When the Pacific Line Islands welcome the first joys of the new year, slowly spreading it to other countries one after the other, it is an occasion that fills people around the globe with more hope than happiness. Each year begins on a new note personally and professionally to begin something new, afresh and create better results.
The year 2023 has been quite a bumpy ride with various macroeconomic factors like geopolitical tensions, inflation, consumer conservatism, etc. However, the direct selling sector shifted its gear to neutral to sail smooth despite uncertainties and unexpected setbacks.
Having been in the industry for nearly a decade, at Epixel, we take immense pride in being a part of the direct selling fraternity. Every year, we compile this annual overview article as an ode to the channel that has impeccable potential, opportunities, resilience, integrity, adaptability, and innovativeness whose dynamic landscape is fertile ground for growth and progress.
Quarter 1 – January to March
They say well begun is half done. The channel, despite various hiccups, kickstarted the year on a great note marking a record high of $16,105 (USD million). According to the WFDSA 2022-2023 global report, the direct selling industry made $172.8 billion in retail sales. Although the total global direct sales dropped 1.5% year-over-year, the report is a vivid illustration of how direct selling is expanding globally and is delivering improved results each year beyond demographics, culture, or race.
Of the 70 global markets, 47 reported positive retail sales growth and the top ten markets constituted 78% of the network marketing industry’s global sales.
Veteran direct seller and WFDSA Chairman Robert Barnett remarked,
“With all the volatility in the world, I believe this is the time for our industry to rise and shine. Now is the time we bring a more powerful and inclusive business model to the forefront of the world’s attention. NOW is our time to broaden our view of our stakeholders to care not just for our customers, our distributors, and our employees, but to also care for our communities and our planet”.
On that note, let us analyze how the industry swam through to resounding success with empowering, inclusive, innovative, adaptable, and diverse strategies.
Quarter in a nutshell
Veteran direct selling brand QNET in its initiative towards empowering women launched FinGreen program to advocate financial literacy for women in Turkey. Joining hands with the Foundation for The Support of Women’s Work (KEDV), QNET found out that only 54% of the women in Turkey had a bank account. To foster financial independence and address knowledge gaps, QNET and KEDV together led financial workshops and training sessions to let women gain economic independence and thus be instrumental in the nation’s growth.
Coway Co., another direct selling business pioneers were recognized with the 2023 CES Innovation Awards for their groundbreaking technology and product innovation, engineering, functionality, aesthetics, and design. What qualified Coway to this prestigious award is its Eco-Friendly Paper Water Purifier that utilizes only a single sheet of paper instead of plastic for power-free water purification, and their Everyday Care Bidet, that employs AI for user health management.
Coway’s Seoul-based R&D center, the Environmental Technology Research Institute won the TÜV SÜD Korea accreditation as a designated laboratory. With this recognition, the facility can now test its own product in-house in the areas of microbial testing, hazardous substance testing and can also evaluate the antibacterial performance of home appliances against bacteria and fungi in its water purifiers, air purifiers and bidets, and test for volatile organic compounds in mattresses.
These recognitions count as Coway’s continuous efforts in developing innovative and sustainable products and enhancing customer experiences.
Avon Worldwide underwent global rebranding involving revamped packaging and an improved typeface. Joining hands with Wunderman Thompson UK, a London-based creative agency, Avon gave its 135-year-old brand a total facelift by adopting a fresh visual and creative strategy. They also unveiled their latest campaign “Embrace Your Power” which highlights and honors women associated with Avon. This new step is an example of how direct selling companies strive to stay up to date with changing customer interests and perspectives.
The direct selling health and wellness giant USANA launched its newest affiliate program aiming to tap into unexplored markets. According to the latest program, affiliates could earn 15%-20% commission on sales when they share the brand’s products through their personal links. They could also enjoy a customized compensation plan designed to their unique style by sharing the brand and its unique benefits.
Industry breakthrough
The Federal Trade Commission (FTC) proposed a ban on noncompete clauses in late January. The proposed rule was meant to prohibit employers from enforcing noncompete clauses on employees which was found to be an unfair method of competition, which is a violation of Section 5 of the FTC Act.
For direct selling enterprises, this ban would imply that the corporate leaders will have to approve independent distributors who wish to represent multiple companies simultaneously. Although a prevalent practice but not always endorsed by companies.
“Digitization and further development of digital technology will change the rules of the game. Connectivity, convenience and community are the key beauty buzzwords for this year. Brands that offer applications, options for personalizing shopping, or the ability to "try" products online will win on the market. Digital technology will transform customer experience, service and the purchasing decision-making process.”
Essential impact
The 2023 Women’s Small Business Survey conducted by Office Depot Inc. revealed that despite challenges, entrepreneurship has helped improve work-life balance for women. The poll was conducted among 1000 businesswomen who own and operate small businesses of which 70% recorded that they enjoyed being their own bosses which is a 4% increase compared to the previous year. The direct selling sector saw this as an opportunity to encourage more women to venture into the channel and be their own bosses.
Quarter 2 – April to June
When The World of Direct Selling released statistics from the sales in first quarter, a declining trend from 2022 seemed to be continuing. Six major public direct sellers like Herbalife, Medifast, Natura &Co, Nu Skin, Oriflame and USANA saw a decline in their sales figures from 6% to 20%. The channel had already foreseen its movement towards the inflection point contending between growth and decline. Considering the inevitable need to change in order to tackle challenges and embrace growth, every direct selling business intensified their distributor training, enhanced customer experience platforms, reworked on inventory management and most importantly reinforced loyalty programs to gain a momentum midst rising competitions.
Quarter in a nutshell
Considering the opportunities and the potential market growth in India in the next few years, businesses are venturing into the region to capitalize on emerging possibilities and establish a robust market presence. In the second quarter of 2023, USANA announced that they are entering into the Indian market as the next step to their international expansion making it the 25th market that they are present in. With the region’s vivid culture and demographics, businesses are aiming to launch their health and wellness products into the market as a starter.
Amway Global CEO Milind Pant also shared the brand’s excitement in venturing into the Indian market stating that he is “bullish” on the India investment plan. India being a geo-strategic sweet spot and its growing digital, entrepreneurial, infrastructural, and socio-economical capabilities, businesses forecast that the Indian economy is set to be at par with the United States by 2035.
4Life Europe had already set the bar very high in terms of sustainability and net zero initiatives by partnering with the UPS Carbon Neutral Program in early 2020. They are now taking a significant step by mitigating their carbon footprint and reducing emissions. They even neutralized the CO2 emissions generated during their recent incentive trip to Athens by planting trees in Viu de Llevata, Lleida. With their constant efforts, the brand has been able to make a substantial impact on reforestation, greenhouse gas elimination, wastewater treatment and methane emission reductions. In 2022, 4Life mitigated almost 120 metric tons of CO2 emissions. Indeed, a green initiative!!
Industry breakthrough
Over the years, direct selling brands have been under the strict surveillance of the Federal Trade Commission (FTC) due to various deceit and fraudulences happening in the channel. As a result, the FTC has penalized companies under Section 13(b). The Supreme Court in 2021 found that FTC is exercising 13(b) incorrectly and has no authority to seek monetary relief or restitution from companies. Further to this, the agency altered its approach and issued notices to over 700 companies that included direct selling brands mostly stating that they would be held responsible if deceptive endorsements, specifically income earnings claims, were made. FTC also announced that they will be imposing stringent regulations regarding auto-renewal programs.
This escalated to a unanimous ruling in April 2023 by the Supreme Court stating that the FTC has limited powers after looking at the constitutionality of both the prosecutorial and judicial functions residing within the same agency.
Essential impact
With the rising impact of the gig economy, the number of people who are working side hustles has increased manifolds. To justify the same, a new study commissioned by Herbalife states that almost half of Americans are turning to side gigs for supplemental income. While some saw this as an extra income to make ends meet, others saw this as an alternative way to keep up with the rising cost of living rather than relying on a single source of income. 2000 Americans and 6500 international participants from over nine countries took part in the survey and the result is a clear example of how finding a side hustle is a necessity considering the economic instability that countries are facing. Over the last few years, the impact of gig economy has been evident in the direct selling sector too with more people turning in to lessen the financial burden.
Validating the above fact, UK DSA’s new data shows that there has been a substantial increase in the number of people joining the direct selling sector in the first quarter of 2023 which was a rise of 36.4%. With the amount of work independence and financial support that direct selling businesses provide, the sector is expecting more individuals to venture in, to become independent distributors or entrepreneurs.
“Thinking Global is important as it helps your team establish a global brand and general competitive positioning, as well as building synergies within your global business, like organizational structure, supply chain, operational hubs, and regional communications and marketing.”
Quarter 3 – July to September
By the third quarter, the industry has already got into a flow of the year with most companies facing a fall in their numbers and very few seeing a rise. However, the direct selling industry with its war-ready attitude has always been able to face any adversities and overcome unforeseen challenges.
The US Direct Selling Association in its Direct Selling Growth and Outlook Survey 2022 revealed that the annual retail sales generated by the direct selling industry in the year 2022 was $40.5 billion while in 2021 it was $42.7 billion, which is a 5% decline. Although this cannot be accounted as a major decline but, companies became vigilant with the innovations that needs to be integrated into their systems to enhance the flow of the business
Quarter in a nutshell
The women in the industry have been making quite an impact with them venturing into the sector with their diverse ideas and business innovations. The newest study by Seldia, the European Direct Selling Association, conducted in alliance with Ipsos and Direct Selling Europe (DSE), affirms the same where 89% of the direct sellers in Europe are found to be women. Over 26,000 European direct sellers from across 12 European Union countries took part in the survey where 3/5 of the participants were women with the 45+ age category.
Another significant finding from the study was that most women got to improve their interpersonal skills, boosted their self-confidence and esteem and enhanced their business, management and sales skills after joining the business. Which means that the direct selling sector has indeed empowered women!
Infinitus was recognized with the Global Code of Ethics Initiative Gold Award by the Thai Direct Selling Association for their unwavering commitment in enhancing their corporate protocols with an aim of better serving and safeguarding customers. The company also earned long-term support from the Thai government for their principles of quality management and strict policy of zero tolerance towards imperfections.
Industry breakthrough
DSA announced that it endorses the collaboration of the Direct Selling and Real Estate Agent Harmonization Act. Direct sellers and real estate agents were considered under the Internal Revenue Code (IRC) as independent contractors. With the new bill, DSA supposes that direct sellers and real estate agents can be defined as independent contractors across both statuses harmonizing Fair Labor Standards Act (FLSA) with IRC.
Essential impact
At a time when every generation is relying heavily on therapy to relieve stress and ease their mental tensions, Medifast in its new survey reveals that self-care is a priority for as much as 80% of Americans. The majority of the survey participants also stressed how self-care can strike a balance between health and habits, thus contributing to the overall well-being of an individual.
These numbers are pointing towards the necessity of enhancing health and wellness and personal care products which can contribute to creating healthy lifestyles and long-term wellbeing.
“With the number of technological tools and innovations at our disposal, the challenge lies in prioritization and effective integration into your business and existing technology. As the selling paradigm shifts, those who embrace and integrate these technological innovations stand at the forefront of growth and success in a changing industry.”
Quarter 4 – October to December
While another year comes to an end, the industry acquired numerous new insights on various aspects of business ranging from innovations, strategy, integrations, customer experience, distributor enhancement, technological advancements, loyalty and rewards and many others. Amongst these, what stood out was brands being on a constant quest to improve brand credibility through enhanced customer experience. Like every year, we saw quite a few direct selling brands taking birth, some undergoing a revamp, some companies sold off their laterals and some died a slow death. With newer brands coming in, the significance of improving the factors influencing customer experience remains prominent. As a result, brands are seen going wide and far to improvise their strategies and generate new stories of success.
Quarter in a nutshell
Mintel released its report on global beauty and personal care trends which unveiled the latest trends in the sector that could rule the year ahead. The major highlight of the report being
- Neuro-glow - That will focus on mind-body beauty, emphasizing the interconnectedness between mental well-being and physical appearance.
- Beaut-AI - Artificial Intelligence is poised to revolutionize the beauty industry improvising on personalization, efficiency and effectiveness. Nevertheless, ensuring governance and transparency will be crucial for sustainable growth of the business.
- Sophisticated simplicity - The beauty industry is set to experience a paradigm shift as customers increasingly seek advanced, effective and high-quality products.
Euromonitor International, a leading global market research company, published the Top Global Consumer Trends 2024 report which threw light on emerging customer values and shopping motivations. The report also stressed the significant influence of Artificial Intelligence, sustainability and various socioeconomic and political factors.
According to Euromonitor, the customer trends in 2024 are
- Ask AI – Direct selling businesses ought to leverage generative AI to upgrade personalization and enhance the overall customer experience.
- Delightful distractions – Customers are longing for relief from everyday stress and anxieties and are badly in need of a break from mundane tasks. A large chunk of customers expressed their willingness with brands tracking their emotions and tailor experiences based on their moods.
- Greenwashed out – While environmental issues are still a major concern, direct selling organizations are expected to take proactive measures and provide evidence for their commitment to environmental sustainability.
- Progressively polarized – With sociopolitical issues being able to mold an individual’s perspectives, values, and attitudes, customers shall express their convictions. As a result, customer spending could be influenced by factors such as social responsibility, political affiliation, and sustainability initiatives.
- Value hackers – Midst the rising cost of living, customers are trying to alter their financial mindset. They are implementing ingenious tactics to clout maximum best deals out of brands.
- Wellness pragmatists – Customers are on an unending quest to derive quick and effective solutions to improve their physical and mental well-being. Demonstrated effectiveness is sure to create an impact on their purchase decisions, where 85% of customers are ready to pay more for beauty products that have increased efficacy and benefits.
Industry breakthrough
Ineffective management is sure to affect every measure of success. From employees panicking to go to work due to unhealthy work environment, to those who are stuck with unclear expectations and toxic bosses, there are numerous reasons why people feel disengaged. This could ultimately lead to a decline in their productivity, affecting profitability too. This has paved way to the trend of quiet quitting where employees feel disconnected and put in minimum to no effort in their work.
Insights from Gallup’s State of the Global Workplace: 2023 Report show that only 23% of employees were found to be engaged in what they were doing. As much as stress is the biggest monster engulfing the mental well-being of employees, they are also longing to be recognized, receive respect, have better clarity around goals, and get better support and guidance.
As a summary of the whole report, Gallup highlights one simple strategy to improve team morale and business profitability - “Change the way your people are managed”. How thought-provoking, right?
Essential impact
Individuals aspiring to be entrepreneurs and joining the direct selling business dreaming of the same is very common in the sector. The 2023 Amway’s Global Entrepreneurship Report data shows how there is an increasing interest, acceptance and attraction to the idea of entrepreneurship.
Findings from the data state that nearly six in ten people are interested in beginning a business on their own. While 58% are interested in starting on their own immediately or in the future, 40% identified raising capital as the first barrier. With the increased emergence of the ecommerce market, most customers are comfortable buying from an online platform and thus business possibilities in the sector pose huge expectations among youngpreneurs and veteran sellers both at the same time.
In other news, Jeffrey Reigle, former president, and Chief Executive Officer of Regal Ware passed away towards the last leg of 2023. Reigle is remembered as a leader and innovator who led businesses with utmost perseverance and dedication to lead a brand with heart rather than brains. Dear Reigle, your commitment par excellence shall continue to inspire us and the generations to come.
“There’s been a lot of focus on Customer Acquisition over the last five years, and for good reason. After all, a core reason for being for any business is to acquire Customers. But with all these acquisitions, companies are now also seeing huge opportunities in turning that acquisition into repetition. In other words, what we all really want isn’t just “Customer Acquisition,” but rather “Repeat Customer Acquisition."”
Embracing tomorrow
2024 like every other year is seen with a lot of optimism by the direct selling fraternity. Every nuance and nitty-gritty that influences and impacts the long-term success of businesses is given prime focus to build brand integrity, authenticity, and legitimacy.
An effective leadership that can guide a business through challenges and inspire the workforce to achieve goals, and innovations that can adapt to varying market trends are essential foundations for a long-term business. Many direct selling businesses, that started off well fall midway due to poor management of finances. From detrimental financial practices, budgeting, cash flow management, and investment decisions, a wiser financial management has got a lot to do with a direct selling business.
“As Artificial Intelligence positions itself as the driving force behind not just the financial sector but virtually all industries, businesses are prompted to re-evaluate and strategically adapt. Embracing the capabilities of AI isn’t just about staying relevant; it’s about pioneering change and setting new standards in a constantly evolving landscape. The strategic adaptation of businesses to this wave becomes vital. But mostly because you don’t want to get knocked over.”
Direct selling businesses over the last few years have been extra vigilant about placing their products in the markets considering how customer needs, behaviors, and attitudes are changing every other day. Market positioning differentiating itself from the competitor is the key for any brand to be identified as unique.
Last but not least is ethical business practices which is the anchor that helps sail any ship to its destined dock despite challenges. Integrity, honesty, transparency, and ethical standards are the key components with which trust among customers, distributors and stakeholders can be built thus enhancing the brand reputation over time.
Considering the socioeconomic setup that the world is sailing through, 2024 is sure to be a year that poses challenges and adversities in one form or the other. However, the direct selling sector shall make it to the shore with its empowering, inclusive, innovative, adaptable, and diverse strategies!
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Source/References: Direct Selling News, GlobeNewswire, DSA, WFDSA, The World of Direct Selling
Disclaimer: Epixel neither promotes nor supports any of the companies mentioned in this article nor their products or services. The facts published here are represented as reported in the direct selling industry. The facts don't reflect our priorities. The article was compiled based on available resources and does not represent special mentions or priorities to organizations, persons, or products.
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