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London Hosts World Congress
Capitalizing on the Phenomenal Success of DIRECT SELLING
Young Company Focus- Essential Bodywear:
Changing the Way WOMEN Shop
A TIME FOR TRIUMPH: Creative Memories Helps Fight Alzheimer's Disease

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Perspectives and Innovations

London Hosts World Congress
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For the success of the event, a big debt of gratitude is owed to the superb team of volunteer helpers, drawn from UK DSA members.

The contributions being made by direct selling businesses to the strength of national economies and to democracy, particularly in new Eastern markets, were highlighted by former USSR President Mikhail Gorbachev. In a frank appraisal of corporate business practices and government policies, he described direct selling as a most valuable “people’s business.”

The power of brands and multichannel distribution, combining direct sales with TV, Internet and catalog shopping channels, were the topics of a workshop and were also dealt with by several CEOs of leading companies. In a powerful and compelling address, Andrea Jung, President and CEO of
Avon, described Avon’s success in creating the mark brand to attract a younger market— typically the daughters of Avon Representatives—which has already achieved sales of $100 million a year in the United States, and soon to be rolled out worldwide. Jung also described Avon’s adoption of a multilevel structure for the $10 billion a year business and her plans to develop a multichannel approach around Avon’s core direct selling business.

John Addison, Co-CEO of Primerica, delivered a memorable keynote on “Leadership with Determination.” John’s infectious enthusiasm and love for the direct selling industry and how it enables individuals to achieve their dreams was evident as he shared his vision of leadership: That the CEO should set the tone for the company, adopt the best practices and principles of the industry, and focus on boosting distribution and people. To be a great leader, he said, the CEO must be the most focused person on the team, work to create a fun, attractive program, and have a human touch, which can make all the difference.

Michael O. Johnson, CEO of Herbalife and former top executive with the Walt Disney Co., made his debut speech to the industry. His multimedia presentation showed how direct selling companies can successfully build a worldwide consumer brand.

In another thoughtful address, Peter Saunders, CEO of The Body Shop, explained that although direct sales currently account for less than 10 percent of his company’s worldwide sales, this was achieved in only three of their 30 markets. He disclosed that direct sales will play an important part in the development of the company’s business in some countries where it will be the best and only effective route to market. He also explained that the key to profitable multichannel distribution is in devising divisional corporate objectives and management incentive schemes that avoid competition between the different channels. He emphasized that each channel must recognize that the customer’s best interests are paramount and that they must meld their pricing and service strategies accordingly. In his view, Best Buy, a non-direct selling business, has been most successful in resolving this challenge and is a role model for direct selling companies.

Another CEO making his first address to a World Congress was Jinyuan Li, founder of Tiens Group, the first multinational Chinese direct selling business that markets traditional Chinese herbal products. He explained that outside China his business now operates in 50 markets, including Russia, along with Nigeria and other African states.

In a workshop led by Magnus Brannstrom, CEO of Oriflame, in which he disclosed that direct sellers now account for 19 percent of the growing cosmetics market in Russia, the panel dealt with other strong Eastern markets. Despite current legislative challenges, the huge opportunities for direct selling in the aspiring sector of society in China were well explained by Matthew Estes of Babycare. His company has focused on the fact that a large proportion of disposable income was spent by the Chinese on their children. This session also included an excellent appraisal of the opportunities for direct selling in India, given by Koyalgeet Kaur of the IDSA who explained that GDP growth last year in India was 8.1 percent and literacy is 60 percent. Koyalgeet also pointed out the importance of gaining a direct seller’s family’s approval for any business opportunity they are considering.

Another example of multi-channel distribution was clearly described by Amrit Thomas of Hindustan Lever in a workshop chaired by Les Dell, director of the Australian DSA. Unilever’s first venture into direct selling was in India. This was followed by another successful start-up business in Thailand and, most recently, in a new direct selling business in South Africa—all based on a multilevel structure. Unilever’s aim in South Africa was to empower the black community. Amrit vividly described the challenges in changing the mindsets of those women who were initially more comfortable with employee status rather than self-employment.

It is not possible to give due credit to all those who contributed to the wide-ranging and wellreceived workshop program. But mention should be made of a workshop on multinational operations led by Michael Smith of Nu Skin. Its message was that, despite pressure to do so by leading distributors, opening too many new international markets without adequate prior research can be a huge drain on the financial resources of a direct selling business. Where 90 percent of corporate resources are commonly being devoted to market openings, the costs of putting right the legal and operational problems of poorly prepared overseas operations far outweigh the costs of setting them up properly in the first place.

The highlight of the Congress social program was a dinner in the huge and magnificent Guildhall in London, served to the musical accompaniment of three acclaimed tenors. Brian Mitchell, who is a longtime friend of Avon, Paul Southworth and the DSA, and a former Master of one of the city’s ancient livery companies, explained to the guests the history of the Guildhall and its 2000-year-old association with British business, banking and trade. He explained that the city, originally a single square mile on the North Bank of the Thames around St. Paul’s, was first established by the Romans as a center of trade and has retained its power and influence ever since. To the astonishment of many guests, Mitchell illustrated this power by explaining that the Queen still has to seek prior permission of the Lord Mayor should she wish to pass through any of the city’s boundaries!

Thanks to the sponsorship of Shell Petroleum Company, another highlight was a reception in Shell’s headquarters prior to a “flight” on the London Eye, operated by British Airways, and located on the South Bank of the Thames very close to the Shell building.

On the final day of the Congress, delegates heard a perceptive presentation from Peter Day of the BBC—the UK’s leading investigative business journalist. His theme was how Western business should best compete with low-cost manufacturers in China, India and Brazil, and with the mass marketing power of Wal-Mart. His first point was that no medium-sized Western business can now hope to gain market share on the basis of lower prices. However, he explained these businesses can do so on the basis of exceptional service and quality and by responding rapidly to changes in consumer demand. He pointed out that dozens of the current major marketers, each with millions of customers, could be effectively challenged by millions of small businesses, each providing good service to dozens of customers and all able to communicate rapidly with their companies. He pointed out that this is just what direct selling companies are uniquely able to do—with millions of part-time direct sellers all in close contact with a small number of their personal customers.

This year’s World Congress broke new ground in organizing a suppliers’ exhibition, which attracted 22 exhibitors, who say they value the contacts they made in London. Direct selling is now a truly international business, and the provision of international services, particularly in the enlarged EU market of 25 Member States, is becoming increasingly relevant. Finally, at a WFDSA board meeting on October 18, chaired by Truman Hunt of Nu Skin, who succeeds Dick DeVos of Amway as chairman, the directors voted on which country should host the next World Congress in 2008. Our congratulations and good wishes go to the Singapore DSA, which was successful in winning this prestigious vote.

Richard Berry is the Director of the UK Direct Selling Association.

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Capitalizing on the Phenomenal Success of DIRECT SELLING
Continued from page 1

And, says Lawrence B. Chonko, Ph.D., Holloway Professor of Marketing at Baylor University, “Of the many business models in the marketplace today, the one-to-one marketing of direct selling is emerging as most efficient and effective.”

Investors are coming to realize that direct selling offers a competitive advantage compared to the more capitalintensive traditional retail model. Since direct selling companies rely on an army of distributors who generally sell their products in customers’ homes, there are none of the typical overhead costs associated with brick-and-mortar retail establishments. Also, direct selling companies do little advertising compared to retail outlets—marketing is done by word of mouth and one-to-one contact with prospective customers. And new products and services can be introduced without the need to forever pester retail managers for “shelf space,” or to spend the usual sums for retail promotion.

“We like the business model of direct selling,” says Eric Streisand, a partner with Greenlight Private Equity Partners, a New York private-equity firm, which made a 2004 equity investment in Petra Fashions, a direct seller of women’s lingerie and sleepwear. “Direct selling gives us a way to break through the barriers of the traditional retail channel and have direct contact with customers on the front lines.”

“The direct selling channel is an extremely powerful channel to sell products in,” says Peter Castleman, chairman and managing partner in Whitney & Co., a leading global investment firm that in 2002 invested $700 million in Herbalife, a weight-management direct selling company.

Gone are the days when direct sellers focused exclusively on their own neighborhoods. Today, the global reach of the Internet combines with burgeoning consumer demand in emerging industrial markets in Asia Pacific, Europe and Latin America to facilitate the worldwide expansion of many direct selling companies. And relaxed trade regulations make it easy for most companies to replicate their U.S. system in other countries with just a few minor changes. Avon, for example, expects to increase annual sales in China from $200 million last year to as much as $1 billion by 2010.

In the words of Roger Barnett, a New York investment specialist who recently became owner, chairman and CEO of Shaklee, a major multinational direct selling company, “This industry is global and is growing exponentially. It’s been the best-kept secret of the business world.”

The Best-Kept Secret Is Getting Out
Several corporate luminaries and Fortune 500 companies made investors sit up and take notice recently when they bought or started up direct selling companies, fueling a wave of mergers and acquisitions by major corporations, and investments by venture capitalists and investment bankers.

In 2002, famed stock market investment expert Warren Buffet startled Wall Street with his multimillion-dollar purchase of The Pampered Chef, a major direct selling supplier of kitchenware, through his holding company, Berkshire Hathaway. Buffet now owns three direct selling companies and says, “It’s the best investment I’ve ever made.”

Sir Richard Branson is one of the world’s most innovative billionaires and the founder of Virgin Records and Virgin Atlantic Airways. He now owns Virgin Cosmetics Company, one of the leading cosmetics firms in the United Kingdom and a direct selling company.

The Lillian Vernon Corporation recently launched its own direct selling company, as did publishing and entertainment giant Time Warner with its exciting new subsidiary Southern Living at Home.

Citigroup, ranked by Forbes as one of the world’s largest companies, owns Primerica, a direct seller of financial planning solutions with more than $2 billion in annual U.S. revenue.

A recent big snap-up is the purchase of Jafra Cosmetics International, a $400 million seller of beauty products, by the German heavyweight Vorwerk, a privately-owned seller of household appliances that already owns 11 percent of industry pioneer Tupperware.

The list of corporations investing in direct selling is long…and getting longer: Bertelsmann, The Body Shop, Hallmark Cards, Jockey, Nestl–, Reader’s Digest, Remington, Sara Lee, Vanity Fair, and Unilever, to mention but a few.

“There’s a lot of capital out there,” says Neil Offen, President of the Direct Selling Association. “We are now a presence to be reckoned with. Our entrepreneurial spirit is a driving force that will bring more than 200 million people worldwide into our industry over the next decade.” Barnett adds, “In the next 10 years, the industry will have more growth than in the last 50!”

Consolidation, according to Barnett, is likely to increase as more big companies get in on the act. Since no one player controls more than 10 percent of the market, there’s a golden opportunity for big fish to gobble up smaller businesses—and a unique opportunity too. “It’s rare to find such a large and dynamic industry that hasn’t had much consolidation,” says Barnett. “That means the trend will continue and the goliaths will only get bigger.”

And the media have noticed. The emerging success of direct selling has now been featured extensively in such publications as Forbes, Fortune, Newsweek, Time, U.S. News & World Report, USA Today, The New York Times, The Wall Street Journal and Success from Home magazine.

From the Avon lady to the Kirby vacuum man, Mary Kay and Shaklee to Tupperware, direct selling companies have been a part of the American fabric for more than 100 years. A recent survey conducted by the Direct Selling Association found that three out of four Americans have purchased from a direct seller at least once.

Now, we’re in a time of massive economic change. Due to a confluence of trends and factors, the direct selling industry is expanding globally, opening up a world of opportunities for investors. Discerning entrepreneurs who recognize these opportunities and stake their claim in these expanding industries will be the ones in position to gain enormously.

Says Lane, “After years of skepticism, the investment community is finally waking up to the viability of direct selling as a good investment opportunity. They’ve become true believers.”

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Young Company Focus-
Essential Bodywear:
Changing the Way WOMEN Shop

An Idea Takes Shape
Sometimes ideas that are knocked around between friends are just talk. Sometimes however, ideas are put into motion and really take off. That is what happened for Carrie Charlick and Marcia Negro; an idea that came from peoplewatching grew into a direct selling company called Essential Bodywear.

In February 2003, Carrie and Marcia were working a booth together at a hobby industry association trade show. Slow foot traffic led to boredom and the two friends became involved in a favorite pastime, people-watching. They noticed the great hairstyles and cute outfits of the passersby. They also could not help but notice how many women needed the pick-me-up that the proper foundation garments provide.

That experience quickly spawned an idea for a business designed to help women look better and feel better about themselves by offering them the best foundation pieces, bras, panties and other undergarments, and to help them find the right size and style for their body type. One of their first names considered for the business was, “Just Trust Me, You Need This!” says Carrie. And the statement is true—so true in fact that last spring Oprah dedicated a show to the topic, Oprah’s Bra and Swimsuit Intervention. However, “just trust me” wasn’t quite the message Carrie and Marcia wanted to send so they settled on a name that imparts the message that the right “foundations” really are essential.

Since statistics show that 85 percent of American women are wearing the wrong bra size, Essential Bodywear hit on a product that is in high demand. The business partners also chose an in-demand mode of distribution for their products. “We knew the only way to market was at home parties,” says Carrie. The team says that the direct selling model has worked well for their business for three main reasons: Women today are extremely busy, women know they can trust their friends to not let them make a fool of themselves by buying something that doesn’t fit right, and because a lot of women simply hate dressing rooms. From the idea that women could get together with a group of girlfriends, have a bite to eat, a glass of wine and be measured and fitted for the perfect bra, the Essential Makeover party was born. In May 2003, Carrie and Marcia began their journey of success by holding their first in-home party, but not until the pair had gone on what they call a “crusade to find the best of the best.” “We went to 100 different stores to find the right pieces,” says Marcia. They found garments they liked, met with manufacturers and developed a product line to fit a variety of body shapes and sizes.

Looking Good
Just three months later, in August 2003, the company signed its first consultant. By mid- October 2005 the company had grown to 144 consultants in 22 states, and just before their interview with Direct Selling News, the company hit its first calendar year million in sales—with the holiday selling season yet to come.

While there are a couple other direct selling companies that sell lingerie, there are few, if any, with the sharpened focus of helping women look good in their clothes. Essential Bodywear also offers women an educational alternative to the hassle and embarrassment of the retail shopping experience. The company is changing the way women shop, with a home party experience coupled with a personal consultation. While retail store associates are often more concerned with moving inventory, Essential Bodywear consultants are “taking customer service to the next level,” says Marcia, by taking the time to explain which piece works best for the individual and why.

“Our focus and mission are to revolutionize the way women shop,” says Carrie. “When a customer goes to a home party and buys things as intimate as bras and panties and leaves smiling, you’ve rocked her world.” She says that consultants will often get to know their clients on an entirely different level by finding out things that are not divulged in everyday conversation. “People will talk to you just like they would their hairdresser,” says Carrie, and consultants honor their customers’ confidences by telling them, “It’s just between you and your bra lady.” Marcia says she gets goose bumps just thinking about the difference that they and their consultants have made, helping thousands of women look great and feel better about themselves. “Some women actually cry because of how great they look,” she says.

The respect and kindness that Essential Bodywear customers are given make the experience one that they’re not only willing to repeat, but one they want to offer by becoming consultants themselves. “We are empowering women to start their own business,” says Carrie, “and they are so confident and proud about what they’re doing.” Marcia adds, “Our consultants love knowing that they’re helping women feel good about themselves.”

If we had known then what we know now…
With just $200 to get Essential Bodywear started, the pair delayed submitting an application for DSA membership. In hindsight they say that was a mistake. “We would have saved thousands and thousands of dollars if we had gone there first,” says Marcia. Now Carrie and Marcia agree that the education they have received and the people they have met through the Direct Selling Association have been extremely helpful. In fact, the business owners recommend that new direct selling companies make becoming part of the DSA one of their very first business decisions.

Among the most valuable benefits the DSA offers are the contacts. Carrie and Marcia have made many since submitting their application at the end of 2004. “It’s easy to feel like a little fish in a big pond,” says Carrie. Marcia agrees, “You can feel like you’re on your own,” says Marcia, “and it’s helpful knowing that they’re out there for you.” Many fears and uncertainties were banished—or at least lessened—when the pair attended their first DSA Annual Meeting this year. The welcome they received and education offered through the general sessions, breakout classes and one-on-one time with other executives and supplier members renewed their spirits, and the two business partners went home from the conference refreshed and ready to run.

Finding supplier companies that specialize in tools, systems and information designed for the direct selling industry has been another plus that the DSA has offered. One of the areas in which the team says they could have saved thousands of dollars is through their Web site. Originally working with a company that did not have direct selling experience put them in a bind. “Our Web site system was obsolete as soon as it launched,” says Marcia. The partners are thrilled with the new Web site and software system that are being put together by Party Plan Solutions and will launch in the coming weeks. The new system offers consultants their own personal Web site and virtual office, and provides an effective system for corporate employees as well.

The Road Ahead
While their consultants take products and the business into women’s homes, Marcia and Carrie are getting the word out by traveling to expos with their “magic box.” Prepared for business with bras, measuring tapes and dressing rooms, they have fit and measured women across the country for better-fitting bras, and always have the busiest booth on the floor. The team says it is like a magic show where women go into the box and emerge to cheers, oohs and ahhs at the difference when they come out. Once the customers fall in love with their new look, the entrepreneurs take the time to explain how they can host a party and share the business opportunity.

With Carrie’s former career both in sales and as a product buyer, and Marcia’s experience in the lingerie department of an upscale retail store, the women say they knew that their experience and the products were a good fit. But the business has surprised them by taking off with a snowball effect. By taking the leap and acting on an idea, the friends-turned-business-partners say they are amazed at the response.

Working now on the designs for a future private label and traveling to Paris to select fabrics for next fall’s line, Carrie and Marcia are excited about the successes they’ve achieved and about their company’s future. With their “bra-fit revolution” Marcia and Carrie say that their goal is to take the guesswork out of shopping and to change the statistic from 85 percent of American women wearing the wrong bra to 85 percent wearing the right bra and, just maybe, to one day be as big as Avon. While these goals may seem lofty, they are the perfect fit for this growing company.

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A TIME FOR TRIUMPH:
Creative Memories
Helps Fight Alzheimer's Disease

For a company whose mission it is to preserve the past, enrich the present and inspire hope for the future, it made perfect sense to channel their charitable efforts into fighting a disease that ultimately robs its victims of their memories.

Since 2001, Creative Memories has been a national sponsor for the Alzheimer’s Association, and to date the company’s Time for Triumph Campaign has helped raise nearly $3 million.

“Initially, we began our charitable campaign with the thought of helping a different organization every year. Our first organization happened to be the Alzheimer’s Association,” says Amy Dahl, Media Coordinator for Creative Memories. “After we began work on the project, it became apparent what great synergy there was with the association and Creative Memories. We proposed to our executive team to keep the association as our primary charitable organization, since our mission is to preserve memories. They unanimously agreed.”

More than 4.5 million Americans currently suffer from the debilitating effects of Alzheimer’s disease. The progressive brain disorder gradually destroys a person’s memory and ability to learn, reason, make judgments, communicate and carry out daily activities. “Since the Alzheimer’s Association deals with a disease that affects precious memories and how a person remembers who they are and how they relate to friends and family members, we knew we could help,” says Dahl. “Creative Memories knows the benefit of telling the stories behind photos and life experiences so that other generations can know and love their family members and connect in a meaningful way.”

Each year, Creative Memories offers an exclusively designed, limited-edition product through its Time for Triumph Campaign and donates a portion of the profits to the Alzheimer’s Association to fund research, education and support materials. This year the product is a kit called the Time for Triumph Memory Chest. Each chest contains a decorative carrying case, an exclusive PicFolio™ Minutes Album, Storybox Metro Photo Mats and Journaling Boxes. A brochure with ideas for layouts helps scrapbookers tell the stories behind the memories of a loved one. Two dollars from each Memory Chest sold in the United States and Can$3 from each Memory Chest sold in Canada will be donated to the Alzheimer’s Association.

The Alzheimer’s Association encourages people to share scrapbooks with individuals affected by the disease. “The process of reviewing photos with captions has helped some patients feel less confused and more at ease,” says Dahl. “Because Alzheimer’s patients usually lose their short-term memory first, photos of patients showing them when they were younger can help them remember who others are and recall some of their life events—having children, marriage, homes, jobs, etc.”

Scrapbooking can also be a therapeutic way for patients and family members to capture details and find photos that register with them. Some family members create scrapbook photo albums so their loved one can page through them daily to help soothe their memory confusion. “Family members and caregivers look for ways to connect with loved ones who suffer from Alzheimer’s,” says Lynne Carey, Director of Special Events for the Alzheimer’s Association. “Studies show, more than ever, how much scrapbook albums and photos can help enhance their well-being, and many times even prompt memories from the past.”

Creative Memories Consultant Kathy Hungler made a Time for Triumph album for her mother after what would be the family’s last vacation together. “She flipped through the pages of that album many times—her finger following the words, trying to remember how to read them,” says Hungler. “The back cover ripped where she tried to turn one more page. My hope was always that the book would help her remember our names for one more day.”

When Creative Memories began offering the Time for Triumph albums, the feedback received from the field was phenomenal. Consultants became involved above and beyond the sale of the album and many participated in the Alzheimer’s Association’s annual Memory Walk. So, during their second year of partnership with the association, Creative Memories decided to sponsor the Memory Walk as well.

“Creative Memories has not only given monetary donations for the Memory Walk, but we have educated, encouraged and sponsored more than 75 consultants each year as team captains in the main 80 U.S. Walk locations,” says Dahl. Each year, money raised by Creative Memories’ consultants has increased steadily, which has allowed the company to become involved at a local level with corporate support.

Carey says the association’s partnership with Creative Memories has been very successful. “Creative Memories is a great partner for the Alzheimer’s Association,” says Carey. “In local markets where Memory Walk takes place, Creative Memories consultants are active participants, raising additional funds for local chapter support and education programs.”

Creative Memories’ dedication to preserving cherished moments makes their partnership with the Alzheimer’s Association a perfect match. The cooperative efforts of Creative Memories’ consultants, the corporate office and the Alzheimer’s Association helps bring understanding and offers comfort to families during very difficult and confusing times. Through continued research funded in part by companies such as Creative Memories, perhaps one day this terrible disease will itself be just a memory.

Scrapbooking and Alzheimer’s Disease:
Creative Solutions Offer Comfort
While an Alzheimer’s patient in the early stages of the disease may not remember what happened yesterday, they can often recall details, when shown a photograph, of an event that had happened many years ago. Studies have shown that photo albums filled with pictures of family, friends and familiar places serve as a comforting, therapeutic experience. Some tips for creating a scrapbook for a person with Alzheimer’s disease:

• Include photos of a patient’s family, friends and home environment; these offer a sense of security and happiness.

• Include both older and recent photos to assist patients with recalling past memories as well as more recent events.

• Use large, easily identifiable photographs. Many patients have poor eyesight and are unable to make out fine details in small photos.

• If possible, include a photograph of the patient smiling. This can help instill feelings of happiness and well-being.

• Avoid photographs of traumatic events or national tragedies.

• If you include journaling in the scrapbook, use large letters and simple language.

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