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April 01, 2012

Cover Story

Direct Selling’s Billion Dollar Markets

by Marilynn Hood

When Dollars Aren’t What They Seem!

When Dollars Aren’t What They Seem!

Comparisons from one year to the next seem pretty straightforward: If the dollar amount is more this year than it was last year, there’s been a gain, right? Maybe so, but then again, maybe not.

In order to create a meaningful comparison of one country with another, retail sales must be expressed in the same currency. Problems occur when transactions in one country’s currency are then expressed or translated into another country’s currency. Exchange rates fluctuate almost constantly, which creates an extra layer of complexity. The exact same amount in one currency will translate to different amounts in another country’s currency at different points in time.

Companies with international operations face this issue when preparing their financial statements. They may have divisions that are operating profitably in a particular country, but when the earnings are translated into the currency of the parent company’s operations, those divisions may even show a loss.

Maurits Bruggink, Executive Director for Seldia, the European Direct Selling Association, points out this type of distortion also occurs when preparing global comparison tables. “One example would be France,” he says. “That country’s sales figures went up in 2010 as compared to 2009, from 1.7 billion to 1.8 billion euros. But when translated into U.S. dollars, it shows France had a decline of 0.4 percent.” In this case, the decline reflects the currency exchange rates and masks the gains experienced in France.

As someone with quite a bit of experience in collecting global statistics, Bruggink has found currency translation to be a difficult problem to get around. He suggests producing two sets of statistics, one in the currency of the particular country, and the other in that of the standard currency. Examining both sets creates a better picture of what is actually occurring in that country. For its 2010 Global Statistical Report, the WFDSA has enhanced the information it presents to show both sets of statistics to help provide a more complete picture of each country’s activities. 

To see Europe’s statistics expressed in euros, pull up the chart, Direct Selling in Europe – 2010 Retail Sales, at [Note: If you have difficulty bringing up this address, you may need to switch to a different browser.]

To see the global industry statistics in both the local currencies and in U.S. dollars, pull up the chart, Global Statistical Report – 2010, at

To see exchange rates for various world currencies, visit Note that you can add different currencies, and the interactive chart can be adjusted for various time periods, up to two years.