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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.

Tupperware Sales Down 10% in Q1 2019

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Tupperware Brands Corporation today announced first quarter 2019 net sales of $487.3 million.

Net sales were down 10 percent (2% local currency). Emerging markets, accounting for 69 percent of sales, were down 11 percent (down 3% local currency). The emerging market operating units with the most significant local currency sales growth in the first quarter were Argentina, China, CIS and Poland, more than offset by significant decreases in Brazil, Fuller Mexico, Malaysia/Singapore, India, Indonesia and Turkey. Established market sales decreased 7% (2% local currency). The local currency sales decreases were most significant in the United States and Canada, partially offset by significant business-to-business sales in France and Switzerland.

  • Europe: Segment sales were down 4 percent (up 8% local currency)
  • Asia Pacific: Segment sales were down 9 percent (5% local currency)
  • North America: Segment sales were down 11 percent (10% local currency)
  • South America: Segment sales were down 20 percent (3% local currency)

“We delivered local currency sales and earnings per share within our expectations in the first quarter,” said Tricia Stitzel, president and chief executive officer. “Our results included sequential sales and sales force trend improvements in several of our units including France, Germany, Indonesia and Italy, and a five-percentage point sequential sales improvement overall.”

To read the full Tupperware Q1 2019 report, click here.

LG Household & Health Care to Acquire New Avon, LLC

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LG Household & Health Care, Ltd. announced it has entered into a definitive agreement with an affiliate of Cerberus Capital Management, L.P. and Avon Products, Inc. to acquire New Avon, LLC for $125 million in cash.

LG H&H will acquire the entirety of Cerberus’ majority interest and Avon Worldwide’s minority interest in Avon North America. The transaction has been approved by the LG H&H Board of Directors.

LG H&H is Korea’s leading consumer goods company, with strong market positions in all major categories, including cosmetics, personal care and home care. Korea is one of the world’s largest and most innovative beauty markets, with over $13.1 billion in sales in 2018. LG H&H currently distributes a number of its brands in the U.S., including belif and The history of Whoo.

According to LG H&H, the addition of Avon’s iconic brand, award-winning products, dedicated employee base and network of 250,000 sales representatives throughout North America will support the company’s international growth plans. Under LG H&H’s ownership, Avon North America will continue its strategy of product innovation, while strengthening its position as the leading social selling beauty company in the region. Avon North America is expected to benefit from LG H&H’s world-class R&D capabilities in cosmetics, personal care, fragrance, packaging and design.

Suk Cha, CEO of LG Household & Health Care, said, “We recognize Avon North America’s strong brand, leading market position in the region, and talented employees and Representatives. Avon North America’s innovative social selling model builds deep connections with customers and we are excited to leverage this as we continue to expand. We look forward to building on Avon North America’s success to drive customer engagement and long-term growth in this market.”

“LG H&H respects and admires our strong community of Representatives and supports our mission to empower women through economic opportunity,” said Laurie Ann Goldman, CEO of Avon North America. “We are thrilled to welcome our new partner, who shares our commitment to innovation, and our clear focus on putting customers first. We have appreciated our partnership with Cerberus over the last three years and their support as we strengthened the company and reset our path toward long-term success.”

Avon Products, Inc. Responds

London-based Avon Products, Inc. (NYSE: AVP) commented on today’s announcement of the agreement.

“We have built a strong relationship with LG H&H and know them to be a great partner,” said Jan Zijderveld, CEO of Avon Worldwide. “We believe this transaction is a testament to LG’s belief in the strength of Avon’s brand and business model, and are excited to see the progress that Avon North America makes as part of LG H&H.”

The transaction between the separate Avon North America business and LG H&H has no impact on Avon Worldwide’s current operations or strategy. The company also stated that the transaction is unrelated to Avon Worldwide’s previously announced sale of its beauty manufacturing operation in Guangzhou, China to a subsidiary of LG H&H, and the subsequent manufacturing and supply agreement, which was completed in February 2019.

Direct Selling News Honors Channel’s Top Companies in 10th Annual DSN Global 100

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In recognition of those companies offering unparalleled opportunity for individuals to start their own businesses, Direct Selling News today unveiled its 10th annual 2019 DSN Global 100, an exclusive ranking of the world’s leading direct selling companies (based on 2018 revenue).

The DSN Global 100 is a collective effort to show the impact and potential of the $189 billion direct selling channel. Unveiled online at DirectSellingNews.com and soon to be featured in the June issue of Direct Selling News magazine, this year’s Global 100 companies hail from 20 countries and represent aggregate revenue of over $75 billion.

“Each year, the DSN Global 100 event allows us to recognize the leading companies in direct selling today,” said Todd Eliason, Direct Selling News’s new Publisher and Editor in Chief. “The companies on the list represent a wide range of products and services, but they share a passion for developing a community of independent business owners who share those products and services with customers in their personal networks. It is a unique and powerful distribution channel.”

A number of takeaways from this year’s Global 100 list.

  • 21 companies achieved more than $1 billion in net sales in 2018. That’s over one-fifth of the ranking. Collectively, these 21 companies generated $55 billion for the year.
  • Mid-market companies—those between $300 million and $1 billion—are represented by 23 companies in this year’s ranking. Five companies are above $700 million, and another five above the half-billion-dollar mark.
  • 15 companies are making their first appearance on the Global 100 list, including companies from Brazil, Korea, Taiwan, Germany, Malaysia, and Sweden.

For the seventh consecutive year, Ada, Michigan-based Amway claimed the No. 1 rank, with $8.8 billion in revenue, up 2.32 percent over last year. Avon Products, Inc., Herbalife Nutrition, Infinitus and Vorwerk rounded out the top five on this year’s list.

Bravo Award Winners Front and Center

The annual event celebrating the Global 100 took place on April 24, 2018, at the Renaissance Dallas at Plano Legacy West Hotel in Plano, Texas. During the dinner and awards ceremony, DSN also presented its Bravo Awards for excellence. MyDailyChoice/HempWorx was the first of two winners of the Bravo Growth Award for their extraordinary annual sales growth of 900 percent from 2017 to 2018. Color Street took home the second Bravo Growth Award for annual sales growth 881 percent from 2017 to 2018.

Color Street was inspired by New York’s “City That Never Sleeps” nonstop energy and wildly colorful fusion of cultures. The New York City-based company offers a vast array of colors and nail art design. Las Vegas-based MyDailyChoice/HempWorx has achieved astounding growth in just two years in business. Using cloud technology to cut overhead costs and taking advantage of the ever-growing consumer interest in hemp-derived products.

Jessica Herrin, founder, CEO of Stella & Dot’s Family of Brands received the Bravo Leadership Award for her exceptional leadership qualities that have propelled her company to extraordinary new heights. Naming her company after her beloved grandmothers, Jessica had the goal of revolutionizing entrepreneurial opportunities for women by creating a modern home-based opportunity. She envisioned a new kind of company that would allow today’s busy women to achieve unparalleled success and balance through a career they were passionate about.

Expanding beyond the flagship Stella & Dot line of accessories, the Family of Brands gives women greater opportunity to create a flexible social selling business opportunity that more precisely fits their goals as an Independent Business Owner. To date, the company has paid out more than $500 million in commissions to 50,000 independent business owners in six countries.

The Bravo Lifetime Achievement Award honors an individual who not only has made on a lifetime commitment to advocating the direct selling business model, but has been shining beacon in the professional contributions they have made to the direct selling community. Taking home the award is J. Stanley Fredrick, or “Stan” to his friends. He has been actively involved in the Direct Selling Association for more than 40 years. He has served on the Mannatech Board of directors since 2001 and was elected chairman in 2009. He also serves on the Board of Directors of Wineshop at Home, a part plan company.

In recognition of his lifetime of contribution to the industry, Stan has been inducted into the Direct Selling Association’s highest honor, the Hall of Fame. He is also in the Direct Selling Education Foundation Circle of Honor.

 

DSN created the Global 100 list to acknowledge the successes of individual direct selling companies and provide a clear picture of the magnitude of the industry. In its 10th year of undertaking this project, DSN continues its commitment to create a fair ranking that will showcase a transparent channel, thus providing credibility and consumer confidence as well as research support for those seeking information on direct selling companies.

All photos by: Debi Podvalova

DSN Announces the 2019 Global 100!

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Direct Selling News tonight announced its Global 100 list of top direct selling companies in the world.

Since 2004, DSN has been dedicated to telling stories focused on relating the opportunities direct sellers provide to millions of independent business owners around the globe. In 2009, the magazine thought it fitting to further recognize the industry by compiling the Global 100 list.

The DSN Global 100 list offers a unique perspective on the global impact of the industry on economic and social realms. It provides a range of mutual learning not only for industry members but also for researchers, investors and—most important—those seeking opportunities within the industry.

We thank all the companies that willingly participated in our survey as well as our dedicated team of researchers who helped us present to you the remarkable achievements of direct sellers around the globe.

The following contains the ranking for the 2019 DSN Global 100 (based on 2018 revenues), our annual list of the top revenue-generating direct selling companies in the world. The list is published in the June issue of Direct Selling News.

2019 Rank Company 2018 Revenue
1 Amway $8.80B
2 Avon Products Inc. $5.57B
3 Herbalife $4.90B
4 Infinitus $4.50B
5 Vorwerk $4.30B
6 Natura $3.67B
7 Nu Skin $2.68B
8 Coway $2.5B
9 Tupperware $2.0B
10 Young Living $1.9B
11 Oriflame Cosmetics $1.55B
12 Rodan + Fields $1.5B
13 Jeunesse $1.46B
14 Ambit Energy $1.3B
15 DXN Marketing Sdn Bhd $1.25B
16 Pola $1.24B
17 O Boticário $1.23B
18 USANA Health Sciences $1.19B
19 Belcorp $1.16B
20 Atomy $1.15B
21 Telecom Plus $1.09B
22 Yanbal International $994M
23 Market America $837M
24 PM International $834M
25 Stream $800M
26 Team National  $734.5M
27 Amore Pacific $600M
28 Arbonne International $544M
29 Hinode $528M
30 Plexus $527M
31 OPTAVIA / Medifast, Inc. $501M
32 Miki $498M
33 Faberlic $463M
34 Scentsy $449M
35 Monat Global $435M
36 Younique $427M
37 For Days $385M
38 WorldVentures $377M
39 Cosway $368M
40 Nature’s Sunshine $365M
41 Prüvit $325M
41 Beautycounter $325M
43 4Life Research $324.9M
44 LG Household & Healthcare $304.5M
45 Family Heritage Life $294M
46 Vivint $290M
47 Noevir  $277M
48 Hy Cite Enterprises, LLC $275M
49 Pro-Partner $246M
50 Pure Romance $237M
51 Naturally Plus $236M
52 New Image Group $231M
53 proWIN International $230.2M
54 Morinda $230M
55 Menard $226.5M
55 CUTCO/Vector Marketing $226M
57 ARIIX $220M
58 SEACRET $211.5M
59 Southwestern Advantage $209M
60 LifeVantage $203M
61 Vida Divina $197M
62 KK Assuran $195M
63 Vestige Marketing $194M
64 NHT Global $192M
65 Hillary’s Blinds $185M
66 Giffarine Skyline Unity Co. $181M
67 BearCere’Ju $180M
68 Mannatech $173.5M
69 Youngevity $162M
70 Princess House $161M
71 Charle $159M
72 Diana $147M
73 Naris $137.5M
74 Maruko $130M
75 Marketing Personal $125M
76 Immunotec Research Ltd $120.5M
77 ASEA $120M
78 Color Street $119M
79 World Global Network $119M
80 Usborn Books & More $118M
81 C’BON Cosmetics $110M
82 Xyngular $109M
83 TruVision Health $106M
84 Zhulian $103M
85 Nefful $101M
86 MyDailyChoice / HempWorx $100M
87 Perfectly Posh $100M
88 Energetix $94.5M
89 ZURVITA $94M
90 Arsoa Honsha $90.5M
91 Best World Int’l Ltd $88M
92 Hai-O $87M
93 Koyo-sha $86M
94 Shinsei $79M
95 Captain Tortue $77M
96 Chandeal $72M
97 Grant E One’s $68M
98 Nikken $67.5M
99 Zinzino $67M
100 Pieroth Wein $60M
100 Medical Marijuana/Kannaway $60M