Is Direct Selling in crisis?
As the 2022 revenue figures for the world's Direct Selling giants are released, what is the real economic situation for France and Europe? The official figures of the French Direct Selling Association (FVD) are expected to be down*. Here is the analysis and a concrete lead from our consulting firm specialized in Direct Selling.
2022 figures of the world leaders in Direct Selling
After a golden year in 2021, the results of the world's largest Direct Selling companies in 2022 are more like bronze. The expected winners are PM International +30%, ExpRealty +22% and Coway +5%. Other industry giants such as Amway -9%, Oriflame -9%, LR -9%, Herbalife -10%, USANA -16%, NuSkin -17%, and Tupperware -18% are down.
As external factors, the direct and indirect consequences of the war in Ukraine weighed most heavily. The collapse of the Eastern European markets, high inflation and the uncertainty of many customers and Distributors are among the most frequently cited reasons*.
In addition, the labor market is very good: the U.S. have the lowest unemployment rate since 1969 and Europe is also desperate for workers.
The long-term consequences of COVID
In addition, there are unintended consequences of the coronavirus crisis, which are only gradually becoming apparent:
1. The DNA of Direct Selling has been damaged
Customer relationships suffered particularly during the pandemic, despite the Zoom calls and efforts made by the Distributors - which I salute. Close, trusting relationships are the DNA of Direct Selling and the basis for purchases and referrals; these relationships were steadily eroded over 1.5 years, due to a lack of personal contact.
2. Distributors felt abandoned
The long absence of face-to-face events led to the abandonment of many part-time independant Distributors - those who had found community and social recognition in their sponsors but were unprepared for the adversity of commercial activity. The negative momentum has also disillusioned many MLM team leaders who previously believed in "passive" income. However, our business requires effort, resilience and good habits, even as a "hobbyist".
3. The Digital Distributors of 2020 and 2021 are disoriented
Recruiting "digital" Distributors has led to strong growth in 2021 - but these Distributors are now having less fun with face-to-face parties and meetings. Face-to-face is not what they came for. During the pandemic, they got away with it because they were already very "digitally mature" and it was easy for them to switch to online parties and remote meetings. However, the customers on their side have had enough of these events, they are waiting for another experience.
What strategy to adopt in 2023?
"Back to basics" - An even stronger return to the DNA of Direct Selling is necessary for many companies. here are two ways of thinking about it :
Community
Strengthening the personal relationships between companies, Distributors and customers, consolidating a strong community and new impulses for the personal development of Distributors - often their main motivation. That's why the best direct selling companies are going full steam ahead again with face-to-face events, meetings and training. At the same time, you should help Consultants rebuild neglected customer relationships through a renewed buying experience.
Digital tools
Ironically, continue to investigate and invest in the right digital tools for Direct Selling. Because 2020 - 2022 have shown us that the more adapted tools our Distributors have, the more resilient they are to this changing world. But our networks are waiting for the right tools, the right sales & sponsorship methodologies and training.
Start here: Products are the key!
The DNA of Direct Selling is to create irresistible products that make you want to have them, to have them cheaper, to sell them, and to create a business with them.
Confidence and enthusiasm for the products will create:
1. The willingness for Distributors
to dare to go out and talk about your brand 24 hours a day, 7 days a week. I am often asked "how do you motivate a Direct Selling network?". My answer is always (and it is regularly verified with our Direct Selling consulting clients):
We motivate the Direct Selling people one by one, through personalized coaching.
You can get a whole network moving with an exciting new product.
2. Successful start-ups,
Lots of small, quick wins. Your new Distributors will love the feeling of serving others and will want to do more and be more involved with your brand.
3. Sponsorships
They will love being associated with you so much that they will attract other Distributors even without asking! It will seem like magic...but it won't be ;).
Conclusion
Over the past year, companies have been in defense mode - OK, we understand... But many Direct Selling companies had already lost sight of what attracts people to Direct Selling: simple, differentiated, compelling products.
In addition, most companies face supply and cost issues.
Finally, consumers expect products that are increasingly respectful, local, sustainable.
It is now time to question the offering in order to maintain margins and stock levels, and regain attractiveness.
Companies may consider changing other aspects of their business. However, we suggest that you keep it simple and check your products first.
Our Direct Selling consultancy has experience in cosmetics, wellness, arts & cratfs, culinary tools, fashion, lingerie, jewelry...
We can perform a quick audit of your product offering and opportunity. You will then be free to implement the changes independently or with our support. Do not hesitate to contact us.
I would like to thank Dirk Schiffner who got this article started, and contributed in gathering figures.
* sources :
Direct Selling News, WFDSA, The World of Direct Selling.
Official FVD (Fédération de la Vente Directe) figures for 2022 had not been made public as we wrote this article.