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August 01, 2017

New Perspectives

Europe’s Impact on Global Direct Selling

by DSN Staff

The global direct selling movement has deep ties to the United States. The U.S. remains the world’s largest market for the channel, and the country is home to most of direct selling’s multi-national powerhouses. Yet it would be a mistake to overlook the influence Europe has on direct selling today.

While it is facing a similar transformation of the consumer landscape brought on by rapid adoption of social media and other technologies as the U.S., Europe has been experiencing growth in both sales and salesforce members. And there is room for more, says Katarina Molin, Executive Director for Seldia, the European Direct Selling Association. Entrepreneurship is becoming more important, particularly in some European Union member states where jobs are more difficult to come by and youth unemployment remains high.  

That said, companies sometimes underestimate the level of complexity that comes with expanding into Europe. While there is harmonization of policies throughout the EU, it is not a single market. Rules, regulations, taxation and other policies vary from country to country, as does the culture. “The culture in the Nordic countries is very different from the business culture in Spain,” Molin says as an example. “You need to know exactly where you’re aiming for and make sure that you do have all the level of information you need to be able to set business up in that specific market.” 

For U.S.-based companies interested in expanding to Europe, Molin recommends working to understand the specific local market and getting in contact with that country’s DSA. Hiring a local manager, though an expense, is advisable. “I know not all companies feel they can afford that, but it’s an investment that can pay off because there is someone in the country to work with the salesforce and with whom the national DSA and the national Code of Ethics Administrator can work.”

Translating corporate messaging from one language to another is of course a critical first step, but Molin says the executive directors of Seldia’s member DSAs recommend going a step farther to ensure that the tone of all company materials is a good fit for each market’s consumer landscape. Understanding different regulations around claims is important, but so too is understanding the style of communication in each country. “I think language in general is a bit softer, both in the way you talk about opportunities and products,” she says. “The companies who are most successful are the ones who actually take the local culture and do their homework before they set up their operation.”

On a policy level, Molin says, the direct selling community is working to stay engaged with the European Commission as it continues its review of essential existing consumer policy legislation throughout Europe. “The interesting thing there is you see both nongovernmental organizations and industry being very much aligned,” Molin says. “In general, the consumer protection policies we have at the EU level are good. They can be tweaked here and there, but the key issue is enforcement. How do you enforce legislation at the national level? Another thing that is important and that the EU Commission wants to work even more with is: How do you make sure the consumer is better aware of his or her rights?”

In Europe, as in the United States, the direct selling community often finds it must work to ensure that policymakers and other stakeholders understand the role the channel plays in the marketplace today. As part of that effort, Seldia is a member of a large European retail association, which Molin says gives the organization credibility and visibility. She and her team also work to regularly engage with the European Commission and the European Parliament on a wide range of issues, even those that aren’t burning priorities for direct sellers. This helps build relationships and foster connections throughout Brussels.

When it comes to promoting the benefits of direct selling and advocating for the channel, the French DSA, a Seldia member, is on the forefront. The DSA has been actively engaged with the French government for years and has worked to introduce direct selling to students and the academic community. Eight years ago, it launched an online learning program that now has 7,000 participants annually, and three years ago, it created a direct selling licensing program, which DSA General Secretary Jacques Cosnefroy says has been very important for the image the channel has in the region. In 2016, it was involved in a reality television show that featured five contestants each trying to sell a product through direct selling. The show ran for six weeks in France, and a Belgian TV station picked up the rights to it this year.

As a result of these and other efforts, Cosnefroy says, direct selling is viewed both by the public and by government officials as a viable job opportunity. Some 400,000 people use the government’s direct seller status to designate their job category in France. “I think this is a very good image for the sector,” says Cosnefroy. A quarter of his association’s member companies are based in the United States. 

There is no doubt that the regulatory and business environment in Europe is different than other regions of the world, and self-regulation within the DSAs is stiff. “There is not a lot of room for bad behavior in the market if you are a DSA member,” Molin says.

In October, Seldia and the French DSA will welcome direct selling companies and executives from around the world to the WFDSA World Congress in Paris (www.wfdsa2017paris.com). There, Molin and Cosnefroy say the conversation will focus on the future of direct selling: the consumer. Digital communication and other new technologies are reshaping consumer expectations, and all direct selling companies—regardless of location in the world—must keep pace with this change. 

Savvy direct selling companies are working to harness the relationship they have with the consumer while also recognizing that the millennial generation are less focused on loyalty and become impatient quickly. They are, however, very likely to turn to influencers in their real life or online communities for purchasing recommendations. “The consumer is not going to get less demanding, but more,” Molin says. Successful companies are reshaping their sales tools accordingly, providing more digital assets, short videos and the like. “Technology will not make the normal face-to-face interaction of direct selling disappear, but you do need to have that added element. You need to make it easy for the consumer.” Or, as Cosnefroy puts it: “The future pathway of the company is the future pathway of the consumer.” 

Solid advice, regardless of your geographic location.