June 30, 2016
DSA Research Shows Dynamic Growth of Channel as Consumer Trends and Technology Evolve
by Ben Gamse
New data from the U.S. Direct Selling Association’s 2016 Growth & Outlook Survey, which sizes the direct selling market in the United States, reports unprecedented growth in direct selling, in terms of both retail sales and the number of people involved. This growth is testament to the vibrancy of the model as an unmatched opportunity for entrepreneurship, the value customers derive from the personal touch inherent in direct selling, and the manner in which advancements in technology have facilitated the ease of commerce.
This year’s Growth & Outlook Survey provides direct selling companies with a vast amount of data and insights into current market dynamics, reasons as to why direct selling has grown and why the channel is poised for continued growth over the next several years. Additionally, DSA uses the data in support of its advocacy initiatives and to educate key external audiences, including the public, consumers, academics and the financial community, about the legitimacy and vitality of the business model.
Here is an overview of some of the new industry data and insights from the 2016 Growth & Outlook Survey:
Growth in the U.S.
Direct selling in the United States experienced growth for the sixth straight year following the Great Recession. U.S. direct sales reached $36.12 billion in estimated retail sales in 2015, a 4.8 percent increase from the previous year and a new record high. This 4.8 percent year-over-year growth rate outpaces the growth of both overall retail sales (1.6 percent) and the U.S. gross domestic product (3.5 percent) during the past year.
The number of people involved in direct selling in the United States grew from 18.2 million to a record 20.2 million in 2015, an 11 percent increase from the previous year. While direct selling continues to attract predominantly women, the business model represents every U.S. state and every generation, and is generally reflective of America’s diverse population.
Direct selling is also growing on a global scale. The World Federation of Direct Selling Associations (WFDSA), driven by its global research subcommittee, has unveiled figures for 2015. Last year, global retail direct sales reached U.S. $183.7 billion, an increase of 7.7 percent from 2014. Three-year compound annual growth rate (2012-2015) was 7.2 percent. In 2015, 103 million people around the world were involved in direct selling, up 4.4 percent from 2014.
What accounts for this level of growth in direct selling, in both sales and the people involved? A significant factor is the prevalence of and favorability toward entrepreneurship. “There’s nothing more global than being an entrepreneur,” says Kevin Plank, CEO and Founder of Under Armour. At a commencement speech this year at the University of Maryland, Plank described the definition of entrepreneur: a “bearer of risk”—a person who has an idea or ideas and is ready and willing to take the risk of acting on them. As we all are faced with and take risks on a regular basis in life, Kevin posed, we are therefore all entrepreneurs. Amway’s 2015 Global Entrepreneurship Report reinforces this sentiment, finding that in the United States, “86 percent of people hold positive attitudes toward entrepreneurship.”
“We are at a time when more people want to be entrepreneurs, and direct selling provides the means to be in business for yourself but not by yourself,” says Dave Merriman, Executive Vice President of ACN. “Distributors can work the business as much or as little as they want at any time and enjoy the rewards for growing their business while receiving the support from the direct selling company.”
Direct selling is in prime position to capitalize on a number of macro trends in the United States, including an aging population and the obesity epidemic. As the population ages, and as consumers become increasingly health and wellness conscious, direct selling is able to leverage its inherent social qualities, personalized product demonstration and coaching potential as a key competitive advantage.
The wellness sector commands the largest share of direct retail sales. It also is the fastest growing sector. Here’s insight into why: Jeff Kaufman, Director of Customer and Field Insights at Isagenix and Chairman of the DSA Research Industry Committee, explains how when direct sellers “experience the products and show a change in their overall health and how they look, that’s an easy selling point.” Personal stories attesting to the effectiveness of products can greatly enhance the seller/buyer experience. This personal touch, especially in the sale of health and wellness products, places direct sales at an advantage over fixed-retail-outlet sales. In addition to showcasing the benefits of the products, Jeff adds, “direct sellers can act as coaches and really help people stick to their programs and experience success, rather than just buying a product off the shelf.”
The personal-care segment of the direct selling industry also is experiencing notable growth. Possible drivers of growth in this product category include increased demand for anti-aging as well as natural and organic products.
The services segment of direct selling also continues to command a sizeable share of retail sales in the United States. As U.S. energy markets become deregulated, direct selling is an increasingly attractive alternative for customers looking for more choices in cheaper, greener energy.
E-commerce, social media and mobile technologies are advancing at a rapid pace, creating opportunities for direct selling companies to broaden their reach and increase their efficiency — often complementing in-person sales, rather than replacing them.
Social media, in particular, is seen as a huge driver of growth. Monica Wood, Vice President of Consumer and Member Insights at Herbalife and also a Research Committee member, says, “The proliferation of social media and online person-to-person communications has positively impacted the businesses of many sellers and has empowered them to be true entrepreneurs.”
ACN’s Merriman adds, “The use of new technology and e-commerce has allowed direct selling companies to give their independent business owners tools to easily expand their business. Online ordering, easy-to-access training and no need for inventory has provided more opportunities than ever before for people to be successful.”
Asma Ishaq, President of Jusuru, says, “Particularly in the past decade, since the onset of social media and technology that make social interaction and information immediately accessible, consumers are constantly seeking reference groups, reviews and community when identifying with a brand. Our industry’s value proposition provides exactly that.”
Growth & Outlook Survey Methodology
In early 2016, DSA extensively surveyed direct selling companies, and received 102 survey submissions. Nathan Associates, an economic consulting firm, confidentially collected survey data, conducted secondary research, and generated industry-wide estimates for the entire market in the United States. With the assistance of Artemis Strategy Group, and with diligent guidance and oversight from the DSA Industry Research Committee, the Growth & Outlook Report was generated. Because of the nature of this exclusive, direct selling company-submitted data, these data and insights cannot be found anywhere else.
DSA’s Industry Research Committee Roster for 2016-2017:
- Yanira Aguayo, Stemtech
- Julie Cabinaw, Scentsy
- Laura Chacon-Garbato, Herbalife
- Damien Douchet, H2O at Home
- Daniela Farmache, Amway
- Staci Glovsky, Nature’s Sunshine Products
- Jake Gundrum, Amway
- Christina Harris, Mary Kay Inc.
- Tyler Horton, Nature’s Sunshine Products
- Omobola Imoisili, Team Beachbody
- Judy Jones, Amway
- Jeff Kaufman, Isagenix International
- JJ LeBlanc, Mary Kay Inc.
- Brian Matney, Thirty-One Gifts
- Jeff Morris, Pampered Chef
- Randi Neiner, Ph.D., Shaklee Corporation
- Tiffany Novy, Lulu Avenue
- Erich Pagel, Scentsy
- Jesse Stamm, Take Shape for Life, Inc.-Medifast
- Pammie Strickland, Ambit Energy
- Emily Trainor, Lulu Avenue
- Monica Wood, Herbalife
- Ben Gamse, Staff Liaison, U.S. Direct Selling Association
Direct selling has continued to experience growth due to strong macroeconomic conditions, an increasing trend toward entrepreneurialism, and an ability to adapt to both consumer trends and advances in technology. DSA expects direct selling to continue to grow in the United States by 3-5 percent per year for the next three years.
All DSA member companies that participated by submitting a completed survey will receive the full Growth & Outlook Report. For those companies that did not participate, Growth & Outlook will be made available online for purchase at a later date. For more information, check out the DSA research infographic of 2015 statistics at www.dsa.org, the Growth & Outlook video or contact Ben Gamse, DSA Market Research Manager, at email@example.com.
Ben Gamse is Market Research Manager at the U.S. Direct Selling Association.