A global outlook about the Direct Selling industry and how its thriving across the world

The global Direct Selling Market Growth is anticipated to rise at a considerable rate between 2021 and 2026. In 2021, the market is seeing growth at a steady rate and with the rising adoption of strategies by key players, the market is expected to rise over the projected horizon.

But what is direct selling? It is a business model in which a company utilizes person-to-person interactions to sell products. Typically, the process involves an independent seller buying the goods from the parent company and then selling them to other individuals, sometimes recruiting them to also become independent sellers. Also, direct selling companies specialise in anything from wellness supplements and cosmetics to household items and fitness gear. Since 2015, the global retail sales from direct selling have increased from about 184 billion U.S. dollars to approximately 192 billion dollars in 2018. Direct selling companies specialising in wellness products make up a 33% share of sales in this industry, making it the largest direct selling product category (statistica.com).

Key trends

If we are to look at the leading player, the United States, the top direct selling companies are Amway, Avon, and Herbalife; each reporting revenue of at least four billion dollars in 2018. Of these three companies, Amway is the largest as it offers a broad range of products such as nutritional products, cosmetics and home goods making up the vast majority of the company's sales. The second largest company, Avon, specializes in makeup, fashion, and home goods. Avon has seen a decline in net sales since 2013, decreasing from about eight billion U.S. dollars to about five billion dollars in 2018. Herbalife primarily offers weight management and nutritional products, and reported net sales of approximately 4.8 billion U.S. dollars in 2019.

The recently-released 2020 Growth & Outlook survey by the Direct Selling Association reveals the following: 

Retail Sales Remain Steady: The direct selling channel generated $35.2 billion in retail sales in 2019. 

Consumer growth: Health and wellness products lead the channel in terms of size and growth with person-to-person sales as the most prevalent method of engaging with consumers.

Americans seeking entrepreneurial opportunities: There were 6.8 million direct sellers in 2019, a 9.9% increase from the prior year. 87% of direct sellers (5.9 million) are part-time. 

A survey conducted in April 2020 by Digital Commerce 360 and Bizrate Insights found that 55% of online consumers said they were ordering more online than they were before the virus hit, up from 26 percent in March. And 22% said in April they were ordering a lot more online, as opposed to only 6% in the March survey, states a report on .directsellingnews.com. It goes on add that there’s evidence that much of the increase in online shopping is from those purchasing online for the first time: ClearSale analyzed April 2020 e-commerce customer data from clients in five of its major markets: the U.S., Canada, Australia, Mexico and Argentina —all countries where some form of lockdowns were in effect. The analysis showed that across all five countries, the average number of brand-new online shoppers rose by 12% between March and April.

India’s status

As far as India is concerned, last year, the country recorded the highest year-on-year growth and CAGR over three years, in the top 20 Direct Selling markets around the world. According to a joint report by IDSA and data insight firm Kantar, the Indian direct selling industry has witnessed a Compounded Annual Growth Rate (CAGR) of approximately 16% and grown from Rs 8,308 crore in 2015-16 to Rs Rs 13,080 crore in 2018-19. In this, wellness tops the chart of leading segments in Direct Selling followed by cosmetics and personal care. The Indian Direct Selling Industry’s contribution to the exchequer stood at around Rs 2,500 crore in 2018-19, said the IDSA report (Source: https://economictimes.indiatimes.com/industry/services/retail/indian-direct-selling-industry-records-usd-2-47-bn-sales-in-2019-ranks-15th-globally/articleshow/77055159.cms?from=mdr).

To conclude, direct selling is no doubt a thriving industry that continues to empower millions across the world. Given it’s several advantages and a rising interest among the marketing fraternity, the industry is most definitely on a growth curve. 

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