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The Art of Social Selling

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Strategies and statistics for thriving in the social media arena.

Social media platforms continue to evolve as natural tools for direct sellers to increase their network and attract customers by building genuine relationships.

Social selling is not about the short-term, one-time sell. Rather, it’s about building relationships for the long-term. It requires more than “liking” someone else’s online content. It takes time to make a genuine connection.

You ‘warm-up’ your prospects by engaging with them when they are active. Whether that’s by sharing their content with your network, providing advice when they ask for it, or by reaching out to them and asking for their input on any questions you may have.

According to a social selling study by LinkedIn, people on social media are much more likely to welcome input from industry experts. In the study, 92 percent of buyers said they are willing to engage with an industry thought leader. The focus of many direct sales professionals successfully using social media platforms is to teach, answer questions and bring value around their product or service. They position themselves as an expert willing to share advice as opposed to trying to sell.

Referrals are still a highly valued source of business, pointing to a Nielsen study that shows more than 80 percent of consumers purchase a product based on recommendations from someone they know. This is why spending more time building a deeper connection on social media is so important. It builds trust. Those who trust you are much more confident referring others to you. Sharing your mistakes goes a long way in building trust. Sharing the lessons you have learned to help prevent others from making the same mistakes is seen as authentic and transparent.

Another study by CSO Insights and Seismic asked professionals about the primary benefits of social selling, and they said the following.

39% REDUCED CONTACT TIME
33% INCREASED NUMBER OF LEADS
31% DEEPER RELATIONSHIP WITH CLIENTS
24% IMPROVED LEAD CONVERSION RATE
14% SHORTER SALES CYCLES

Social Selling Social SellingA recent HOOTSUITE.COM article listed these four critical social selling practices:

1 SHOW UP Don’t use automated posting services. Be real. Be present.
2 LISTEN STRATEGICALLY to identify leads. Your target audience is online telling you exactly what they want and need. Pay attention.
3 PROVIDE VALUE Don’t pitch. Provide valuable insight to the right prospects at the right time.
4 BUILD MEANINGFUL RELATIONSHIPS Pay attention to the content                                           your contacts are posting. Engage from time to time with meaningful                                                                                       responses.

Social Selling Social Selling

Annual Meeting and the Way Forward

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It feels like opening day! Or a Broadway premiere. Or the first day of a new job. The excitement is there, palpable. It’s the future— the potential, excitement, fear, danger, and thrill of something new and unknown.

That is what I am hearing from direct selling executives across the country as we take the next step into this new business environment and marketplace: one of technological change, social shifts, logistics innovations, increased competition, and other unknowns.

“We have to embrace this change and realize that we are all on the threshold of exciting, great things for direct selling!” That is what a wellrespected CEO of a mid-sized, highly involved and innovative direct selling company told me at a recent DSA Board meeting. She has reason to be excited.

Direct sellers are competing against new giants like Amazon and Uber in both product sales and our opportunity, but this competition is taking place on a playing field where direct sellers have played for generations. Who better to take advantage of this renewed taste for flexibility, networking, and entrepreneurship than direct sellers.

The DSA is putting the final touches on DSA’s 2019 Annual Meeting—an event that promises to chart the way forward for direct selling—and our focus is this new playing field.

We laid a solid foundation for growth these past years. The issues of self-regulation, marketplace perceptions, and legal, regulatory, and ethical challenges permeated past annual meetings.

While this work continues, we can now cast our gaze forward with a meeting that focuses on the grand potential awaiting direct selling in this changing marketplace.

We have invited noted futurists, respected CEOs, and leaders from other sectors. A faculty of experienced executives from every type of direct selling company—person-to-person, party plan, big ticket, consumables, new companies, industry veterans and giants, tech companies, and services companies—will impart their wisdom in this premier event for strategy sharing, business development, and personal growth.

Discussions about competing with Amazon, gigs and e-commerce, shifts in social media, the first six months of the DSSRC and the state of direct selling will be held in a safe, secure environment organized by direct selling’s nonprofit incubator of progress, sharing and change— the Direct Selling Association. And while we have plenty of opportunities to evaluate and the myriad of services offered by industry suppliers in a high-quality trade exhibit hall, there will also be unrivaled opportunities for peer-to-peer discussions in a secure non-competitive environment.

I hope you will take the opportunity to join the other executives who are already filling up the DSA hotel room block in Austin, Texas on June 2-4. Register today at annualmeeting. dsa.org. I look forward to seeing you there and engaging in this exciting and potential-filled discussion

Hitting Back At Fraud

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Direct selling companies are coming up with creative ways to catch bad actors.

As direct sellers, we’re intimately familiar with Amazon’s disruption of the retail market, otherwise known as the Amazon effect. We can’t deny that it’s driven millions of consumers online, giving both brick-and-mortar outlets and other e-commerce sites a serious run for their money. By and large, our strategy to compete with Amazon has been to emphasize our personalized service, our preferred customer programs and, for those customers seeking something more, our business opportunities. What we hadn’t banked on, however, was that some of the very distributors who represent our brands would leverage Amazon, eBay and other sites to sell our products at discount, unwittingly placing their own businesses—and the businesses of other independent distributors—in jeopardy.

While this practice isn’t illegal, it’s a clear violation of the independent contractor agreement. What is illegal, however, is credit card fraud, and our industry is by no means exempt from that. Increased awareness of these deceptive practices and their associated red flags are helping direct selling companies reduce the number of incidents, but they remain prevalent enough to keep third-party fraud detection companies in business.

Every organization in every industry faces online security risks today. The risks faced by the direct selling industry, however, are unique due to two factors: one, the independent contractor relationship; and two, our promotion and recognition-oriented cultures, which, unfortunately, can motivate for the wrong reasons as well as the right ones.

Friendly & Unfriendly Fraud

The issues boil down to what John Licari, Chief Operating Officer of Total Life Changes, refers to “friendly fraud” and “unfriendly fraud.” Friendly fraud isn’t necessarily fraud per se, but it involves buying and selling our industry’s products in a manner that doesn’t support long-term, healthy business growth. Unfriendly fraud involves the above-mentioned credit card fraud. A single case may be committed by several individuals who open up an account for the purpose of committing fraud, after which they shut down the account, then open a new one somewhere else and begin the process again.

Friendly fraud, according to Licari, “takes a little longer to materialize. They’re pooling their money, they buy as much product as they can at a reduced cost, and then they’re dumping it on Amazon or eBay or anywhere else they can—and still at a profit because they’re able to obtain it at a discounted rate.” Unfortunately, that’s not the only path friendly fraud can take. “A lot of times with friendly fraud, you’re getting a lot of rank advancements, which could trigger inflated bonuses and commission checks. So now all of a sudden, a $1,000 investment might net $1,500 because you gave everyone time to do the math.” Another common tactic is the creation of fake accounts— for example, a distributor who uses her own credit card to establish multiple accounts for customers who don’t exist.

“One of the biggest mistakes I see people making in this industry is mistaking a flurry of activity for one month as business growth.” —DEBORAH HEISZ , Co-CEO, Neora

Rethinking Product Promotions

Product promotions are one of the common scenarios during which this behavior takes place. Imagine the typical product promotion: You announce it to your distributors, and the promotion continues for a month or more. Our intention is to motivate distributors to challenge themselves—to find a few new customers, sell a bit more product, welcome a few new team members. And many do just that. Sadly, however, a few try to take shortcuts or otherwise game the system.

“If we give people advance notice, if we keep promotions going on long enough, that gives the potential bad guys time to get their ducks in a row and figure out a strategy to manipulate the promotion or the system itself, either through the customer affiliate program or through the standard genealogy,” Licari continues. “They figure out a way to either get product out, or product in and money out, and by the time you figure it out, they’re gone.”

Whether driven by a desire for rank advancement or something more nefarious, an uptick in these unscrupulous practices has brought about a secondary, yet no less important, challenge to our industry. Distributors who approach prospective customers find that they can’t compete when their own products are being sold on Amazon for a significantly lower price. “What’s really happening there is that they’re [distributors] competing against themselves,” says Deborah Heisz, Co-Chief Executive at Neora (formerly Nerium International). While our industry’s reputation for personalized service is a compelling point of difference, “ it doesn’t overcome the online marketplace,” Heisz says. “We really have to control brand pricing online. It’s a huge hurdle, and it’s something a lot of CEOs are talking about right now.”

Cash In Hand Instead Of Product

Last year, The Times of London reported that luxury brands like Burberry had taken to burning their excess stock so as to avoid having their products sold at discount, and to maintain exclusivity and prestige. Burberry disclosed in its 2017 annual report that it had burned $37.8 million of unwanted products that year alone, three times more than in 2014. It may seem extreme, but it’s food for thought. If direct selling companies allow excess inventory to be sold at discount prices, are we unintentionally diminishing the perceived value of our own products?

“If direct selling companies allow excess inventory to be sold at discount prices, are we unintentionally diminishing the perceived value of our own products?”

Neora has just revamped its compensation plan with built-in bonuses to reward those who are actively building and cultivating a customer base. “We’re putting more cash in their hands instead of free product,” Heisz says. “There’s a big problem with giving product versus cash because you’re potentially incentivizing [distributors] to do something that jeopardizes their own business and the company. We want to make sure they’re motivated to talk to people about our products and the business opportunity.”

Short-Term Flash Sales

Burberry disclosed in its
2017 annual report that it had burned
$37.8 million
of unwanted products that year alone,
three times more than in 2014

At Total Life Changes, flash sales have replaced the traditional longer-lead, longer-term product promotions. It’s a change that Licari says has been an effective measure against fraudulent or otherwise questionable purchase activity, and it rewards distributors who are connected to the company and actively engaged in their businesses. Every Friday at 2 p.m. Eastern, TLC delivers a broadcast announcing a flash sale lasting anywhere from 10 to 60 seconds. The company usually decides what will be on sale 15 to 30 minutes before they go on the air. Shorter-term sales, Licari adds, protect against the erosion of brand value.

To illustrate his point, he talks about a regional furniture store where he’s based in Michigan. On nearly any day of the year, the store is running a “50 percent off” sale along with additional incentives like no interest and deferred payment. Any shopper who happens upon the store at a time when a sale isn’t running likely won’t be motivated to make a purchase when she knows another sale is just around the corner. Keeping sales targeted and short based on limited quantity benefits those distributors who are working the business, and it keeps perceived product value high.

Some direct sellers are reducing the dollar amount of product for which distributors may qualify during a promotion, and others have moved toward sampling programs and away from using fullsized product for promotions as a means of curbing fraud.

“For us, it’s about making sure the behavior [distributors] are focused on is not requiring them to stockpile product. That’s bad for them and for us,” Heisz adds. “I think the biggest driver of fraud in our industry is programs that unintentionally incentivize people to spend more and acquire more product than they’re comfortable having. Then they move that product via Amazon or eBay to recoup some of that investment. That’s what I see most often.”

Can We Beat Amazon At Its Own Game?

Amazon will never be able to compete with the kind of personalized service an independent distributor delivers to her customers every day. But is that enough? When it comes right down to it, if a prospective customer can pull out her phone, tap her Amazon app and find your product for less, will she be willing to sacrifice service for a discount? After all, if she doesn’t like the product, Amazon has made it relatively easy for her to return it. In fact, while Amazon may not have much of a customer service presence, consumers don’t seem to be deterred. What this all boils down to, then, is price.

“One of the main complaints we get from distributors is, ‘What are you going to do about Amazon?’” said Danny Lee, President and CEO of 4Life, during a recent Direct Selling Association Companies in Focus event. “What can anybody do about Amazon? The last time I checked, Jeff Bezos isn’t taking my call.” Given that this our reality, “when it comes to our industry, the real question is … how are we adding value, how are we making it easier for our distributors to do business?”

“If we give people advance notice, if we keep promotions going on long enough, that gives the potential bad guys time to get their ducks in a row and figure out a strategy to manipulate the promotion.” — JOHN LICARI, Chief Operating Officer, Total Life Change

At 4Life, the answer has been to price products more competitively. “The company’s goal is to empower distributors not only to offer consumers a superior product but at a price 25 percent lower than Amazon, along with the icing on the cake: personalized service and the option of a business opportunity in the future if the customer is interested.” 4Life initially used a third-party organization to enforce its retail prices on Amazon and now manages tracking and post-market surveillance on its own with a small in-house team.

Recognizing The Behavior That Leads To Success

Rank advancements, bonuses and incentive trips may lead to self-inflicted pressure to order more inventory than a distributor can reasonably sell. With those factors in mind, direct selling companies are examining how they can reward those distributors who are focused on growing and nurturing their customer base versus selling a specific amount of inventory—which can be little more than a means to an end. While they’re well-deserved for hard-working distributors, rank advancements and bonuses are “great, but they’re a one-time thing. It doesn’t build business,” Heisz says. “One of the biggest mistakes I see people making in this industry is mistaking a flurry of activity for one month as business growth. You put in a program and you get all of these sales for one month, but then the next month, you’re right back where you were, if not lower, because everyone has all of the product they need for three months.”

Ensuring that we’re rewarding the behaviors that lead to a sustainable business will support our continued efforts to eliminate misconceptions about the direct selling industry. “I would love to get to the point in this industry where we’ve taken the stigma away because we’ve proven over and over again that this is a great place to start a business at a low cost,” Licari says. “We’re not selling Lamborghinis in bikinis; we’re selling middle America the opportunity to earn an extra $200 to $300 a week by selling our products. There’s a ranking and recognition system, but we’ve chosen to celebrate both sides of the spectrum equally, and that helps us minimize fraud to a certain extent. ‘Ms. Middle America’ who’s probably 35, has a minivan and two kids playing soccer will be celebrated at TLC for making $250 a week just as loudly as someone who made five figures in a week. That’s our dream.”

Stopping Fraud Before It Occurs

A 2017 study conducted by LexisNexis® Risk Solutions determined that for every dollar of fraud, businesses incur an average of $2.66 in losses. Third-party fraud detection companies like Sift, Threat Metrix and iServe help companies of nearly every industry affiliation detect and reduce fraud and spot trends so they can get ahead of would-be offenders. These services employ such technology as Artificial Intelligence to conduct fraud analytics at the pre-gateway state of the transaction before an order is processed. Direct selling companies are not only using these services, but they are also employing dedicated staff to verify the authenticity of orders that are flagged based on various criteria—for example, orders exceeding a particular threshold.

Safety technology aims to strike the balance between making it harder for fraudsters to complete a transaction while maintaining a seamless check-out for its distributors. Kevin Lee, a Trust and Safety architect at Sift, has led various risk, chargeback, spam/scams, and trust and safety organizations at Facebook, Square and Google. He refers to the strategy as “dynamic friction—you want to be able to throw a sledgehammer at a bad guy, take him out, but you cannot apply that same approach to 100 percent of people on the platform. You’re really taking a scalpel approach—targeting a specific subset of that population that is aimed to do bad things.”

Red Flags To Consider

“A very common promotional abuse tactic is promotional funneling—creating fake accounts to redeem additional promotional offers,” Lee continues. “Typically, these fake accounts tend to have identifiable patterns including similar email addresses. From a technology standpoint, we’re looking at user behavior to understand patterns of abuse so that companies can prevent this from happening in real time. With such digital trust and safety tech in play, companies can add friction dynamically so that only suspicious users—in this case suspicious sales reps— have to do things like provide additional credentials.”

Anyone who monitors fraud will soon spot emerging trends and red flags—for example, concentration in a specific geographic location; according to John Licari, Chief Operating Officer of Total Life Changes. “Montreal is a hotbed for fraud right now for us.” Inevitably, as more fraudsters are caught, the number of cases will decrease there, only to pop up in some other location. Subsequently, some zip codes may require dual authentication.

While some factors don’t necessarily mean that fraud has taken place, they do send up red flags nonetheless. For example, a seller with multiple customers all coming from the same device, IP address or street, or who otherwise are in very close proximity.

Fraudsters are a savvy group running a multitrillion-dollar business. “Often times, it may seem like an arms race,” Lee says. “Companies will institute rules or put some kind of monitoring in place, but they’re only putting in those rules because they got burned by someone or some group. And really, the danger there is that fraudsters will go one below the threshold,” or do just enough not to get caught. An additional concern, he adds, is that the institution of rules is likely to introduce friction to your high-performers’ buying experience, when in fact you want to do everything you can to help them sell more. Those hurdles can turn your superstars off or otherwise cause frustration.

Stop Chasing Technology

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Want to cut costs, improve efficiency and increase profits? Develop a killer set of APIs.

APIS, or application programming interfaces, were once the realm of technicaljargon prone software engineers. Today, however, there is a growing need for executives, sales analysts, HR specialists and others in all industries to understand the value of APIs.

All these stakeholders have something in common: They want to cut costs, improve efficiency and boost the bottom line of their company—no matter what industry it’s in. Generally, the way to do that is through technology—specifically, through developing a great set of APIs.

The direct selling industry is no different. Because technology changes so quickly today, it’s even more important for direct selling companies to focus on developing good APIs. This is the message we received from the sources to whom we spoke for this story.

Direct Selling News talked to several direct selling executives with technology backgrounds to get their thoughts on why building APIs is better than trying to update your technology at every turn. But first, let’s take a look at what exactly APIs do.

What Are APIS and How Do They Work?

An application programming interface or API is what allows programs to talk to one another, so they can share data and features. APIs provide a standard way of accessing any application, data or device, whether it is shopping from your phone or accessing cloud applications at work.

APIs define the rules that must be followed in order to interact with a programming language, a software library, or any other software component. A good API makes it easier to develop a program by providing all the building blocks.

Think of an API as a messenger that delivers a request to the provider you’re requesting it from, and then delivers the response back to you. APIs are used by software applications in much the same way that interfaces for apps and other software are used by humans.

Why APIS Matter

For direct sellers to get ahead, they must create a great set of APIs—for their back office and beyond. Because of the strategic significance of APIs, industry executives should feature APIs in their long-term plans and initiatives.

Consider this: If you get good at developing APIs, then your team owns them, and you can plug into other technologies as they become available. Otherwise, you will always be chasing the tail of technology. Our sources told us that APIs are the key to business success in the direct selling industry. For example, your back office needs to be robust enough to support your business, and it needs to present the data that is there—such as customer/distributor details. If you can present this information through an API, you can create the user interface you would like.

The reason this is possible is that APIs are what allow disparate data sources to talk to one another—and this will expand your options exponentially. When data is segmented, you can only see part of the picture. Not so when using an API-based system.

Thus, developing a robust set of APIs is the key to not only sharing data but increasing functionality. These dual benefits offer the promise of a smoother and more contiguous experience across a variety of platforms.

How Data Delivers

In recent years, data has become a crucial resource to companies because of its ability to give those businesses a competitive edge. Companies that become market leaders do so because they understand how to leverage data—how to analyze it, optimize it, monetize it. According to McKinsey & Company, early adopters in various industries have used APIs to create new products, channels and opportunities. For example, in the automotive industry, companies are using APIs to integrate real-time driving data into dashboards. Indeed, developing good APIs is the key to leveraging data to create new opportunities for innovation and business growth.

Another benefit to developing great APIs is that it enables your company to create rules about accessing your data, thus protecting the data’s integrity. Compromised data leads to negative outcomes and dissatisfied customers. It’s also a risk to your business with privacy laws like the GDPR in Europe.

Chasing the Tail of Technology

While technology has always evolved, it is now changing at a much more rapid pace than yesteryear. Today, technology is experiencing exponential growth. As a result, it’s easy for companies to get distracted by technology—or at least the wrong aspects of it—only to discover that chasing technology is a neverending chase.

That doesn’t mean that you shouldn’t spend time keeping updated but be strategic about it. Does it make things easier and faster? Does it create cost savings? Or, is it leading your company down the rabbit hole?

When it comes to technology, the key seems to be knowing where to focus your energy. Being an expert in APIs allows you to integrate new technology seamlessly and more easily. It also allows you to become an expert on integrations—thus mastering the art of developing technology in such a way that you maximize speed and minimize disruption.

Economies of Scale

Building your back office around a good set of APIs will also allow your company to be nimbler and more agile. The right APIs will enable you to scale and adapt quickly to changing user tastes and new technologies.

How do APIs fit into your company’s big-picture vision? Are they the foundation on which you build your business? Do they play an important role in your strategic plan? These are questions we suggest you ask and answer.

The fact is, if your company is thinking about implementing any piece of new technology, you should seriously consider the API set and documentation. Ensuring that all of your implementations and integrations are based on good APIs makes it much easier to manage and scale your technology.

Anything else will come across as clunky and outdated, something that is just not acceptable today. Manual processes, no matter how efficient, just can’t keep up speed- or scale-wise.

We live in an Amazon world where even the unsophisticated, as it relates to technology, have a certain expectation set. You have to have good data and the ability to access it quickly and flexibly. And that’s what APIs provide.

Rise of the Virtual Social Selling Enterprise: Part 2

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More companies entering the direct selling space are opting for a cloud-based business model that combines skilled suppliers, online office platforms and strategic partnerships.

Editor’s Note: This is the second installment about the virtual social selling companies that are making an impact that began in with July 2018 cover story.

Direct selling startups used to require major capital and widespread connections, but the field has drastically changed. Today’s companies can launch their operations virtually through a cloud-based structure without a brick and mortar location to hold them back, and even under resourced organizations can provide fierce competition by leaning on trustworthy third-party suppliers to provide access to a specialized manufacturer without the massive overhead. Now almost anyone can play.

“Everything we do in business should be working towards the goal of growth in what we want to accomplish. If someone isn’t helping us move in that direction, whether it’s a vendor or an employee, we have to have that conversation and see if we can make that correction and, hopefully, we can work it out.” – Paul Rogers, CEO, PrimeMyBody

Barriers have disappeared, companies are nimbler, and customers are engaging like never before thanks to these virtual infrastructures. The systems most traditional companies rely upon are the same systems that tie up profit margins, bog down growth, limit the talent pool to highly specific geographic regions, and prevent expansion from happening any faster than a contractor can build. But this new trend, which embraces agility, lean operations budgets, and executive teams scattered across the country, has the potential to allow companies to adapt more readily to market fluctuations and not only stay in the game, but potentially lead the pack.

For the renegade companies who are paving the way with these virtual infrastructures, the giant, expensive brick and mortar offices are gone. And so are the gate keepers.

All Relationships Require Communication

Much like the leaders of Toyota and Honda, PrimeMyBody CEO Paul Rogers believes holding suppliers to a high level of communication and acknowledging that they’ve already invested large sums of their own capital into their manufacturing processes is essential for success. “I don’t take anything for granted,” Rogers says. “I don’t want a vendor to ever feel like they are disrespected by me, and I don’t want to feel like I’m not valued by a vendor. That takes regular communication to make sure they are a part of achieving your ultimate goal. Everything we do in business should be working towards the goal of growth in what we want to accomplish. If someone isn’t helping us move in that direction, whether it’s a vendor or an employee, we have to have that conversation and see if we can make that correction and, hopefully, we can work it out.”

The “organization as machine” model is being replaced by the new architype of “organization as organism.” Instead of the stiff, sluggish machine, with its layers of bureaucracy and expensive red tape, the organism is agile, and quick to adjust as needed to its environment. – McKinsey & Company

For third-party companies like the ones Rogers works with, PrimeMyBody isn’t the only one in the partnership with skin in the game. The suppliers’ livelihoods depend on the success and health of their client’s business. If one succeeds, the other does as well. If the client stumbles and takes a financial hit, so too goes the supplier.

PrimeMyBody’s 2018 sales totals of $48 million is a real-world example of how trustworthy outsourcing can take a company to the next level. And research supports it as well. In fact, according to Whitelane Study, 89 percent of clients who have outsourced claimed to be satisfied by the services provided by their third-party agents.

Transitioning from Organization to Organism

New trends can cause upheaval for businesses not willing to adjust their day-to-day rhythms and customers are picking up on it. Even if it’s not on the tips of their tongues, consumers understand market disruption. It’s why they call an Uber instead of a cab, why a new outfit typically means a delivery on the doorstep rather than a trip to the mall, and why shipping that isn’t free and fast can be a deal breaker. We don’t buy like we used to.

Unfortunately, embracing market disruption isn’t something every company is equipped or willing to do. Companies like Blockbuster learned the hard way that slow adaptability is no adaptability and faced dire consequences. What was missing, in part, in these dying organizations was a lack of flexibility. There was no room to be nimble or move quickly. In The Five Trademarks of Agile Companies, a 2018 article from McKinsey & Company, the “organization as machine” model was described as being replaced by the new architype of “organization as organism.” Instead of the stiff, sluggish machine, with its layers of bureaucracy and expensive red tape, the organism is agile, and quick to adjust as needed to its environment.

“In the 2009 downturn, many of the traditional real estate brokerage franchises had to go out of business because they couldn’t deal with the financial swings in the market. In our model, we can adapt to pretty much anything the economy could throw at us without much financial impact either way.” – Glenn Sanford, Founder & CEO, EXP Realty

That’s the structure EXP Realty Founder and CEO Glenn Sanford followed when he launched the company in 2009, in the wake of the 2008 housing market crash. Launching in a year when getting a mortgage was extremely difficult, he needed to circle the wagons and pitch every expense over the side that he could.

“In the downturn, many of the traditional real estate brokerage franchises had to go out of business because they couldn’t deal with the financial swings in the market,” Sanford says. “In our model, we can adapt to pretty much anything the economy could throw at us without much financial impact either way.”

Sanford’s company is entirely virtual, from the 17,000 plus real estate professionals who work for him to his executive team spread out across Nevada, New York, Arizona and Massachusetts, just to name a few locations. Sanford, who runs his real estate company from a casita over his garage, believes the adaptability and flexibility the cloud infrastructure provides is a benefit that a company with an on-site team couldn’t fully appreciate. “We have collaborations with masterminds taking place throughout the day in our virtual world, which really gives us an unfair advantage to innovate,” he says. “We take working together and collaborating together to a different level.”

Longer, Happier Work Days

Employees in a virtual office may not sit around the same conference table, but they’re showing up to meetings and working together on projects just the same. Cloud-based companies share and contribute through applications like Zoom, Google Docs and Facebook group chats. For eXp Realty, their virtual world is an elaborate 3D campus built on the Virbela platform, the same one used by the U.S. Navy and Stanford University.

Many company leaders who depend on a virtual team, like Liv Labs founders David and Debbie Reeder, report that the pros of relying on a remote staff greatly outweighs the cons. Aside from the savings to the bottom line, a widespread workforce makes their company more immune to local or regional weather problems, and the productive hours of a workday are considerably longer, with the West Coast continuing to work long after the East Coast team has logged off. “It gives us the ability to use the very best people in their specific areas of expertise without requiring them to be in one location,” David Reeder says.

“Being virtual gives us the ability to use the very best people in their specific areas of expertise without requiring them to be in one location.” Liv Labs Founder David Reeder

Much like the co-prosperity of the supplier relationship, a remote workforce is a happier workforce. “They obviously enjoy where they live,” Debbie Reeder says. “We’re not having to move them. They’re able to work in an environment, whether it’s a home or small office, with people they thoroughly enjoy.”

As an added bonus, Debbie gives the remote working model credit for providing them with the resources to hire more talent. As a young company, they are able to employ an entire graphics team who work on multiple projects simultaneously, rather than the one creative professional they would likely be able to afford if they were paying for the overhead of a brick and mortar headquarters.

Ron Williams, CEO of ÜFORIA is appreciative of being able to work with competent partners who know what they are doing. “When you take myself and my ‘lean and lethal’ team, and you couple that with great strategic partnerships, and then wrap everything around a virtual model that is well funded, you basically have all the upside—basically minimizing most of the risk,” Willams says. “I like that, because as we all know the percentages of success year one and year two are very low. I think that we have put everything in place to maximize our opportunities. And it’s proving to work for us.”

A New Hybrid Evolution

Operating in the cloud doesn’t have to be all or nothing to reap the benefits, as illustrated by cosmetics company Maskcara Beauty, whose 2018 sales reached $24 million. What launched as a virtual company, has grown into more of a hybrid–transitioning some of their remote workforce into in-office employees–as the company has expanded and evolved. “We are so young as a company, so we are learning, adjusting and relearning constantly,” says Maskcara Beauty founder Cara Brook. “We want every employee to be in the environment that helps them thrive.”

What direct selling leaders who have embraced this trend know is that success in the digital age will require an unusual amount of agility. That means finding reliable partners who can be entrusted with valuable segments of the business–whether that be an executive working from home or a third-party vendor running the manufacturing process–and leaning into that trust to invest in a long-term and loyal relationship that exudes empathy and operates transparently.

Maximizing Revenue Per Employee (RPE)

The virtual movement is about maximizing revenue per employee, an important financial ratio used to gauge the success of a young, growing business. Since the largest expense for all companies are their employees, the more revenues that can be generated for each employee the greater efficiency for the company. It shows what companies are getting in exchange for human expenses.

RPE is not only a key indicator that reflects a company’s ability to sustain growth, it also measures productivity and how efficiently a company operates with their given resources. And greater efficiency means you are doing more with less, which translates to expanding margins and improved profitability. RPE has been an important metric for the growing tech industry for years and is becoming an increasingly important measure of being on the right track.

Virtual Social Selling Companies Influencing Industry Trends

B:HIP GLOBAL

Founder: Terry Lacore (2010)

Info: Asia business and South America No home office for US business, international operations have offices

web: bhipglobal.com

 

EXP REALTY

Founder: Glenn Sanford (2009)

Info: Agents in all 50 states and 3 Canadian provinces help clients with their real estate purchases.

web: exprealty.com

 

LE-VEL

Founders: Jason Camper and Paul Gravette (2012)

Info: Around 55 full time employees and no home office

web: le-vel.com

 

LIV LABS

Founder: David & Debbie Reeder (2018)

Info: Less than 10 employees

web: livlabsnow.com

 

MASKCARA BEAUTY

Founder: Cara Brook (2013)

Info: Hybrid model which combines both a virtual team and minimal in-office staff

web: maskcara.com

 

MYDAILYCHOICE/HEMPWORX

Founders: Josh & Jenna Zwagil (2014 & 2017)

web: mydailychoice.com

 

PRIMEMYBODY:

Founder: Paul Rogers (2015)

Info: Offices in Dallas and Las Vegas

Web: primemybody.com

 

PRÜVIT

Founder: Brian Underwood (2015)

Info: Only 15 full time employees in sales and marketing at Louisville HQ

web: pruvitnow.com

 

REVITAL U

Founder: Andy McWilliams (2017)

Info: 10 employees

web: revitalu.com

 

ÜFORIA

Founder: Ron Willams (2018)

Info: No traditional office, less than 10 employees

Web: uforiascience.com

Our Channel Must Evolve

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The way our channel responds to three specific market forces—competition from gigs, smart technology and hypersegmentation— will make the difference between our survival and extinction.

Remember when customers learned about new products mostly from three television networks—or maybe from a magazine or mail-order catalog? Avon came calling, too, with lipstick samples and sometimes a presentation about the benefits of selling Avon.

Basically, we saw one promotion at a time from a few sources.

Now, there are ads in the game we play on a phone that buzzes with a customized text offer from a retailer whose social media link we click for a flash sale that ends in 30 minutes. Also, there’s a mini billboard on our grocery cart. And the judges on our reality singing competition show are drinking clearly branded beverages.

Need a time out? Don’t make it a long one. You have to stay in the game, keeping up with and standing out in the full-court press of messages targeting consumers, or you’ll get stuck on the bench.

The direct selling channel has worked hard to meet changing customer and market expectations without losing sight of what makes it unique. But we have to work harder. This fast-changing, diversifying economy is challenging all companies to keep evolving. The way our channel responds to three specific market forces—competition from gigs, smart technology and hyper-segmentation—will make the difference between our survival and extinction.

Gigs

Direct selling may have no competitor more formidable than the gig.

We used to be the best option for people who wanted to make their own hours and supplement—or even heavily subsidize—their incomes. Then came Uber, Lyft, AirBnB and Etsy and a score of other companies that let people make money with things they already own—their cars, their homes, their time and their talent. We quickly realized that our entrepreneurial opportunity wasn’t necessarily the thing that set us apart any more.

“Direct selling has traditionally sold bigger dreams —like changing your life and becoming financially independent. Aspiration is important, but we need to focus on shorter-term, more tangible returns, too.”

Now we’re challenged to use that competitive pressure to turn ourselves into an even bigger diamond.

What do many gig companies offer that we should consider offering, too? How about more transparency? People are looking for a guarantee. If I’m an Uber driver and I accept a passenger at a certain fare, I know exactly how much money I’m going to make. Plus, the company is going to feed me passenger leads until I call it quits for my shift. The model provides a high level of predictability and a clear path to the next dollar.

Direct selling has traditionally been shrouded in a bit of mystery because we’ve tended to sell bigger dreams—like changing your life and becoming financially independent. That’s not a goal you can reach by the end of a shift. Aspiration is important, but we need to focus on shorter-term, more tangible returns, too.

Our channel also needs to refine the process of equitably distributing leads to our field teams. That’s how we become an end-to-end solution that’s competitive with gig economy opportunities.

Conversely, no one’s going to make six figures driving people to and from the airport. Plus, direct selling is very team oriented. Anyone looking for a sense of belonging or purpose probably won’t find it in a gig job. When you’re out of the house because a tourist is renting your rooms, you’re probably not at a convention or professional development workshop with other gig landlords.

Direct sales companies can set themselves apart by providing tools, training and support that help salespeople grow professionally and a mission to which they can be emotionally connected. When your teams are driven by broader objectives, they will see their work as more than just a gig.

Smart Technology

Typing a Google search or asking Alexa for an answer is so last week. All we really have to do is wonder out loud about something, and it seems to appear in our digital information feed.

Technology has, literally, become a no brainer— which makes it even more critical that we use it thoughtfully and stay mindful of how it empowers customers and influences their habits. Solid marketing and sales principles must drive technology strategy, not the other way around.

The web pages and YouTube videos that replaced printed brochures and CDs made it easier for us to reach prospects, but they didn’t take away the need for us to personally interact with them. Our model is rooted in conversations and storytelling, and while our products and opportunities may be amazing, they don’t actually sell themselves. We are still responsible for creating, shaping, and sustaining trusted relationships. Technology should augment not control how we court and keep customers.

What we can’t really control is the flow and accessibility of information. Technology has become a great equalizer, allowing everyone to peek behind the curtain.

As the online content ocean gets deeper, potential customers and distributors can find information about our products, ingredients and companies with a few clicks, swipes or “Hey, Siris.” This means we have to be even more transparent and confident about what we’re selling. If you are only 98 percent sure about your product claims—whether it’s about what the product does or how it’s different—someone will find information that pokes at your two percent doubt.

This is a good opportunity for our channel to research and innovate, to take your product development to the next level by investing more time and money into your sales force and customers by giving them complete confidence in what you produce.

“Solid marketing and sales principles must drive technology strategy, not the other way around.”

Direct selling companies should be diving just as deeply into the ocean of online data. There’s so much information available to us about who is buying our products and how they use technology to engage with us. There’s no excuse for chasing the wrong audience or using technology in a way that’s not driven by audience demand.

Pay attention to who shares your social media posts and who reads and comments on your blog. Be honest about whether your messages resonate with people because if they don’t, it doesn’t matter how many you send or how instant they are.

Hyper-Segmentation

The television programs you watched in the 1980s and 90s? Everyone was watching them. The magazines and catalogs you read? Everyone subscribed. Of course, that’s an exaggeration, but when there aren’t many buckets, each one holds a lot of people.

Then cable and the internet began to subdivide consumers and micro-target within demographics. Now audiences are super segmented, defined according to spreadsheets worth of criteria, and people are conditioned to seek content and products that speak to their specific preferences and points of view.

This is a permanent change. We’re not going back to the days of massive media audiences. Yet, there’s a persistent belief among direct selling companies that everyone is their target market. Even if your product is good for everyone in theory, in reality not everyone will want it, and we need to realize that’s okay.

We’re not doing our distributors any favors by perpetuating the notion that anyone they talk to is a future customer for life or a member of their downline. Dig into that online data you’ve been collecting. Be objective about who is buying your product and taking you up on your entrepreneurial opportunities and make sure your marketing and sales tools and messages speak directly to those people.

It’s also critical to keep reminding ourselves that we are targeting two often distinct audiences. There are people who want our products and services and people who want to make money. The two are not necessarily mutually inclusive or exclusive. Too often, companies try to talk to both groups at the same time, and it dilutes the message.

Targeting sweet-spot age ranges—like the coveted Millennial demo—and leaving it at that? Effective marketing is more sophisticated now. Companies need to connect with consumers and prospects on a psychographic level, understanding what kinds of lifestyles people are trying to achieve and being clear about how buying a product or building a business can help them get there. If you appeal to people on that level, they get excited and become brand zealots for you.

Catch!

Evolution isn’t as slow as it used to be. It took billions of years for the earth and human beings to become what they are. It took 10, maybe 15 years for gig work, smart technology and sophisticated market segmentation to almost completely redefine our economy.

So, cut yourself some slack if you feel like you’ve missed a ball. There will be another one coming.

Q&A with 4LIFE president and CEO Danny Lee

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It’s About Execution. The model works. Now we must each do our part in the execution of it.

4LIFE president and CEO Danny Lee’s career has spanned almost every area of operations, accounting, marketing. Now as CEO (since October 2017) he has the advantage of being able to switch lenses depending on what the current environment requires.

I recently connected with Danny to talk about his current tenure as the chief executive, as well as how he is helping move the ball down the field when it comes to improving the customer and distributor experience, and ultimately growing the company.

Given your experience in many areas of business, what particular lens do you use the most as President & CEO?

I am trying to see the lens more from a sales point of view now, actually, because that’s the mandate I’ve been given to grow sales. So that’s one area that I don’t have experience in. So I’m looking to glean ideas from those who have that experience in my industry and from our peers.

You could you could say that for the first 10 years of my time or nine years of my time at 4Life, I’ve been a student of 4Life, learning our business and how we do business here and throughout the world. And since coming into this role I’ve kind of pivoted and try to become more of a student of the industry, trying to look outward and see what other colleagues I admire are doing, what reputable companies I see that are doing a good job of recruiting that we can model and glean ideas from.

What has been your biggest challenge in your role being a year and half in as CEO?

The biggest challenge to this point has been battling Amazon. When I say Amazon, it makes it sound like Amazon is the enemy, which the company is not. Amazon is just a platform, right? They have no conscious involvement in 4Life, or necessarily in our industry. We’re just a blip on the screen for them. But from where our distributors stand, it’s a very big challenge to their business, to their livelihood, to their long-term success. And so being able to take Amazon and turn it into something we can leverage for growth…that’s been my greatest challenge to date.

What responsibility do you have as a company to retention? And how does training fit into that?

Generally speaking, we view recruitment as the field’s responsibility. Distributors sell to customers and bring entrepreneurs into the 4Life business. Retention is our responsibility. We retain them through a great customer experience, a unique product experience, and a superior interaction with the 4Life brand. When someone contacts the company, we want that to be a first-class moment.

“We’ve rededicated ourselves to getting out into the field and developing those relationships.”

So, we view the field’s responsibility as a recruiting and ours to be more in the realm of retention, but at the same time, we collaborate with the field to empower them with the tools they require to attract those who are interested in 4Life. We achieve this through training, enculturation, product differentiation, and a general awareness of all the assets, tangible and intangible, that we offer the field.

As an industry, we shouldn’t expect that recruits will come to us with any idea about what to do or how to accomplish it. Our participation in their success is critical.

How are your international markets faring?

The majority of our international markets are up in sales. We have corporate offices in 25 markets. As an executive team, it’s important for us to be hands on. That means traveling to markets and developing relationships with our field leaders. I visit different markets around the world at least four times a year.

And China?

Like a lot of companies in our industry, we began in Hong Kong with a traditional direct selling model. Just this year we launched a cross-border e-commerce model into China. It’s been quite a
transition for us but is working well.

What are you doing specifically for the North American market?

North America is our biggest market, by far. Like most of the industry right now, it’s been a little stagnant. We have, however, enjoyed modest single-digit growth in the United States over the past four months. But we’re talking about a market that is well over $100 million for us. So, the growth is significant. But to answer your question, we’re developing a real strategy for field development
and training. We’re getting out into the field, doing events, locking arms, getting face to face and knee to knee with distributors.

We are learning things, like how hungry business builders are for relevant information about the company. They’re saying, ‘We didn’t know this. How have I been doing this for 10 years and I didn’t know how that worked? I didn’t know we had an app that could help me with my business that much. I didn’t know the incentive worked like that,’ etc.

So, at the end of the day, we’ve rededicated ourselves to getting out into the field and developing those relationships.

What have you been specifically tasked with to help grow the company?

China will obviously be a part of that plan. I mean, if you look at the top companies in our industry, especially those that have broken a billion, there aren’t many that haven’t entered China.

“Another initiative that our industry must commit to is mobile first.”

The next thing we are laser-focused on is the U.S. market. The interesting thing about 4Life is that 90% of our demographic in the U.S. are Hispanic. But we are now beginning to show positive growth among women in that middle income, middle America Caucasian market.

How does our channel need to evolve in your opinion?

If you think you can ignore technology, then obviously that’s a huge mistake. And not only do we need to remain mindful of what companies are doing well in our industry, but we must be heedful of everything happening around us. Too many examples abound to mention them here, but the question is how to leverage technology in a way that mirrors the needs of customers with the strategic placement of distributors. There’s a lot to be said for what’s being done outside our industry and we have yet to accomplish in the marketplace.

Another initiative that our industry must commit to is mobile first. We are getting to the point—if we aren’t there already—where everything one needs to manage the business must be easily executable from a mobile device. China’s a good example. They skipped the entire standard computer laptop phase, and went straight to mobile. They are not only chatting and paying bills, scheduling meetings and buying takeout, but their entire lives evolve around mobility. We must think mobile first to keep up.

What plans do you have for 2019 going forward? What are you laser focused on?

Execution. I feel like we have the programs in place. We have the comp plan and products, history and leadership, both on the corporate side and in the field. We have great founders who are actively engaged. All we need now? Is to execute. We want our distributors and customers to feel empowered to share their 4Life experience with others. The model works. Now we must each do our part in the execution of it.

HempWorx of MyDailyChoice: The Company Affiliates Built

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How one woman’s health journey ignited a movement that drew $100 million worth of sales–and counting.

MYDAILYCHOICE /HEMPWORX
Founded: MyDailyChoice 2014 HempWorx 2017
Headquarters: Las Vegas, Nevada
Top Executives: Josh Zwagil, Co-Founder/CEO, Jenna Zwagil, Co-Founder/CMO
Products: Hemp-based Products, Cannabidiol Oil (CBD) Products, Oral Nutritional Sprays

 

Walking away from a rewarding residual income and an organization with fifty thousand distributors, in your downline sounds crazy, but that’s exactly what Josh Zwagil did when the corporate executives of the company he was a part of began making changes that did not put the needs of its employees and customers first. The responsibility he felt to the people he brought into the business weighed heavily on his shoulders. Josh began scouring the market for a better company to call home, and when he couldn’t find one, he decided to build his own.

The result was a direct selling company focused on health and wellness, named MyDailyChoice, which Zwagil established in 2014 to be run his way: by prioritizing the people involved–affiliates and customers–and putting their needs above the bottom line.

A Mission is Born

Just as MyDailyChoice began to take shape in 2014, Josh’s wife Jenna started experiencing some health challenges.

“We’re very transparent, and we speak to people from the heart.” —Josh Zwagil, Co-Founder & CEO

Since traditional means offered Jenna few solutions, she began scouring the holistic arena looking for therapeutic resources. When she sampled CBD oil taken from their Kentucky farms, she found the answer she had been looking for. Her results were encouraging, so she shared the products with her close family and friends who returned with positive outcomes as well.

“I felt like a normal person, for once,” Jenna says. “I said, ‘We need to get these products out to the rest of the world because I know I’m not the only one in need of such a beneficial product.’”

The next logical step, in Jenna’s view, was to add CBD oil to the MyDailyChoice lineup, which then included oral nutritional sprays, but Josh felt like the network marketing industry wasn’t ready for what most people assumed was illegal or marijuana. Not to be deterred from her mission, Jenna put up a simple Shopify website and started a Facebook group where she educated people about CBD oil. Within three months, her orders exceeded what she could handle on her own.

For the People, By the People

Jenna’s brainchild became the HempWorx brand and officially launched in May 2017, merging its hemp-based products with MyDailyChoice. By the end of 2017, sales reached $9.6 million. In 2018, that number grew 90.4% percent, skyrocketing to $100 million.

Their business model may have transitioned from a simple retail website to a massive organization with more than 70 employees, and over 300,000 customers purchasing from over 60,000 affiliates, but its founders have stayed true to what created its original momentum.

“We give the lower level ranks the same opportunity to succeed as the higher ranks. We provide you the opportunity to set goals to even out-earn the CEOs!” —Jenna Zwagwil, Co-Founder & CMO

“We’re very transparent,” Josh says. “Instead of doing commercials or ads, we just go live on Facebook; we speak to people from the heart. We are very engaged with the field, and we shake the hands of all the customers that come through our office. It’s about the people more so than anything else.”

Women are Leading the Way

Josh and Jenna recognize that selling non-psychoactive cannabis makes some people uncomfortable but, for them, resistance just signals another opportunity to educate. They’re not only building a company, they’re growing a movement they firmly believe in.

Behind them in this mission is an army of affiliates, 80 percent of which are female, who have taken on their task of providing people with a holistic health option. Even these affiliates, who have made a mission out of educating people about hemp and CBD oil, face opposition and often within their own households.

“It’s the most rewarding thing in the world when you can provide an opportunity for people to grow financially and physically in the same opportunity.” —Josh Zwagil, Co-Founder and CEO

“Husbands are very skeptical, and women decide to do it anyway, which is kind of how we started,” Jenna says. “They become very empowered through this model and have the opportunity to create not just a side income but a full-time income through our compensation structure.”

The Future of CBD Oil

The CBD oil market is expanding as more and more states become hemp-friendly. Tinctures, sublingual applications, edibles and topical applications have been where much of the market has taken up residence so far, but the future, the Zwagils believe, is in the bath and body category, meaning cleansers, masks and cosmetics, to name a few.

Predictably, HempWorx isn’t waiting for everyone to catch up. Their CBD oil-infused bath bombs released at the beginning of the year with more product innovation waiting in the wings. And while the competition heats up around them, the Zwagils are keeping their eyes on the reason they launched HempWorx and what matters most to them: the people.

“We are excited to continue changing lives,” Josh says. “It’s the most rewarding thing in the world when you can provide an opportunity for people to grow financially and physically in the same opportunity.”

HEMPWORX: Coming To A City Near You

It was momentum and mission that propelled HempWorx to the CBD oil leadership position they are in today. With their unique combination of culture, marketing and drive, they’ve attracted enthusiastic people to join their movement to bring CBD oil to the masses. And like any well-known activist movement, they’re taking their show on the road.

“Most companies have one regional every 60 days,” Josh says. “Our goal is to do three to four events per month.”

To accomplish this, they’ve bought a semi-truck, wrapped it in HempWorx branding and are traveling across the country political campaign style with a goal of reaching out to all fifty states.

“It’s very uncommon in the industry for CEOs to be transparent,” Jenna says. “They usually only show up to one event a year. We’re very much in the trenches with our customers and affiliates.”

A Season of Channel Evolution!

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The direct selling channel has been working overtime the past few years to meet changing customer and market expectations without losing sight of what makes it unique. The Amazon Effect not only has posed challenges from a retail market and customer experience perspective, but what caught so many off guard was that some distributors would use Amazon’s platform—as well as others—to sell your products at a discount.

This has made it necessary for companies to work even harder in protecting both their brand and opportunity from those trying to game the system. Writer Courtney Roush talks with a few direct selling executives to see how they are battling fraud at all levels, and for many it starts with changing their product promotion strategies.

Pick up the printed issue in which this article is found.

Next, Noah Westerlund, Senior VP of Business Development for SUCCESS Partners, and writer Heather Martin talk about how this fast-changing, diversifying economy is also challenging companies to keep evolving. Westerlund says the way our channel responds to three specific market forces—competition from gigs, smart technology and hyper-segmentation—will make the difference between our survival and extinction.

In this issue, we are also pleased to feature HempWorx of MyDailyChoice. Co-Founders Josh and Jenna Zwagil founded HempWorx after Jenna started experiencing some health challenges. When she sampled CBD oil taken from their Kentucky farms, she found the answer she had been looking for. Her results were encouraging, and they soon added CBD products to the MyDailyChoice lineup, and in May 2017, the HempWorx brand officially launched. It has been a banner year for HempWorx, accumulating $100 million in sales for 2018. See their feature starting on page 54.

In closing, I wanted to mention how exciting it was to see so many of you at our 10th Annual Global 100 Celebration event on April 24, where we recognized and honored the top revenue-generating companies in the world, as well this year’s Bravo Award winners. We will have a complete roundup in our June issue, so stay tuned and thank you again for your support for another outstanding event!

Japan Presents a Market with Many Opportunities for the Direct Selling Industry

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A Bilateral trade agreement could result in the elimination of Japanese tariffs on U.S. nutritional supplements, as well as serve to strengthen Japan’s direct selling market.

In our global world, free trade is critical in order to expand our markets. Last year, following the conclusion of negotiations on the U.S. Mexico, Canada Agreement (USMCA), the U.S. Government announced intentions to enter into discussions on three new trade agreements with Japan, the European Union, and a post-Brexit U.K.

High Tariffs on Supplements Have Stifled Growth

Recently, the U.S. Trade Representative (USTR) announced they would formally open a dialogue with Japan. Japan has some of the highest tariff rates on nutritional food products and supplements in the Asia-Pacific region ranging from 15%-30% for some nutritional product tariff classifications

“While Japan has just over three million sales representatives who sell via the direct selling business channel, the vast majority, 80.9% of those are women. In contrast, 73.8% of global direct sellers are women.”

While many of these tariffs were addressed in the Trans- Pacific Partnership (TPP), a now defunct trade proposal between twelve Pacific Rim countries, U.S. exporters of nutritional products continue to face high tariffs into the Japanese market.

In addition to high tariffs, Japan’s regulatory system poses a severe challenge to the import of nutritional supplement products through non-tariff barriers such as food additive restrictions and difficult rules to secure approval of functional food claims.

A bilateral trade agreement could result in the elimination of Japanese tariffs on U.S. nutritional supplements, creating more market access for increased U.S. exports. Currently, U.S. exporters of nutritional products are at a disadvantage due to Japan’s recent trade agreements with other countries such as the European Union and discussions with many of the countries which were formerly party to the TPP.

Womenomics Initiative

It’s notable that Japan’s aging population and restrictive immigration policies have severely limited the country’s ability to expand its economy. In order to stimulate growth and quickly tap into a source to expand their workforce, Japan’s Prime Minister Shinzo Abe has championed a “womenomics” initiative to boost the workforce as part of his economic reforms. While many Japanese women have entered the workforce in the past five years, many also continue to work either part-time and or from home.

Despite being a leading economy (Japan ranks third behind the U.S. and China in GDP), Japan presents more opportunities for growth when compared to other Asian countries in terms of direct selling.  While Japan has just over three million sales representatives who sell via the direct selling business channel, the vast majority, 80.9% of those are women.  In contrast, 73.8% of global direct sellers are women.

Direct selling sales in Japan totaled around $15 billion in 2017, less than half of the $34 billion in sales reported in
China—a country with a much more restrictive direct selling regulatory environment. A bilateral trade agreement with Japan could serve to strengthen Japan’s direct selling market.

What Does All This Mean?

We need to engage the U.S. government as a unified industry to:

1. Encourage Japan to reduce or eliminate tariff and nontariff market barriers.
2. We need to work closely with the Japanese government to demystify direct selling and to partner with government initiatives to improve workforce sustainability.

 

Plexus’ National Service Week Benefits Families Affected by Hunger

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Scottsdale, Ariz.-based Plexus Worldwide recently hosted its Nourish One Week of Service to benefit children and families affected by hunger.

Plexus Ambassadors gathered to give back to children and families in need in communities across the country. Additionally, corporate employees from the Scottsdale headquarters joined in the spirit of giving by volunteering at St. Mary’s Food Bank.

During the Nourish One Week of Service, 209 Plexus team members clocked 418 volunteer hours at the local food bank. In one day, Plexus volunteers served 648 families at the nonprofit’s Knight Distribution Center. Over the course of the week, they also packed 6,471 emergency food boxes which will provide 128,790 meals to local families in need.

“Giving back to our community is an essential part of Plexus culture, so we were thrilled to see more than half of our local workforce sign up for the Nourish One Week of Service,” said Mary Ann Luciano, vice president, Philanthropy at Plexus.

To encourage a culture of giving, Plexus provides 16 hours of personal volunteer time to every employee.

“At Plexus, we believe no one should go hungry because everyone should have access to affordable nutrition. That’s why we created Nourish One, a one-for-one initiative where one serving of Plexus Lean™ equals one meal for a child or family in need,” said Tarl Robinson, founder and CEO of Plexus. “With the support of our Ambassadors, Plexus has donated more than 6 million meals from Lean sales to our U.S. Nourish One partner Feeding America®—the nation’s largest organization dedicated to fighting domestic hunger through a network of food banks.”

Amazon’s 1-Day Shipping Standard Raises Bar on Shoppers’ Expectations

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Amazon’s recent announcement of one-day shipping for its Prime members will put new pressure on retailers and direct sellers to meet shoppers’ delivery expectations.

The e-commerce company announced last Thursday that it will be making one-day shipping the standard for all Amazon Prime members, expecting to spend $800 million during the second quarter of this year to improve its warehouses and delivery infrastructures to make this possible. With the announcement, retailer Target shares closed Friday down almost 6 percent and Walmart shares tumbled 2 percent. Amazon’s stock closed the day up 2.5 percent.

With more than 100 million paying Prime members across the country, it’s estimated Amazon reaches more than 50 percent of U.S. households today and is growing. The impact of its move toward an even speedier shipping option is going to be substantial. This means more and more consumers are going to get used to having whatever they order on the internet show up at their doorsteps in 24 hours or less.

Already, nearly 40% of consumers want online orders to arrive in two days, free of charge, according to a survey by the National Retail Federation of about 3,000 U.S. adults from Oct. 23 through Nov. 30 of last year. Twenty-nine percent of people said they didn’t complete a purchase online after finding out two-day shipping wasn’t free.

“Just as Amazon did with Prime 2-day delivery 14 years ago, we see a broad-based 1-day shipping offering increasing consumer e-commerce expectations (essentially more people will get used to 1 day vs. 2 day shipping … and grow to expect 1-day shipping),” Morgan Stanley analyst Brian Nowak said in a research note. “This, in our view, is likely to cause other brands, manufacturers, retailers and logistics companies to have to invest more aggressively to compete with Amazon and its differentiated delivery,” he added. “The cost to compete within e-commerce continues to rise.”

Walmart, Target and many of Amazon’s other rivals like Best Buy, Kohl’s and Home Depot are increasingly touting their buy online, pick up in store options. And that’s something Amazon hasn’t been able to match at scale, without a far-reaching network of bricks-and-mortar locations like these other companies.

There’s evidence more and more shoppers are turning to this option, too.

Target this past holiday season said the amount of online orders it fulfilled through either in-store pickup or its curbside pickup service was up 60 percent from a year ago and accounted for roughly 25 percent of online sales during November and December.

A recent April survey from Coresight Research found 46 percent of online shoppers in the U.S. had collected at least one of their online orders from a bricks-and-mortar store within the past 12 months. Coresight said Walmart and Target are the two most popular U.S. retailers for buying online and picking up in store, followed by Best Buy and Home Depot.