June 01, 2013
The 1 Percent Difference: Direct Sellers Continue to Make Positive Global Impact
by J.M. Emmert
IN THIS ISSUE:
It’s fascinating to consider the numbers: Of the 7 billion people on the planet, a little over 1 percent are direct sellers.
Just 1 percent. At first, that doesn’t sound like much. However, 1 percent actually equals over 91.5 million people worldwide who have embraced the entrepreneurial spirit by choosing to become small-business owners.
Indeed, direct selling—that microcosm of people from all walks of life and from all regions of the globe seeking new opportunities—is having a tremendous impact on the global stage.
What can 1 percent do? Collectively, it can transform millions of lives for the better, effect much-needed social change, safeguard natural resources and stand at the forefront of job creation. And it can do it all amidst challenging economic times and changing consumer attitudes.
Over 91.5 million people worldwide have embraced the entrepreneurial spirit by choosing to become small-business owners.
Impacting the Economy
Challenges always walk hand in hand with opportunities. That is the nature of any business model. And the direct selling industry has certainly faced its share of challenges.
When the global economy began its decline in 2007 there was cause for concern. How would the industry react? Would it remain stable while the economy plummeted to depths not seen since the Great Depression? When U.S. retail sales steadily declined over the four-year period from 2006 to 2009, that concern grew exponentially.
But the industry always seems to reinvent itself. It is that direct selling moxie that always prevails—that spirit and courage and boundless energy—and allows the industry to shake off the threats, pull up its bootstraps and look for new opportunities to help its people succeed.
It is the ability of established companies to embrace change, and the dogged determination of startups that contribute to the continued success of the industry.
Of the Top 10 companies on this year’s DSN Global 100 list, eight reported double-digit dollar growth over the past three years. And if the first quarter of 2013 is any indication, the future looks promising for direct selling. Several top public companies exceeded expectations or set new records for sales growth, including Herbalife (17 percent), Nu Skin (19 percent), Tupperware (3.6 percent), Natura (5.9 percent) and USANA (9.7 percent).
Looking closely at the Global 100 list, there might be something very telling about this industry and the people who comprise it. Seventeen companies with less than 10 years in the business made their way into the DSN Global 100 list for 2012, accounting for $5.3 billion of the $72 billion the listed companies achieved in 2012. Six of those 17 companies are less than 5 years old, proving that economic uncertainty cannot keep the entrepreneurial spirit down.
And that entrepreneurial spirit is what is needed most today. An estimated 200 million people worldwide are without jobs. Last month, the International Labor Organization reported that the youth unemployment rate is expected to climb from 12.4 percent to 12.6 percent, leaving some 73 million between the ages of 15 and 24 out of work.
So where will the jobs come from? According to a recent USA Today interview with the International Monetary Fund, the global organization dedicated to fostering high employment and sustainable economic growth, unleashing creative potential and the enterprising spirit will encourage growth and lead to job creation.
And when looking for companies that show significant growth and provide business opportunities for those millions out of work, look to the direct selling industry.
Impacting Public Perception
When Inc. magazine released its 31st annual Inc. 500|5000 ranking of the nation’s fastest-growing private companies for 2012, it noted that, “Now, more than ever, we depend on [these] companies to spur innovation, provide jobs and drive the economy forward.” Growth companies and not large corporations, the magazine noted, are where the action is.
The Inc. ranking, which offered a comprehensive look at America’s independent entrepreneurs with substantial sales growth, included several direct selling companies: Stella & Dot (No. 57), J. Hilburn (No. 221), Scentsy (No. 516), It Works! Global (No. 662), YOR Health (No. 1220), Ambit Energy (No. 1305), Initials Inc. (No. 1555), 5LINX Enterprises (No. 2900) and Isagenix International (No. 4951).
The success of such companies is just the tip of the iceberg for an industry focused on changing public perception of the direct sales channel of distribution. The Yankee peddler image that has pervaded the consumer consciousness for more than a century is slowly giving way to a new view of direct sellers.
Today, several direct selling companies stand with the giants in the corporate world. Berkshire Hathaway, parent company of direct sellers The Pampered Chef, Kirby and World Book, ranked fifth on the Fortune 500 list of America’s largest companies. Medifast Inc. (Take Shape for Life) was ranked at No. 10 on Forbes’ list of the Best Small Companies in America.
Tupperware was ranked No. 2 in the Home Equipment category for the World’s Most Admired Companies by Fortune. And Ambit Energy and Primerica were both recognized on the 2012 InformationWeek 500 list of Top Technology Innovators, an annual listing of the nation’s most innovative users of business technology.
Impacting Small-Business Owners
Over a century ago, Walker Agents, Fuller Brush salesmen and Southwestern representatives were among the direct sellers aided by a new invention that made it easier to reach customers: the telephone. Today, the innovative use of social media and mobile devices by technology-savvy direct selling companies has allowed would-be entrepreneurs to reap the benefits by staying closely connected to consumers.
But technology is just one of the advantages for those testing the entrepreneurial waters in direct selling. What remains the greatest advantage is that direct selling is an environment in which all people have an equal right to success. Age, gender, religion, education or financial resources do not limit the opportunities.
For those individuals willing to put in time and energy, direct selling truly has significant earning potential. However, people get involved in direct selling opportunities for a variety of reasons, from making a car payment or paying off a debt to making a career change or building a large business. Some become direct sellers in order to purchase products or services they love at a discount. Certainly, being one’s own best customer has advantages.
And the industry—one about people and for people—makes the transition to owning a business easier. There are fewer barriers to entry, with most initial investments less than a few hundred dollars, and ongoing support is provided by their companies.
That support includes training in business skills as well as opportunities for personal development and coaching, which are unequalled in other industries.
The industry also empowers entrepreneurs to use their businesses to make a difference in the lives of others. Many direct sellers are drawn by a company’s corporate social responsibility initiatives. Direct selling, recognized as one of most charitable industries, comprises companies that have been founded on the principle of giving back to others.
In addition, many companies are focused on conservation, helping to create a sustainable environment. São-Paolo, Brazil-based Natura, the No. 5 direct seller in the world, was recently ranked the second most sustainable company on the planet by Canadian research firm Corporate Knights. Companies such as Viridian Energy, which is committed to renewable energy, and Momentis, which instituted a green energy initiative to help consumers offset their carbon footprint, are among the direct sellers striving to save natural resources.
In today’s socially responsible culture, a commitment to others is not only a prerequisite of small-business owners, but also consumers. Today a company is measured by its products or services as well as its behavior and respect for the community.
Today’s consumers want to know the company behind the product—how it behaves and if it respects the environment. They want to feel that when they make a purchase, their money is working to help others, benefiting charities and organizations.
This change in consumer behavior—how and why people are deciding to buy—is changing consumer-supplier relationships. But what has not changed is the industry’s focus on providing quality products and services that enhance people’s lives.
Direct selling companies offer a wide variety of consumer goods, from cosmetics and wellness products to telecommunications and insurance. The most common sales method remains person-to-person, which accounts for 70 percent of sales. (The party plan method accounts for 35 percent.) According to the U.S. Direct Selling Association, 74 percent of Americans have purchased products from a direct seller.
The industry is intent on self-policing and protecting consumers by voluntarily following a strict Code of Ethics, set forth by national direct selling associations and overseen by the World Federation of Direct Selling Associations, which since 1978 has pursued the highest level of ethical conduct in the global marketplace.
If the $160 billion in global 2012 sales across the world is any indication, direct selling will continue to flourish. In fact, many companies are expanding their operations into both developed and emerging markets. Last month Amway announced plans to invest $20 million in a second manufacturing site in Vietnam. Nu Skin is expanding its operations in China, which it expects will top $1 billion in sales for 2013.
If the $160 billion in global 2012 sales across the world is any indication, direct selling will continue to flourish.
LifeVantage and Mannatech are launching in Hong Kong; Neways and Stemtech are venturing into Thailand. Jeunesse Global is opening operations in Australia and New Zealand. And Oriflame, the No. 9 direct seller, is expanding into India.
A 100 Percent Difference
Whether the 91.5 million people around the globe who call themselves direct sellers have been attracted to the industry by the products or the business opportunity, one thing is clear: Direct selling empowers them to better themselves, their families and their communities.
This small minority is helping people enjoy the benefits of world-class products and services, live free from debt, join in the efforts to save the environment and reach out to those in need.
It’s clear that just 1 percent can make a 100 percent difference.
Participation in the DSN Global 100 Ranking
Direct Selling News will again host the DSN Global 100 Celebration in April 2014, based on each company’s 2013 performance. If you believe your company would qualify for the Global 100 ranking and you would like to be notified when research begins this December, please send an email with your complete contact information (name, title, company name and phone number) to email@example.com.