Clean up home-shopping industryThe prosecution investigation into television home-shopping channels underscored the shady business deals and connections rampant in the business. The TV home-shopping industry has long been dogged by speculation about the exchange of handsome payola for prime-time slots.
Manufacturers and companies selling their products on shopping channels vie to secure prime-time spots because sales can differ greatly depending on the time of day merchandise is shown. They often have to kowtow to TV merchandisers and producers in charge of allocating airtime to get favorable slots and popular hosts to sell their products. And they are said to have paid kickbacks to TV home-shopping industry players on top of regular sales commissions.
The industry has long been aware of foul practices and loopholes that can breed shady deals and temptation. But it has done little to rein in corruption until the prosecution indicted employees from major home-shopping channels for habitually receiving kickbacks from contract companies and selling time slots. The cable channels are equally culpable for lax management oversight and overcharging consumers.
TV home shopping has been a service to both consumers and producers by providing a direct marketplace for merchandise of good quality at affordable prices. Small and midsized companies losing customers to competition from larger or foreign rivals benefit from a media platform that allows them to forego the expense of brick-and-mortar shops and reduce marketing and distribution costs. TV shopping channels also provide a variety of new product information, choices and bargains to consumers in the comfort of their homes.
Major home-shopping channels are preferred because of the implied credibility of their brand value. Consumers buy items in good faith that they are of high quality and priced fairly. But the products cost 30 percent to 40 percent more than they should because of commissions from sales, video production expenses, phone services and kickbacks for employees.
Based on complaints, four out of six TV home -shopping channels were involved in the prosecution probe. But the prosecution plans to push the investigation further to other channels and overall practices. The home-shopping industry will have to strengthen internal auditing and ethics in order build transparency and win back consumer trust.