In the West, villages are emptying out due to the lack of economic opportunities. Consider Italy where, in a bid to attract newcomers, a handful of municipalities have turned to selling houses for €1.

Meanwhile, in some developing countries, the digital revolution has created a path for villagers to earn a living through online selling. To wit: About 40 percent of online entrepreneurs in China live in a rural area.

It is one thing for entrepreneurs, whether urban or rural, to create and operate an online store, as some platforms have made it relatively easy to manage an e-store – even by using just a smartphone.

Perhaps the most troublesome aspect of online selling is that platforms frequently tweak their algorithms. This requires entrepreneurs to keep up with these changes and constantly adjust their strategy. If not, their products may never surface in customer searches.

The next problem is that platforms do not always communicate the changes in the most straightforward manner, leading to confusion among entrepreneurs. As I show in my paper, Platform governance and the rural-urban divide: Sellers’ responses to design change, co-authored with Charles Eesley, compared to rural entrepreneurs, urban entrepreneurs have access to offline sources of information that helps them see through the veil quickly. This advantage can lead to lasting gaps in performance.

The Offline Interface: In-person communications still rule

For online business and digital platforms, my research highlights the importance to understand the offline interface – a term I use to describe the local, offline factors (be it economic, social, cultural or political) that affect users’ ability to navigate a digital environment.

In most countries, online entrepreneurs on digital platforms usually start out as scavengers, either making their own products or pulling excess supplies from their environment (e.g. factories). You see this phenomenon on a number of e-commerce platforms, such as Lazada and Shopee in Southeast Asia.

Entrepreneurs sourcing from nearby factories might sell socks, car radios and baby products, whatever assortment of products they manage to line up – or figure out what might sell based on a recent fad.

In May 2013, a prominent e-commerce platform in China was trying to increase the professionalism of its sellers (entrepreneurs) by encouraging them to specialise in a single product category.

The goal was simple: over time, entrepreneurs would become category experts able to provide top-level customer service. To achieve this, the platform modified its algorithm to prioritise entrepreneurs who sold many products within one or two product categories (a characteristic termed “category focus”).

However, the platform had difficulty conveying this change to entrepreneurs. A somewhat cryptic announcement said that Big Data would be used to construct buyer profiles and that a new algorithm would “help entrepreneurs lock onto potential buyers and implement targeted marketing”.

Poor communication such as this is common. While hiring better communicators might…

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About the author

INSEAD Knowledge is the expert opinion and management insights portal of INSEAD, The Business School for the World. Knowledge showcases the latest business thinking and views from award-winning faculty and global contributors

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