Headline News

Direct selling products on record in China have been reduced by nearly half after being reviewed by authorities, the Ministry of Commerce (MOC) announced June 10. Chinese authorities launched a nationwide campaign to crack down on irregularities in the health product market in April, including reviewing registered direct selling products, trainers and sellers. After the recheck, the number of direct selling products on record decreased by 44.5 percent, from 4,304 to 1,917. Both the number of direct sales trainers and sellers declined by over 16 percent. A total of 89 direct selling enterprises completed the review and registration process. Two companies were suspected of committing crimes of pyramid selling and failed to conduct reviews and registration in accordance with relevant procedures.

The California state assembly passed a bill in May that would make it harder for companies to assign independent contractor status to its part-time workers. The bill is known as AB5 and expands on the Dynamex Supreme Court “ABC Test” decision from last year. Supporters say the bill will provide hundreds of thousands of independent contractors in California the protection of employee status. Critics say the state is interested in the estimated $7 billion it loses in tax revenue from companies that utilize independent contractors. The bill is headed to the state senate next.

Eureka Forbes, the well-known purifier maker that built its foundation on direct sales, is shifting greater focus to e-commerce and its retail stores, to compete in a market now crowded with more than 150 brands, including from big firms such as Hindustan Unilever. While Eureka Forbes holds nearly 60 percent share of the entire electric water purifier market (estimated at US$646.9 million), only 7 percent to 10 percent of its overall sales are online. Plans also include increasing its number of retail stores from 20,000 to 25,000 and bringing its direct sales to smaller towns, as well as marketing its lesser known products, such as air purifiers and home security solutions.

New Age Beverages (NBEV—NASDAQ) acquired functional juice direct seller Morinda in December 2018 for $85 million to expand its production and distribution of CBD-infused beverages. Continuing to expand its distribution and logistics infrastructure, in June, New Age acquired Brands Within Reach, bringing the company’s annual revenues to more than $320 million. In Q1, Morinda’s sales accounted for 83 percent of the company’s top line.

The FDA held its first public hearing May 31 to evaluate the safety and efficacy of CBD products, which have exploded onto the market claiming everything from pain relief to depression support. The FDA planned to delve into manufacturing, product quality and concentration, marketing and effects of long-term use to determine how to regulate CBD. Researchers, doctors, patients and witnesses from the supplement industry were set to testify about their experience. Dr. Ned Sharpless, acting commissioner of the FDA, pointed to the issue of safety during the hearing, as the use of CBD in food and dietary supplements is yet to be determined.

VERB Technology Company Inc. (VERB—NASDAQ), a creator of business-focused interactive video as well as Augmented Sales Intelligence software, has acquired Sound Concepts, a provider of digital marketing and customer relationship management (CRM) applications for the direct sales and affiliate marketing industries. Each share of Sound Concepts’ capital stock issued prior was converted to a proportionate share of $25 million of value to shareholders through a cash payment and VERB stock. The cash payment consisted of an aggregate of $15 million, which was paid using a portion of the net proceeds VERB received as a result of its recent public offering of units that closed on April 9.

Educational Development Corp.’s (EDUC—NASDAQ) direct sales division, Usborne Books & More (UBAM), has driven the company’s revenue for the past three years. While EDC’s publishing division had a higher revenue gain in the year ended Feb. 28, 2019, UBAM did increase 4.5 percent in fiscal 2019 to $108.4 million. Total revenue for the year was $118.8 million. According to the company, the uptick in UBAM’s sales was due to an improvement of 3.6 percent in the number of independent representatives selling its books and educational material with totals averaging 32,000 in the year. Executives also credit “improvements and expansion of our product lines” for the positive numbers.

Based on a new study in the American Journal of Preventive Medicine, Harvard researchers have determined energy drink consumption in the U.S. has jumped significantly since 2003, especially among young adults (from 0.2 percent to 1.4 percent). The study revealed that energy drink consumers had considerably higher total caffeine in their systems compared to non-consumers. After reviewing data from the National Health and Nutrition Examination Survey taken from 2003 to 2016, researchers at Harvard’s T.H. Chan School of Public Health expressed cause for concern when looking at the increased caffeine and sugar intake, which can lead to “negative health consequences.” Senior author of the study, Sara N. Bleich, a professor of public policy at Harvard, pointed to “consistent labeling” and an “upper caffeine limit” to lessen the negative impact.

Snapchat has launched more shopping opportunities in its app, letting top influencers have select access to open stores ahead of the crowd. Starting with Kylie Jenner, Kim Kardashian, Shay Mitchell, Spencer Pratt and Bhad Bhabie, Snap Store plans to add official accounts from Khloe Kardashian and Rob Kardashian soon, followed by publishers later this year. Snapchat’s U.S. users can access the shops, powered by Shopify, but due to data-privacy restrictions in some countries, international users will be directed to a mobile website. Snap Store looks to engage users with expanded shopping features while offering creators more ways to generate revenue from the platform.

Amazon has designed its latest drone to deliver small items in less than 30 minutes. The new drone can perform vertical takeoffs and landings like a helicopter but shift to a more efficient airplane mode once airborne. Safety measures include wings that can enclose the device as well as six degrees of motion freedom, compared to the standard four. Using AI, the drone can react independently to changes in its environment and detect and avoid obstacles. With capabilities of carrying up to five pounds, Amazon’s new drone will be able to fly up to 15 miles to deliver packages.