In mid-December, just after we went to press with the January 2013 issue, our industry and its executives were assailed by another short seller attacking a prominent direct selling company with accusations reminiscent of an old movie that has seen its day of reruns. Bill Ackman and his Pershing Square Fund are the latest players to strike against one of our industry’s publicly held companies based upon a collection of personalized information—this time presented to an audience that included approximately 400 analysts.
Fortunately for the direct selling industry there is a Direct Selling Association (DSA). Joe Mariano, DSA President, provides his perspective on this latest challenge on page 71. Millions of lives depend upon the direct selling channel of distribution, and this is usually ignored by those whose greed appears to lie below what is often disguised as an effort to inform the public, as if the public cannot make decisions for itself. However, as Mr. Mariano says in his article: “Beyond the rhetoric, the anecdotal reports, and the distorted misrepresentations of the shorts, there is a community of goodwill, of lives positively affected by direct selling, and a long history of direct selling’s community service and sales person opportunity that is hard to ignore.”
The stories behind the preceding commentary are broad and deep. Herbalife President Des Walsh described the Ackman attack as “a gross distortion of reality.” This is very true. Critics of this industry overlook the reasons why people from all walks of life choose to engage in the activities of a direct selling company and the benefits and rewards they receive. The critics also attempt to portray direct sellers as money-seeking opportunists versus people who are motivated by diverse reasons, goals and objectives. Consumers are empowered today and look for the best in innovation and quality. It just so happens that the value proposition that is most attractive may be offered by a direct seller versus a more traditional retailer.
From housewares to cosmetics, nutrition, weight loss and healthy lifestyle advice, services to hobbies and crafts, accessories to high fashion and much more, direct selling companies are more and more leading the way, not following the norm. People are also reluctant to rely upon traditional means of earning money when their country is experiencing a shrinking job base, forced downsizing and unemployment that continues to hover at concerning rates. It just so happens that direct selling companies offer opportunities as alternative ways to earn money without the disruption of other important aspects of one’s life. “Earn while you learn” is a most appealing concept, especially when most of the risk is related to time invested versus dollars. Were this not true, the malicious attacks from those who do not have a contemporary understanding of the direct selling channel or its business model would have detonated the direct selling industry long ago.
The Direct Selling Education Foundation’s recently accelerated relationship with the academic community through the National Association for Community College Entrepreneurship programs and the release of its first course will support the need to have credible coaching and guidance on direct selling available as a public resource.
Our outlook remains strong and positive. We continue to look forward to writing the stories that need to be told. On Jan. 10, Herbalife CEO Michael Johnson responded to the Ackman accusations by inviting the analyst community to a presentation Herbalife conducted at the Four Seasons Hotel in New York City. The response and subsequent results of that meeting have now revealed that other significant hedge fund managers are taking long positions in Herbalife (a rebuttal to the Ackman position) with some even predicting a rebound in Herbalife stock price from a Christmas Eve low of near $24 to better than previous highs of $73.
Direct selling companies continue to adjust and transform themselves. Through the uniqueness and loyalty of their independent contractors, and the value proposition associated with the products and services, state-of-art tools, and a more empowered consumer, direct sellers will continue to effectively compete for the market share represented by those who cherish the best available value proposition from both the consumer and opportunity-seeker perspective. We call this participation in the free enterprise system. No other industry does it as well. This is also why over 16 million people in the U.S. have already chosen to be involved, and that represents a powerful force capable of delivering the finest in products, services and relationship building, all of which are now demanded by today’s empowered marketplace. What a well-positioned channel of distribution!
As we now move through the month of February and into March, we anxiously look forward to the year-end reports that will create many of the stories for 2013, and we look forward to seeing many of you at this year’s DSN Global 100 banquet. It will be quite a celebration!
Until next month. Enjoy the issue!
John Fleming
Publisher and Editor in Chief
