Click here to order the August 2013 issue in which this article appeared.
It is often said that small business entrepreneurs play a critical part in the revival of the U.S. economy. Given that more than half of all working Americans either own or work for a small business, there is little reason to wonder why President Obama once referred to the small business community as “the backbone” of the U.S. economy and “the cornerstones of our communities.”
While talk of the decline of American entrepreneurship permeates business and financial news coverage on a daily basis, analysts and media commentators often debate the cause of this regression. Many believe the decline is linked to another category in which the U.S. has presumably lagged behind foreign competitors in recent decades—innovation.
A quick Google search will reveal countless editorials about the biggest factors contributing to an alleged decline in U.S. innovation. The evidence cited ranges from a rise in the number of U.S. patents filed by foreign inventors to a slowdown in research spending across a number of industries. But even if the U.S. has suffered from an overall decline in innovation in the last decade, something unique has happened in the direct selling industry in the same time frame—innovation has thrived.
Direct selling is often considered an example of U.S. innovation at its finest. After all, countless direct selling companies rank among the top overall businesses in the U.S. in categories such as health and wellness, personal care, financial services, clothing and accessories, and educational products. But to say the direct sales channel stands as an example of innovation in America is an understatement; rather, direct sellers remain a driving force—a critical component—of the rebirth of U.S. innovation. Even more, direct sellers provide evidence that innovation is not a figment of the past. In fact, the spirit of innovation—as well as entrepreneurship, modernization, creativity and vision—is what has powered the direct selling industry to enjoy tremendous success, even as other industries continue to struggle.
Not only does direct selling support both globalization and the growth of U.S. small businesses simultaneously in ways no other industry can, but the industry also breaks through seemingly insurmountable barriers such as the rising costs of education and business training and the resulting achievement gap. And while many of today’s leading direct sellers have stood as household names since the mid-20th century, direct selling companies of all shapes and sizes have rolled out unmatched products and services, transformed what it means to promote eco-friendly practices, and even incorporated top-of-the-line technologies to provide distributors and employees alike with invaluable business tools and education, free of charge.
Earlier this summer, the Direct Selling Association released its 2012 Growth & Outlook Survey Report to survey participants. According to the report, the share of sales for two categories—Wellness (including weight-management products, nutritional supplements, health foods and beverages) and Services (including utilities and financial products)—has steadily increased over the last several years. Additionally, energy deregulation has contributed to the rise in sales in the Services category, as a number of energy companies have chosen a direct sales approach.
What does this mean?
Put simply, it means direct selling is flourishing—and not just in one or two product categories. Rather, direct selling companies have made a tremendous impact on industries that are commonly viewed as the biggest influencers behind economic growth and recovery in the U.S.—clean energy, business services, health and wellness education, telecommunications services, and Internet technologies.
While the country awaits a resolution for slow-to-improve employment rates, rising costs of sought-after education and streamlined access to skills training demanded by companies across the board, direct selling has quietly provided an answer to all of the above. By offering both men and women equal opportunities to launch independent businesses in any field of their choosing, the direct selling industry has empowered millions, including many who have felt discriminated against because of their lack of access to higher education or expensive job training, or their inability to adhere to a fixed employment schedule due to family or personal obligations.
With U.S. direct sales totaling $31.6 billion in 2012—a 5.9 percent year-over-year increase from $29.87 billion in 2011—it’s clear that innovation is not a term to be defined and studied in U.S. history books. It is, instead, alive and well and embodied by countless direct sellers across the country.
Alyssa Wolice is Communications Specialist at the U.S. Direct Selling Association.