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April 01, 2012

Cover Story

Direct Selling’s Billion Dollar Markets

by Marilynn Hood


Click here to order the Direct Selling News issue in which this article appeared.


0412 DSN Cover

The World Federation of Direct Selling Associations (WFDSA) recently released its Global Statistical Report after compiling the data for the year 2010. Although a comparison with the prior year shows several significant changes, it’s to be noted that a portion of the increases reported from 2009 to 2010 is due to changes in the collection of data (see the article, “WFDSA—Working to Improve Statistical Reporting”). However, there are still some wonderful growth stories in the direct selling industry to tell.




GLOBAL DIRECT SALES BREAKDOWN BY REGION

Global Direct Sales Breakdown by Region


Judy Jones, who serves as Chair of the WFDSA Global Research Sub-Committee and of the United States DSA Industry Research Committee and is Insights Lead, Consumer & Market Insights for Amway, prepared the following global highlights for DSN:

In all, the global direct selling industry is sized at over US$132 billion in estimated retail sales, generated by over 87 million individual direct sellers around the world. Asia Pacific is by far the largest region for direct selling in the world, followed by North America. Latin America and Europe/Africa make up the final regions accounted for in the report.

Recent research shows that individual direct sellers in 21 countries in the world generate 90 percent of the world’s direct retail sales. Each of these countries generates in excess of $1 billion in direct sales per year (see chart below).


GLOBAL MARKET REVENUE BY COUNTRY (IN U.S. DOLLARS)

Global Market Revenue by Country (in U.S. dollars)


Points of Interest:

  • Two new countries have entered the “Billion Dollar Markets”: South Africa at $1.1 billion and Peru at $1.05 billion. The total number of markets that cross the billion dollar threshold is now 21.
  • The U.S. and Japan continue to dominate by nearly twice as much as any other nation.
  • Outside of China, Brazil continues to hold in the top four markets, several billion ahead of any other South American nation as well as others—though South American countries have a small increase, and there’s a new entry with Peru entering the game in 2011.
  • China continues to climb—going from $8 billion to $10.9 billion to $12.5 billion.
  • South Korea increases by almost $2 billion.
  • Malaysia is increasing steadily from $1 billion to $2 billion over the last year.
  • Many European nations continue to hold around $3 billion.

In terms of how individual direct sellers approach their customers, globally 76 percent use a person-to-person sales method and 18 percent a party plan method.

Regionally:

  • The range is 64 percent person-to-person/ 28 percent party plan in North America.
  • The range is 91 percent person-to-person/ 9 percent party plan in Latin America.

There is also a great difference in the ratio of single-level companies to multi-level companies across regions of the world. Globally, 57 percent of companies are multi-level in structure; 40 percent are single-level.

Regionally:

  • Multi-level companies range from 20 percent in Latin America to 93 percent in North America.
  • Single-level companies range from 7 percent in North America to 80 percent in Latin America.

Global Direct Sales Breakdown by Product Category