Features

Reasons are under debate; industry experts warn recovery may take several years.

By David Rauf

“This is an opportunity for the industry to reinvent itself, and there’s a common theme across the board that everyone sees the need for it.”
—Mona Ameli, owner, Ameli Global Partnerships

Companies small and large are revamping core aspects of their business models to adjust to the myriad pressures.

The U.S. direct selling channel is heading into the holiday season with the looming prospect that 2018 will be its third consecutive year marked by sluggish sales. Industry experts say it could take several years before the domestic market starts seeing substantial revenue increases again as direct sellers reboot their business models to adapt to the digital age as well as other pressures on the model.

A slight drop in sales in both 2016 and 2017 put an end to a relatively robust period of growth. Between 2010 and 2015, U.S. revenue jumped by more than 25 percent to $36.1 billion, according to the Direct Selling Association (DSA). But sales in 2017 totaled $34.9 billion, down 1.6 percent year over year.

Industry’s failure to unite may weaken its collective power.

By Teresa Day Craighead

What does our channel have at its core that unites its participants? This may sound like a rhetorical question; however, the answer appears to be increasingly elusive.

“The stigma is exacerbated by the fact that we continue to lean on the same jargon.”
—Jim Turner, industry executive and consultant

Unable to even agree upon a shared name—MLM, network marketing, direct selling, social selling or something else—companies under the “direct selling industry” umbrella seem indecisive as a collective.

Even calling the group an industry has been debated since “industry” typically refers to a group of companies who at least have similar products in common. Some commentators, including this paper, prefer to use the word “channel,” indicating that what links us together is the manner in which products are distributed through an independent salesforce.

Proposed legislation may weaken industry’s collective power.

By Corinne Lincoln-Pinheiro

The clearly evolving environment in the American workplace will undoubtedly create amendments in existing statutes or generate new legislation says Adolfo Franco, chief counsel of the Direct Selling Association (DSA). Those efforts, he emphasizes, “do not change what we are.”

In anticipation this conflict would only intensify as the conversation about the changing American workforce and the gig economy developed, the DSA is looking at existing statutes to ensure clarity around correctly classifying direct sellers as independent contractors across all types of legislation.

Industry practice of using health professionals to bolster sales is questioned.

“We work closely with the marketing group because the research that we do is often hard to explain. We put the science around our products into understandable words.”
—David Vollmer, chief scientific officer, 4Life Research

“Regulators have been forced to be as severe as they are because there are a lot of really shaky claims out there.”
—Dr. James Gutman, chief science officer, Immunotec

The practice of direct selling companies utilizing scientific and medical advisory boards, clinical studies and expert spokespeople to help market their products is being examined by consumer advocates and regulators in an effort to curb what they view as misleading and deceptive marketing, according to a consumer group.

“We’ve always assumed that businesses engage experts to advise them with their products and services,” says Bonnie Patten, executive director of Truth in Advertising (TINA.org), a non-profit consumer advocacy group focused on uncovering false advertising. “One area that we have started to focus on is the use of these experts, more specifically medical advisory boards, as a marketing tool.”

Marketers from the mainstream consumer products companies require a mindshift when considering direct selling.

By Lori Bush and Elizabeth Thibaudeau, for Social Selling News.

The way we shop has fundamentally changed. With the “retail apocalypse” many CPG marketers are looking to direct selling for their futures.

But do they understand what’s in store when
they move out of the store?

In direct selling and arguably in traditional CPG marketing models, temporary price promotions are like pain killers. They should be used sparingly and only when absolutely needed.

The way we shop has fundamentally changed, and the giant consumer packaged goods (CPG) industry is feeling the impact. With the “retail apocalypse” many CPG marketers are looking to direct selling for their futures.

But do they understand what’s in store when they move out of the store?
The marketing strategies of both approaches—consumer goods and direct selling—ideally start with a compelling product value proposition and a validated consumer need. But that’s pretty much where the similarity ends.

The entrepreneur was known for his philanthropy, political activism and faith.

Richard DeVos, the co-founder of Amway, died from complications of an infection on Thursday, Sept. 6, 2018, at the age of 92 in his hometown of Ada, Michigan.

In addition to founding the most successful direct sales company in the United States, the ambitious DeVos, who purchased the NBA Orlando Magic franchise in 1991, was also known for his devout Christianity, philanthropic efforts and for making major financial contributions to the Republican party over the course of his life.

While discounts can boost short-term revenue, they often do more harm than good.

By Scott Bell

Every time you run a discount promotion of any kind, you send the message to your customers that your price points are movable; that while your products may not be cheap now, they will be eventually.

Achieving a 1 percent increase in retention can give you a 5 percent increase in sales. If your sales are lagging, it’s more than likely that some of your distributors aren’t sufficiently motivated to tell the world about your products.

Need a fast way to perk up your direct selling organization’s sluggish sales numbers? The easy answer is to run a promotion. But is this the right answer?

It’s easy to say yes when your buy-one-get-one event causes a huge spike in the sales numbers for your best-known product line. After all, nobody wants to argue with cold, hard cash.