?), and your company’s lawyers have ensured that the materials provided by your company for your personal website comply with both the law and the DSA Code of Ethics. Having all this in place protects you, the consultant, as well as the consumer.
Product guarantees are also affected when people buy products outside of the company-provided websites. For example, says Ashley, Arbonne offers a 45 day money back guarantee for clients. When a product is purchased directly from a consultant through an approved vehicle, customers have that guarantee. When products are purchased elsewhere, such as Ebay, Amazon.com, Craigslist, etc, the company is unable to trace that purchase back for clients. There is no way for the company to guarantee that the product has not been tampered with, is out of date, defective, used, broken, etc. Also, the customer doesn’t have access to the customer service line for those purchases. It results in a bad customer experience, which harms the brand image for every consultant in the company.
So the next thing I asked Ashley is how this affects all distributors. Does it really matter to your business if other distributors in the company are selling product on Ebay? After all, your customers have access to the guarantee. What’s the big deal?
It’s a very big deal, according to Ashley. If a customer purchases a product through an unapproved venue, they could potentially have a bad experience with that product. Plus, the customer is cheated out of the true company experience, which includes YOU, the independent consultant. Not to mention the fact that if a customer gets used to buying your products online at a discount, or hears that her friends do, she’s not going to want to purchase from you at full price. That harms your business, and devalues the brand. “It devalues our business model,” says Ashley. “When online auctions become too prevalent, the consultant’s job becomes more difficult because she now has to work even harder to prove to the customer the added value of working through a consultant.”
I then asked Ashley about the consultant that has a lot of inventory, and decides to leave the business. Wouldn’t it make sense for her to unload her extra products through an online auction? Actually, no, says Ashley. As long as your company is a DSA member, they have promised to buy back all your unused inventory at 90% of the original purchase price. When you consider the cost of listing an item on an online site, shipping, and the cost of the time you have to put in, you will almost certainly be better off just returning it to your company. And it also helps every salesperson in your company by avoiding discounted merchandise showing up online.
The other challenge of selling through these unapproved venues is the fact that you’re not able to meet potential recruits that way. One of the huge benefits of meeting with people person to person when making sales, is that it gives us the opportunity to build relationships that often lead to recruiting opportunities. When you sell through these sites, you deprive yourself of that opportunity.
So what should you do if you discover that your product line is being sold through an unapproved venue? Ashley says that you should first contact your company’s customer service or compliance deptartment, and ask if they monitor auctions. If they do, they’re probably already aware of the problem, and are doing what they can in conjunction with the site to resolve the issue. Generally, it is more helpful if you are calling to report an online seller who you know is another consultant in violation of your company’s policies. Realize that it takes time to handle these issues (it’s not an overnight process, unfortunately, so be patient.)
If you’re making a complaint about a specific auction, here’s the information your company will need:
- The online venue hosting the auction
- The seller’s ID
- When you saw the auction
- What was being sold
- Whether you know if the seller is a consultant for your company
- A link is always helpful when reporting via email
Online auctions and other unapproved venues really can damage your business, as well as the business of every other consultant in your company. So it really is a big deal. And that’s why your company takes it so seriously.
There’s a reason our businesses are set up the way they are. Direct selling has been used by millions around the world with success, because relationships are what drive sales and recruiting. Don’t try to circumvent the system. Instead, put the system in place and you’ll enjoy the results that make so many so loyal to this industry.
What are your thoughts on this issue? Would love to read them in the comments below!
Ashley Good is Senior Vice President and General Counsel of Arbonne International, LLC (www.arbonne.com), a direct selling company offering personal care and wellness products for 30 years. Ashley provides key in–house counsel at Arbonne and leads the Legal and Compliance Departments. She is responsible for all aspects of Arbonne’s legal affairs, including company and Arbonne Independent Consultant compliance, and Arbonne’s intellectual property. Ashley was previously a corporate attorney for the prestigious, international law firm of Latham & Watkins, LLP. She earned BA and MA degrees from Stanford University and her Juris Doctor degree from Duke University School of Law. Ashley is a member of the American Bar Association, California Bar Association and Association of Corporate Counsel.