wellbet手机版app-Direct Selling’s Strength in the World’s Billion Dollar Ma
DATA:2015-09-29 17:53 From:DIR Group
Direct selling continues to gain ground worldwide, with global retail sales and the total salesforce both reaching record highs in 2014.
The World Federation of Direct Selling Associations (WFDSA) estimates that retail sales rose 6.4 percent to $182.8 billion in 2014, up from $171.8 billion in 2013, with all regions and three-quarters of direct selling countries posting gains. The total salesforce grew by 3.4 percent in 2014 to 99.7 million people, up from 96.5 million in 2013. All of which lights the stage for coming geographic shifts in market dominance.
“The most recent figures highlight the increasing opportunities that direct selling offers,” says WFDSA Chairman Doug DeVos. “Customers seek personalized service and quality products, and direct sellers are able to meet those needs in a way that is convenient and enjoyable. At the same time, people who aspire to earn a little extra or launch a full-time business venture are drawn to direct selling due to its flexibility and pay-for-performance structure. It’s exciting to see more people, both customers and distributors, enjoying the benefits of direct selling.”
As part of WFDSA’s annual global statistics gathering, data is collected in local currency figures, which are then converted to U.S. dollars using 2014 exchange rates for all years. When comparisons are made to determine year-over-year change, this practice eliminates the impact of currency fluctuation, explains Judy Jones, Market Research Insights Leader at Amway and Chair of the WFDSA Global Research Committee. The 2015 report comes with an expiration date of May 2016, when the next year’s data will be published. For some markets, sales are estimated until the respective country reports its official figures to the WFDSA. At that time, actual data is restated and accounted for the next year.
These most recent figures confirm direct selling’s strength and its ability to keep reaching more people—as sellers and consumers—in all corners of the globe. The industry’s 6.5 percent three-year compound annual growth rate (CAGR) from 2011 to 2014 is evidence of that power.
The Top 5 countries account for 61 percent of all global sales. All but one report a positive CAGR (2011-2014):
1. United States, 4.9 percent
2. China, 18.7 percent
3. Japan, -2.3 percent
4. Korea, 8.1 percent
5. Brazil, 6.7 percent
In all, 23 countries posted retail sales from direct selling of $1 billion or more in 2014. That group accounts for 93 percent of global sales from direct selling.
Leading the pack of the Top 5 countries once again is the United States, where the 2014 sales of $34.5 billion set a record and grew by 5.5 percent from the prior year. The U.S. CAGR for 2011 to 2014 is 4.9 percent. There are 18.2 million people who distribute products, up 8.3 percent from 2013. Nearly 75 percent are women, which means 14 million females are building their own businesses.
Overall estimated retail sales rose 6.4 percent to $182.8 billion in 2014, up from $171.8 billion in 2013.
Companies that are members of the U.S. Direct Selling Association (U.S. DSA) employ 55,300 people who are highly trained experts in their field. For example: 3,000 employees are science professionals, including chemists, biologists and engineers.
“Robust salesforce and revenue figures only tell part of the story behind direct selling’s success in the United States and around the world,” says Joseph N. Mariano, President of the U.S. DSA. “Our channel also provides tremendous professional opportunities to thousands of individuals committed to sound science, product integrity, ethics and a superior customer experience. As the direct selling channel continues to grow, so too will new prospects with companies across a wide variety of industries.”
The China Factor
Despite the growth in the U.S., all eyes are on China. With 2014 sales of $30.2 billion, it is growing ever closer to claiming the No. 1 spot among the world’s billion-dollar direct selling markets. China’s phenomenal year-over-year growth rate of 18.6 percent puts it on pace to bump the United States to the No. 2 spot in 2015, as long as current growth trends continue, predicts DIR Group Management Co. Ltd., a Wuhan City-based firm that provides industry research and consulting to direct selling companies in China.
DIR Group Management subsidiary and consultancy Syncplex predicts China will continue to grow in retail direct selling revenue for 2015. According to Syncplex CEO and Founder Lau Chong Guan, “The number of licensed companies is on the rise and should reach 70 by the end of 2015. The Chinese government granted 15 new licenses as of July 2015, and there is rapid growth among new companies.”
China’s $30.2 billion in 2014 sales, as recorded by the WFDSA, only includes licensed companies. Syncplex believes there is another 20 percent in sales recorded by companies without licenses, which would bring the China market close to $36 billion in 2014.
Clearly, China is a country primed for direct selling. Its growing middle class has money to spend and is eager to experience a wide range of consumer goods, including health and wellness products that focus on prevention. At the same time, transportation issues that once made it difficult to get products to consumers in rural China are less of an issue today.
For the bulk of direct selling companies, China will remain an intriguing market to observe. Only the very largest direct sellers based outside the country—such as Amway, Avon, Herbalife, Mary Kay, Nu Skin and Oriflame—have achieved success in China. As well, several Chinese and Asian players have been successful, for instance, Perfect, Infinitus, Joymain and Tiens. Still, growth in the market is likely to be concentrated among a few players. Here’s why:
China’s relationship with direct selling began in the 1990s, when Avon entered the country. Scandals among other companies caused the Chinese government to ban direct selling in 1998. When China joined the World Trade Organization in 2001, it agreed to reopen its doors to direct selling, which it did in 2005. Today there are about 50 licensed direct selling firms operating in China. The official number of independent consultants is unknown.
During the ban, companies that first entered China, including Avon and Amway, evolved their business models to comply with Chinese law. This meant opening standalone retail stores (called specialty shops) that allowed for continued sales and a brand presence. Despite the ban, direct sellers that operated retail outlets maintained growth rates and grew their market share in cosmetics and toiletries from 2000 to 2005. Stores expanded at rates between 2 percent and 5 percent, and direct sales grew between 4 percent and 9 percent.
The industry’s 6.5 percent three-year compound annual growth rate (CAGR) from 2011 to 2014 is evidence of direct selling’s strength and its ability to keep reaching more people in all corners of the globe.
To avoid a repeat of earlier scandals, in 2005 the Chinese Ministry of Commerce put strict rules in place to obtain a direct selling license. The process is complicated and lengthy. However the government did loosen up rules for online sales. It wants online shopping to account for more than 5 percent of China’s total retail sales by the end of 2015. To achieve that goal, Chinese officials are encouraging multi-channel sellers that operate traditional stores to offer online shopping.
Today, direct selling fits nicely into China’s current economy and cultural outlook. The person-to-person interactions dovetail with the cultural aspect of guanxi or “doing business with people you know. “
“More people want to be entrepreneurs, and so direct selling, in fact, provides them with the opportunity to invest small to start their own business,” Brian Liu, a senior manager at DIR Group Management, says via email.
China’s phenomenal year-over-year growth rate of 18.6 percent puts it on pace to bump the United States to the No. 2 spot as soon as next year, some industry experts believe.
Claiming a Spot on the World Stage
From the Chinese perspective, there are two major direct selling markets in the world: one is the global market minus China, and the other one is the China market. The ability to use Internet sales and smartphones in direct selling embraces China’s entrepreneurial spirit.
Social media channels such as WeChat let consultants create online “micro-shops” to promote and sell their products, and many of these online stores use a simple multi-level payout structure, says DIR Group Management President Brian Cai.
\Native and international companies are keen to tap the China market, especially pharmaceutical firms. Two new healthcare and beauty product firms began direct selling operations in 2014—Taiwan-based Orient Pharmaceutical and Shandong Province-based Sanzhu Fuer Pharmaceutical. Both make medical and health products. Other established native Chinese direct sellers are eager to show off their success while rewarding their salespeople with tours around the world.
In May 2014, Perfect China (a seller of health food, household, beauty and skincare products) sent 7,000 distributors on a tour of California. The group logged 12,000 hotel room nights at 30 hotels. It was the largest single group meeting from China to ever visit the U.S., says the Anaheim/Orange County Visitor & Convention Bureau. The event generated $85 million in revenue for the region’s economy.
This May, the Tiens Group, which offers healthcare products, booked more than 4,700 rooms in 79 hotels in France to take 6,000 consultants on a four-day excursion to celebrate the company’s 20th anniversary. The trip generated $20 million in revenue.
In the same month, Infinitus, a direct seller of modern Chinese herbal products, sent 12,700 consultants, sellers and customers on six-day trips to Thailand. The company sent people in groups of 2,000 to 3,000 to visit Bangkok and the beach town of Pattaya. Thailand’s tourism officials reported an economic impact of $18 million, according to published reports.
Today, direct selling fits nicely into China’s current economy and cultural outlook. The person-to-person interactions dovetail with the cultural aspect of guanxi or “doing business with people you know.”
Surrounded by Growth
Direct retail sales and direct sellers are on the rise across the globe, as WFDSA data illustrates.
Asia is by far the largest region for direct sales in 2014, claiming 45 percent of global retail sales. China, Japan and Malaysia make up 64 percent of that. The three-year CAGR for the region is up 8.4 percent to $81.5 billion.
Ten of the 23 billion-dollar markets are from the Asia/Pacific region:
2: China15: Thailand
3: Japan19: Australia
4: Korea20: Philippines
9: Malaysia22: India
12: Taiwan23: Indonesia
The Americas account for 37 percent of 2014 retail sales. South and Central America generate 17 percent, and the United States and Canada combine for 20 percent. The three-year compound sales growth rate for this geographic sector is up 5.9 percent to $67.4 billion. The region claims seven of the 23 spots:
1: United States16: Peru
5: Brazil17: Canada
7: Mexico18: Argentina
Europe is the world’s third largest region for direct sales. As a whole, it delivers 17 percent of retail revenue. Of that 17 percent, 75 percent is from Western Europe and 25 percent takes place in Central and Eastern Europe. The region’s three-year CAGR is 3.4 percent to $32.6 billion. Six of the top markets are European:
6: Germany11: Russia
8: France13: Italy
10: United Kingdom21: Poland
Africa and the Middle East, together, account for roughly 1 percent of global direct retail sales.
As one might expect, Asia is home to the most people participating in direct selling as independent consultants. Its salesforce grew 1.6 percent in 2014 to 51.1 million people, according to the WFDSA. The Americas jumped 5.7 percent to 33.1 million sellers. Europe climbed 4.4 percent to 14 million distributors.
China and other Asian countries, plus emerging markets in Latin America, are fueling much of the industry’s growth. Emerging markets as a whole produced 45 percent of all 2014 direct retail sales, an increase of 7 percentage points from 2010 to 2014.
In 2014, Argentina had the highest year-over-year growth among the billion-dollar markets with 37.7 percent, as well as the highest three-year cumulative growth rate with 28.8 percent.
It can be interesting to look at what’s driving growth in individual countries. The national economy, government regulations, technology and social media, and a rising consumer class all play a role. Emerging markets as a group have experienced a three-year CAGR of 10.7 percent. Advanced or more developed markets posted compound annual sales growth of just 3.5 percent for the same period.
In 2014, markets with the highest year-over-year growth are:
· Argentina, 37.7 percent
· China, 18.6 percent
· United Kingdom, 10.9 percent
· Colombia, 10.4 percent
Countries with the highest three-year cumulative growth rate are:
· Argentina, 28.8 percent
· China, 18.7 percent
· Philippines, 17.6 percent
· India, 12.3 percent
· Indonesia, 11.3 percent
Latin America offers huge potential for direct selling, says Roberta Kuruzu, Executive Director of the ABEVD, the Brazilian Association of Direct Selling Companies. Many residents are seeking new earning opportunities to supplement their household income, and governments are launching programs to encourage national economic development and foreign investment.
Direct selling companies “need to address their efforts to understanding the tax and legal aspects of the model,” Kuruzu says. Other important aspects include working to understand the logistic processes of navigating a large country like Brazil or other less developed markets.
In Colombia, a government plan called Pipe 2.0 was designed to generate investment in education, infrastructure, housing, industrial production, mining and tourism. The plan is expected to create 322,000 jobs and juice the economy by up to 3.5 percent, says Netherlands-based business operator TMF Group.
Amway’s adaption strategy in China of employing the Chinese people and featuring Chinese models in advertising could pay off in other emerging markets, Chairman Steve Van Andel told Fortune magazine in 2014.
But in Colombia, like in many other countries, starting a direct selling business that succeeds depends on being able to navigate the local culture, in-country regulations, and laws and licensing processes.
Amway’s strategy in China could pay off in other emerging markets, Chairman Steve Van Andel told Fortune magazine in 2014. He noted that in China, Amway employees are Chinese and advertising features Chinese models. “We always took the approach from the beginning that we need to make sure that when people look at our business, even though they know it’s a U.S. business, they know it’s been adapted to China,” he says.
Van Andel says Amway was not as grounded as it could be in Latin America, and would be working to change that.
In China, companies that incorporate the preferences, history and beliefs of consumers are finding huge success. Nu Skin recently built a new regional headquarters and is capitalizing on its anti-aging treatments. Amway constructed a Nutrilite plant research center in the country, the first facility for its brand of vitamins, minerals and dietary supplements.
Amway also launched a dedicated social media channel in China called Amway Plus, as well as cloud service through WeChat. These offerings let members interact directly with Amway, access member privileges and accumulate points through purchases.
“Brazilian consumers like to receive recommendations from each other. Brazilians are very relational people who enjoy being together and exchanging experiences.”
—Roberta Kuruzu, Executive Director, ABEVD (Brazilian Association of Direct Selling Companies)
Wellness, Cosmetics and Personal Care
Direct sellers provide customers with a wide variety of products and services, from cosmetics to utility services. Many consultants were product users before becoming company representatives, and some choose to use the products themselves and not sell them at all.
This works perfectly with the social selling aspect of direct selling, which was discussed at length at the WFDSA World Congress in 2014 as the original social network. For more than 100 years, the industry has used personal recommendations in an organized way of doing business, Kuruzu says.
“Social media tools are a powerful way to leverage the relationship skills that direct selling has always had,” she says. “Nevertheless, we believe that social media or digital life will never replace the personal contact.”
But for those who do, product categories in beauty, personal care and wellness are the most popular. This holds true globally and regionally.
2014 global sales by product category:
· Cosmetics & Personal Care: 34 percent
· Wellness: 29 percent
· Household Goods & Durables: 13 percent
· Clothing & Accessories: 7 percent
· Utilities: 3 percent
· Financial Services: 3 percent
· Books, Toys, Stationery: 3 percent
· Home Care: 2 percent
· Home Improvement: 2 percent
· Foodstuff & Beverages: 1 percent
· Other: 3 percent
Cosmetics and personal care along with wellness items are the top two product categories in each region for which data is available. Household goods, home improvement, and clothing and accessories round out the third slot in the various regions (see below).
2014 regional sales by Top 3 product categories:
· Cosmetics & Personal Care: 25 percent
· Wellness: 39 percent
· Household Goods & Durables: 17 percent
· Wellness: 30 percent
· Cosmetics & Personal Care: 18 percent
· Household Goods & Durables: 15 percent
South & Central America
· Cosmetics & Personal Care: 66 percent
· Wellness: 18 percent
· Clothing & Accessories: 8 percent
· Cosmetics & Personal Care: 24 percent
· Wellness: 26 percent
· Home Improvement: 13 percent
Central & Eastern Europe
· Cosmetics & Personal Care: 61 percent
· Wellness: 16 percent
· Clothing & Accessories: 7 percent (tie)
· Household Goods: 7 percent (tie)
Data is not available for Africa and the Middle East as a region. But in South Africa, cosmetics and personal-care items claim 40 percent of direct retail sales, followed by household goods (26 percent) and wellness products (17 percent).
In Brazil, which is the No. 5 market with 2014 sales of $13.0 billion and a CAGR of 6.7 percent, the country’s economy is struggling, says Kuruzu, of the ABEVD. “Despite that, direct selling is a very good opportunity for people who are unemployed and looking for extra or a main source of income,” Kuruzu says. The country’s cultural aspects are the perfect environment for direct selling, says Kuruzu. “Brazilian consumers like to receive recommendations from each other,” she says. “Brazilians are very relational people who enjoy being together and exchanging experiences.”
Russia is the 11th largest market for direct selling. Its $3.6 billion in 2014 sales set a record for the country. Growth is a bit slower here than in other nations, but sales remain strong. Russia’s CAGR is 1.6 percent from 2011-2014. Look for that number to grow as more residents sign on to be independent consultants. The field grew by 7.6 percent to 5.4 million people, and 88 percent are women. Such growth is a good indicator of coming sales increases.
There are 19 wellbet官方登录-Member Companies in Russia’s DSA. The group employs 6,743 people. One-third of the businesses make their products in Russia while 40 percent outsource to Russian suppliers. Some firms do both. And 70 percent of Russia’s direct selling entities operate national head offices within the country.
Argentina posted 2014 direct retail sales of $1.8 billion, making it the 18th largest market on the globe. Those sales are a record for the nation and calculate to a year-over-year increase of 37.7 percent. Fast growth is likely to continue, as evidenced by a CAGR of 28.8 percent and an expanding salesforce.
Turkey is about to break into the billion dollar club. With 2014 sales of $877 million and a year-over-year growth rate of 10.5 percent, the market is backed by a strong growth curve.
There were 715,000 distributors in Argentina, up 2.1 percent from 2013. Of those, 95 percent are women who own their own businesses. Argentina’s 11 DSA member firms employ 3,621 people and are heavily invested in manufacturing their products within the country’s borders. Thirty-six percent of direct selling wellbet官方登录-Member Companies make their products in-house and 73 percent outsource to other Argentine companies.
Australia is No. 19 among billion-dollar direct selling markets with $1.4 billion in sales in 2014. That’s up 5.4 percent since 2013. The country, which is home to popular spice maker Your Inspiration at Home, counts a field of 557,000 distributors. Seventy-eight percent of sellers are women. The salesforce grew by 10.2 percent last year. Combined with cumulative three-year growth of 3.9 percent, the country should continue to post strong sales figures.
Poland is now the 21st largest direct selling market in the world. Its 2014 sales were $1.2 billion, marking a record year for the European country. Poland’s compound growth rate from 2011 to 2014 is 5.2 percent.
Women dominate the Polish direct selling salesforce, making up 87 percent of the 970,933 independent consultants. The number of distributors grew by 7.9 percent in 2014. In addition, Poland DSA’s 22 member direct selling companies employ more than 1,500 people.
Indonesia is the world’s 23rd largest direct selling market with 2014 sales of $1.1 billion, up 8 percent from 2013. The nation’s double-digit CAGR of 11.3 percent bodes well for continued growth. The salesforce of 11.7 million people grew by 14.5 percent last year. DSA wellbet官方登录-Member Companies employ 3,472 people.
Direct selling firms in Indonesia have developed a robust supply chain. Among wellbet官方登录-Member Companies, 1 in 5 operates manufacturing centers in Indonesia and 2 in 5 outsource to other Indonesian suppliers.
Turkey is about to break into the billion dollar club. With 2014 sales of $877 million and a year-over-year growth rate of 10.5 percent, the market is backed by a strong growth curve. The country’s CAGR is 5.4 percent from 2011 to 2014. Turkey is also growing its salesforce, up 2.1 percent in 2014 to 1.1 million sellers. Women make up 84 percent of that group.
The Turkish DSA includes 10 wellbet官方登录-Member Companies that employ 702 people. Only two of the wellbet官方登录-Member Companies are based in Turkey. The others support their in-country operations from regional infrastructure centers outside of Turkey. The WFDSA says this “provides a strong example of the interdependence of nations and how direct selling helps attract direct foreign investment to a market.”