ACN Named Ronald McDonald House Signature Partner

September 6, 2013 by DSN Staff Leave a Comment

At its International Convention in August, Ronald McDonald House Charities recognized ACN as one of the organization’s three Signature Partners. The designation of Signature Partner indicates those whose annual donations total between $500,000 and $1 million.

ACN’s giving stems from its International Training Events, where the company collects donations to fund ACN Reach, its global charity organization. Ronald McDonald House, which operates chapters in 51 countries worldwide, is the official global charity of ACN. At the close of each event, ACN matches the collected donations dollar for dollar and presents the total to the local Ronald McDonald House chapter.

ACN previously made it a company mission to bring a Ronald McDonald House to the home of its corporate headquarters—Charlotte, N.C. The Charlotte house opened in 2011, thanks to ACN’s key sponsorship and $2 million pledge toward ensuring future sustainability.

“At ACN, helping children is very close to our hearts, so it’s an honor to work with an organization whose purpose is to provide families with the care and support they need during their darkest hours. It’s a humbling experience,” said ACN Chairman and Co-Founder Robert Stevanovski.

Read the full press release from ACN.

Shedding Light on Legitimate Sales Practices

September 5, 2013 by DSN Staff Leave a Comment

In Canada’s Financial Post, contributor Armina Ligaya recently provided an in-depth look at legitimate direct selling practices in contrast to how illegal schemes conduct business. The distinction is a welcome one in an industry that has sold products or services to 42 percent of Canadians, according to the country’s Direct Selling Association.

As Ligaya notes, “Multi-level marketing is a humming multi-billion-dollar engine of the Canadian economy that’s often overlooked, as business takes place in everyday conversations with friends and family, behind closed doors.”

That has changed in recent months as a series of high-profile investors have taken large stakes in global nutrition company Herbalife, following Bill Ackman’s very public attack on the company’s business model and concurrent $1-billion short position on Herbalife. Ackman’s claims have put a spotlight on the direct selling industry and sparked further dialogue about what distinguishes legal multi-level marketing companies from fraudulent ones.

Canada’s direct selling industry is regulated by the Competition Act, which, like similar legislation in countries around the world, serves to safeguard consumers. These regulations enforce measures such as buyback guarantees, product returns and transparent compensation structures.

Ligaya outlines proper business practices and explains the role that direct selling associations play in enforcing a strict code of ethics. As a supplement to her piece, be sure to read this month’s feature on “Herbalife: What the Short Sellers Missed on the Way to the Press Conference”, a point of view by MLM Legal’s Jeffrey A. Babener.

Read the full story from the Financial Post.

Your Inspiration at Home Honored at Major Awards Show

September 4, 2013 by DSN Staff Leave a Comment

Your Inspiration at Home’s hand-crafted, gourmet seasonings collected 62 medals at the 2013 Royal Hobart Fine Foods Awards in Australia, where the company was founded in 2011 prior to its acquisition by Dallas-based CVSL earlier this year.

Gourmet food experts evaluated nearly 1,400 entries in the 17th annual show. Your Inspiration at Home received 14 gold, 31 silver and 17 bronze medals—including two category champions for its Rose White Chocolate Dukkah and Brazilian BBQ Glaze and a reserve champion for its Sri Lankan Coconut Spice.

“For a company as new as ours to be awarded this kind of recognition is a huge validation for us. It’s more proof that we’re onto something exciting here. This fuels our determination to bring our hand-crafted spice blends to people around the world,” said Colleen Walters, Your Inspiration at Home’s Founder, CEO and Chief Spice Curator.

In addition to achieving high honors at a line-up of major awards shows, Your Inspiration at Home concluded August with the company’s strongest sales and recruiting numbers to date.

Parent company CVSL is furthering its direct selling strategy with a letter of intent to acquire Agel Enterprises LLC. The nutritional gel supplements manufacturer, currently selling in more than 40 countries, is the latest in a series of acquisitions which includes The Longaberger Company, Your Inspiration at Home and Tomboy Tools. Each company maintains its unique brand identity, leadership and product line while benefitting from the shared CVSL infrastructure.

Read the full press release from CVSL.

The Difference Between Legitimate Direct Selling Companies and Illegal Pyramid Schemes

September 2, 2013 by DSN Staff Leave a Comment

Click here to order the September 2013 issue in which this article appeared.

Editor’s Note: In conjunction with our New Perspectives article by Jeffrey Babener detailing some of the legal history already won by legitimate direct selling companies, we are publishing a fact sheet on the subject developed by the Direct Selling Association. You can find this fact sheet at www.dsa.org.

Here’s how to tell a legitimate business from a pyramid scheme: Legitimate direct selling companies contribute to a vibrant marketplace by selling competitive, high-quality products and services and providing a sustainable source of income for those who choose to sell those products. Specifically they:

Provide accurate information about the company, its products and what one can expect as a seller of the company’s products and services.

Charge a nominal fee for a starter kit—the median cost for the startup kit is $99 and usually includes items such as samples, catalogs, order forms and other tools that help the seller begin selling.

Have a product or service that is competitive in the marketplace and is purchased by the ultimate user.

Require sellers to hold little or no inventory and have a buyback policy to protect against inventory loading.

Base compensation primarily on the sale of products and services to the ultimate user. Compensation can be generated from either your own sales or the sales of others you have recruited.

Take time to describe the business and give potential sellers adequate time to make a decision—any opportunity worth having will be there tomorrow.

Legitimate direct selling companies also promote consumer protection and guarantees. Many of these are voluntary standards that exceed the requirements of any regulations created by the Federal Trade Commission (FTC) or mandated by federal or state law. Members of the DSA have also pledged to abide by a strict Code of Ethics that outlines a high set of standards for interaction with both sellers and customers.

Pyramid schemes take advantage of and defraud people because they:

Promise large earnings with little effort.

Promise that one can earn a substantial income merely for recruiting people into the operation.

May or may not have a “product” to sell, but if they do it generally has little or no actual value.

Convince people to buy large amounts of inventory, which they cannot easily sell to others and is not returnable (this is called “inventory loading”).

Charge large up-front fees to get involved, either as a direct payment or in the form of an obligatory payment for “products.” Promoters of pyramid schemes will also try to pressure people to sign up immediately by suggesting the same opportunity will not be available later.

Base compensation primarily on activity (these payments for recruitment are called “headhunting fees”). Participants are convinced to pay to get involved with the promise of receiving “headhunting fees” when they recruit others.

Pyramid Scheme Operators and Critics of Direct Selling Count on Confusion

Just as pyramid scheme operators prey on victims by using misinformation to make a bad opportunity seem too good to pass up, there are many critics of direct selling who manipulate the facts to discredit legitimate companies—or who don’t even understand the differences themselves and add to marketplace confusion by spreading misinformation. They count on the fact that many consumers aren’t familiar with the differences between frauds and legitimate companies. The best remedy, of course, is to be educated so you can make your own determination about what’s real and what’s a fraud.

Popular culture may mock pyramid schemes, but the bottom line is that they do exist and it’s important to know the facts about how to identify them—both for one’s own protection and to avoid missing out on the great products, services and opportunities provided by legitimate companies. Millions of Americans and people around the world benefit from the income they make through direct selling and enjoy the products they purchase. Direct sellers are the original word-of-mouth marketers—using personal recommendations to connect people and products. In a time when social media makes word-of-mouth a preferred method of gathering information and making purchasing decisions, direct selling couldn’t be more relevant.

Read more about the DSA at www.dsa.org and www.directselling411.com.

Herbalife: What the Short Sellers Missed on the Way to the Press Conference

September 2, 2013 by DSN Staff Leave a Comment

Click here to order the September 2013 issue in which this article appeared.

Editor’s Note: The following is a summary of an article written by Jeffrey A. Babener. The full article contains references to court cases and further explanation of each topic. To read the full article, go to www.mlmlegal.com.

History repeats itself. Just as Yogi Berra famously said, “It’s déjà vu all over again.”

The 2012 billion-dollar short seller attack on Herbalife, a 32-year-old NYSE listed direct seller of nutritional products in 80-plus countries with annual sales in excess of $3 billion, is a replay of the seminal challenge to the MLM/Direct Selling model won by Amway in 1979 [In the Matter of Amway, 93 F.T.C. 618 (1979)].

In that 1970s FTC challenge, the criticism went to whether or not the core of the MLM referral selling model was a “deceptive” way to market. Similarly, in the 2012 short seller attack on Herbalife, along with other criticisms, a principal complaint was that evidence of “substantial personal use and consumption” of company products by distributors themselves renders an MLM/Direct Selling model inherently deceptive and an illegal pyramid scheme. Armed with multi-hour slide presentations, short sellers and financial bloggers predicted that a direct selling program, in which substantial product is purchased by distributors for personal use, is doomed to collapse as an illegal pyramid scheme and that federal agencies should step in to hasten that demise.

Is this legal analysis correct, and is the call to federal action justified or predictable in light of the 40-year legal history of direct selling?

Does the answer lie in the follow-up and prolific financial blogging that focuses on algorithms, multiple regression analysis and economist “speak” about “who uses the product?” Perhaps not. Rather, the answer to whether or not an MLM/Direct Selling program is a pyramid, for which federal prosecution is justified and predicted, may be driven by a case-by-case fact scenario that answers a “gut instinct,” as noted by Justice Potter Stewart (on pornography)… “I can’t define it, but I know it when I see it.”

In the case of direct selling, the operative question appears to be: Is the program “inherently deceptive” and an “egregious abuse” of consumers, and is the driving force behind payment of money for products the desire to qualify in an MLM plan? In other words, are distributor purchases and payments incidental to the business opportunity or are payments made merely as a “gateway” to a business opportunity? This is a different issue than the question of the amount of internal consumption or personal use by distributors, even if it is incentivized by a compensation plan. Further, do today’s established direct sellers deserve to be placed in the same gene pool as companies that have been the target of federal prosecutions?

A close look suggests that it may be time to reassess the situation. Some very salient facts and cases seem to have been missed in the rush to challenge direct sellers. First and foremost, it appears that in the massive releases of the Herbalife short seller and in the prolific financial blogging “call to action” that Herbalife is a pyramid and should be prosecuted by the FTC, individuals may not have actually examined the facts of leading FTC, SEC and Justice Department pyramid prosecutions over the last two decades. Had they done so, they might have observed that a significant chasm exists between inherently deceptive and egregiously abusive pyramid schemes and the practices of leading direct selling companies.

Furthermore, these individuals seem to have missed the FTC’s own statements on personal use, as well as the trending legislation in more than a dozen states recognizing the validity of personal use as a legitimate end destination of product.

Some Background

The MLM/Direct Selling/Network Marketing business model was off to a robust start in the 1950s with the success of companies such as Amway, Mary Kay and Shaklee. Not long thereafter, imposters and inherently deceptive pyramid headhunting recruitment schemes came along, emphasizing recruitment of participants to earn money without putting focus on selling products to consumers.

Two promotions founded by Glenn W. Turner, Dare to Be Great (motivational seminars and materials) and Koscot Interplanetary (cosmetics), prompted major prosecutions for pyramiding. Virtually every state had residents who were impacted by this and other programs, which officials successfully argued were mere “headhunting” schemes.

During this time, the FTC established the earliest guidelines regulating illegal pyramids and other unlawful entrepreneurial chains. In In Re Koscot Interplanetary Inc., 86 F.T.C. 11106 (1975) (inventory loading of cosmetics), the FTC was highly critical of:

Large membership fees,

Front-end loading and inventory loading,

Programs in which distributors were misled as to the amount of commissions they might reasonably earn, and

Programs in which commissions were not based on the sale of product to the ultimate users.

In fact, the Koscot case established the legal standard for pyramid analysis that has threaded its way intact from that case to the 1979 FTC Amway case to the 2012 FTC BurnLounge case [FTC v. BurnLounge, U.S. District Court, Central District California, Case CV 07-3654-GW (FMOx) (2012)], leaving the question: Are there rewards earned unrelated to the sale of product to ultimate users?

This is a critical question, because at the core of the short seller accusation is the claim that a purchase for personal use by distributors (otherwise known as internal consumption) cannot be considered a sale to an ultimate user. If this standard were to be adopted, it would cast a cloud over many well-established direct selling companies, particularly those that sell consumable products such as health, home and personal care.

In In Re Koscot Interplanetary Inc. (1975), the FTC established the earliest guidelines regulating illegal pyramids and other unlawful entrepreneurial chains.

The Securities and Exchange Commission (SEC) also stepped into the Dare To Be Great picture, demonstrating that securities statutes also apply to the industry. In SEC v. Glenn W. Turner Enterprises, 474 F.2d 476 (1973), the U.S. Ninth Circuit Court of Appeals reaffirmed that the securities acts were “designed to protect the American public from speculative or fraudulent schemes of promoters.” Like other pyramid schemes, the only “commodity” that moved through this program was money. There were no viable goods or services sold at fair market value accompanying the recruiting activities.

Basically, individuals were invited to pay money to attend motivational seminars where they were trained to go find others to do the same, and so on. The Dare To Be Great program was ruled to be an “investment contract” under the securities laws and thus subject to regulation by the SEC. This was a landmark ruling in establishing the distinction between “speculative or fraudulent schemes” and legitimate direct sales activities. It also helped establish the SEC’s role in upholding the rights of legally operating companies and the right to prosecute offenders.

The Koscot, Dare To Be Great, and other pyramid cases left a sour taste in the mouth of the American public. And so, the legitimate direct selling industry had a close call in the 1970s when the FTC accused Amway of being an illegal pyramid scheme rather than a legitimate business opportunity. Fortunately for Amway and the entire industry, a 1979 administrative law decision declared the Amway business model to be legitimate and applauded various consumer safeguards, including the buy-back policy for unsold inventory, curbs on inventory loading and emphasis on moving product to the ultimate user [In the Matter of Amway, 93 F.T.C. 618 (1979)].

And so it went for the next 40 years and to this day. Federal agencies, such as the FTC or SEC or the U.S. Justice Department, did not chase after well-established direct selling firms, but rather they sought out inherently deceptive schemes that defrauded the consumer of business opportunities. Hardest hit were offerings with large upfront investments of cash or inventory loading, nonrefundable fees, bogus products used as an excuse to move money, and so on.

The Practices of Established Direct Sellers

So we return to our question: Should decades-old direct selling companies be confronted again by federal regulatory agencies such as the FTC, SEC or U.S. Justice Department? After all, they clearly offer a financial incentive to consumers to use their products and services and to recommend those products and services to their family, friends and neighbors.

Truly, financial incentives have been one arrow in the quiver of the shaping of consumer spending behavior forever. These types of incentives include all frequent flyer programs, credit card reward programs, cash back loyalty programs, and every loyalty and referral program from every mom and pop diner and donut shop in America, not to mention warehouse clubs like Sam’s Club and Costco Wholesale. Fortune 500 companies also embrace their customers as referrers who receive rewards for finding other customers, with well-known programs such as: MCI Friends & Family, United Airlines MileagePlus, American Express Membership Rewards and Amazon Associates, just to name a few.

In fact, the direct selling industry merely takes the referral rewards program one step further. Often pitching the positive experience of customers, companies offer a 1099 independent contractor business opportunity to those motivated to refer friends, family, co-workers and neighbors to patronize products that they themselves typically have used and enjoyed. The result in the U.S. is a thriving $30 billion industry with more than 15 million individuals involved and with publicly traded NYSE leaders including Avon, Herbalife, Primerica, USANA, Nu Skin and Tupperware. Worldwide, the direct selling industry comprises over $150 billion and 90 million individuals in over 100 countries.

Since the landmark approval of the multilevel marketing model in the 1979 seminal administrative law decision, In the Matter of Amway, no federal prosecutions have been aimed at multi-decade established direct sellers.

And, notwithstanding the fondest dream of short sellers of NYSE direct selling companies to drive down stock prices by way of pyramid scheme allegations, the odds are diminished by the fact that—since the landmark approval of the multilevel marketing model in the 1979 seminal administrative law decision, In the Matter of Amway—no federal prosecutions have been aimed at multi-decade established direct sellers.

In fact, attend a legal day symposium at the Direct Selling Association, and one is likely to find a representative of the FTC praising the work of the DSA and the contributions of member companies to the American economy and U.S. business expansion abroad. As a general matter, the facts in the cases of those companies prosecuted by the FTC look nothing like the programs of established and leading direct selling companies. The truth is that short sellers and critics seem to miss the clear dividing line between legitimate companies and pyramid schemes.

Jeffrey A. Babener is the principal attorney in the law firm of Babener & Associates. For more than 25 years, he has advised leading U.S. and foreign companies in the direct selling industry. He has also served as legal advisor to various direct selling companies listed on the New York Stock Exchange. See more of his articles at www.mlmlegal.com, where he is Editor.

Ramp Up Your Direct Selling Business with Mobile POS

September 2, 2013 by DSN Staff Leave a Comment

Click here to order the September 2013 issue in which this article appeared.

Avoid some common pitfalls with these best practices.

Mobile technology is revolutionizing direct selling. By transforming smartphones and tablets into point of sale (POS) terminals, direct sellers are creating seamless shopping experiences for their customers and quickly achieving measurable ROI. With today’s technological advances, direct sellers are putting their product catalogs onto apps, checking real-time inventory levels at the point of sale and taking payments in the field.

Direct selling organizations and their independent sales consultants are rapidly adopting mobile solutions to gain a competitive edge in the marketplace. Consider this: The number of mobile terminals grew to 9.5 million globally in 2012, more than double the number in use the previous year. And that explosive growth isn’t expected to slow down any time soon.

While most one-to-one selling and party plan companies understand the need to go mobile, many are struggling to keep up with the evolving technology and industry regulations. Following some best practices, direct selling organizations can stay ahead of the curve and streamline implementation of their mobile POS solution.

Ensure secure transactions.

Security is the most important consideration when it comes to mPOS. If you compromise security, you compromise everything—your reputation, your customers and your future.

Security is the most important consideration when it comes to mobile POS.

Security is the key driver of the Payment Card Industry (PCI) requirements. Created to reduce credit card fraud by increasing controls around cardholder data, the PCI Data Security Standard outlines information security requirements for organizations that handle cardholder information for the major credit, debit, prepaid, e-purse, ATM and POS cards.

PCI compliance is a challenge for direct selling organizations. Consider the typical party plan event: The company gathers consumer information, including credit card data, on paper order forms for post-event entry into an e-commerce site. By PCI standards, as soon as you write down the credit card number, you’re not compliant. (The merchant, software, contractors—anyone and anything—that touch consumer information and process and store payments must comply with PCI.)

By implementing an mPOS solution that allows a mobile card reader and a smartphone to take consumer payments at the time of an event, direct selling organizations are able to comply with that range of PCI requirements.

Buyer, beware: Ensure your mPOS platform enables fully PCI-compliant, secure transactions with end-to-end encryption.

PCI compliance isn’t a one-time task; it’s an ongoing process. Your solution provider should meet all PCI standards today and be working to stay ahead of anticipated changes and future requirements.

Minimizing security risks and improving consumer confidence are always good for business!

Enhance your brand.

Mind share equals market share in today’s brand-driven economy. Your mPOS solution should establish credibility with customers while reinforcing and extending your brand.

Don’t use a generic app or reader. Instead, differentiate yourself from competitors and drive brand loyalty with a customized mPOS solution that showcases your brand. This is critical for large and small businesses alike.

Find a partner that can white-label the entire solution, including the card reader, the payment app, online management tools and even customer receipts.

Find a partner that can white-label the entire solution, including the card reader, the payment app, online management tools and even customer receipts. The idea is to seamlessly integrate the look and feel of your brand from start to finish during m-commerce transactions.

There’s a bonus, too: In addition to building credibility with existing and potential customers, increasing brand awareness improves recruitment and retention of independent sales consultants and helps grow the distribution base.

Boost profits and save costs.

With the right mPOS solution, direct sellers can achieve huge cost savings and grow the top and bottom lines.

Direct selling businesses typically pay e-commerce interchange rates on credit card transactions. With an mPOS solution, direct sellers can qualify for card-present transaction rates, saving them up to 85 basis points. That’s nearly a 1 percent savings on every transaction processed.

Saying goodbye to “card-not-present” rates is just the beginning. An mPOS solution also reduces the volume of declined cards, chargebacks and fraud.

Remember that party plan event I mentioned earlier? With an mPOS platform implemented, direct sellers virtually eliminate lost sales due to cards declined for insufficient funds or other reasons. Instead, it’s as easy as asking for an alternate form of payment on the spot. There’s no after-the-fact hassle trying to hunt down someone to finalize a purchase. (There’s also no more transposed credit card numbers because the handwritten form is eliminated from the payment process.) Fewer declines mean more ability to grow the top line.

At that same party, there are also going to be fewer chargebacks with the mPOS solution in the field. Plus, it’s not just the individual chargeback fee being saved; there are also the time, labor and other costs associated with processing the chargeback. Eliminating those costs also gives businesses more room to grow the bottom line.

A word of caution: Don’t try to cut costs by sacrificing the critical functionality that could actually save you time and money in the long run. For example, be sure any solution provider you choose supports both electronic signature and email receipt capabilities. Both help to reduce fraud and can subsequently produce significant cost savings of the right kind.

Wow consumers and consultants.

An mPOS solution benefits two of the most valuable assets of all direct selling organizations—your customers and your consultants. Automating purchases and the payment process improves the sales experience for both. In addition to eliminating paper order forms and the lines associated with them, an mPOS solution creates a more personalized shopping experience and enables the immediate purchases that drive impulse buying. Also, with the ability to check inventory in real time at the point of sale, sales consultants are able to make product and upsell recommendations.

Regardless of their core businesses, many direct selling organizations want to be known as tech-savvy companies, as this helps recruit and retain independent sales consultants. With the explosion of technology, the consultant base is already familiar with and using smartphones and tablets. In fact, their use is so widespread that direct selling organizations don’t have to provide consultants with the hardware because they already have their own. That’s the good news.

The not-so-great news is it can be challenging to find a partner that can support all the hardware and accompanying operating systems. But you can—and must—find a solution provider with large compatibility, including supporting both iOS and Android. (There are already hundreds of models of Android phones on the market, and new ones are being released every day!) Don’t forget about BlackBerry or Windows, either. With the huge investment Microsoft is making in Windows Phones, it’s prudent to find a provider that supports them now or will be able to soon.

Ultimately, choose a solution provider with a long-term technical product roadmap. The roadmap should cover about 18 months. A three-month roadmap is too shortsighted; choose a partner that can support you today and well into the future.

Improve operational efficiencies.

A majority of direct selling companies have international operations around the globe. While U.S. companies are worrying about implementation of the EMV global payment standard next year, international companies aren’t because they’ve already been dealing with EMV as part of their global operations.

But EMV is just one reason your solution provider should have substantial international experience. There are a lot of new players jumping into the payment industry. Look for an established partner with global payment industry experience. Avoid the newbies, perform due diligence, and stick with an experienced vendor to keep operations on track and improve efficiencies.

Along those lines, to ensure quick and easy integration with back-end systems, choose a solution provider that is processor-agnostic, so you don’t have to change your merchant-processing relationship. Some vendors are bank-specific and make their clients convert. To avoid the operational and contractual pain associated with changing, find a vendor that supports all processors.

Similarly, find a solution provider that supports both manual-select and geo-tagged tax capabilities. Geo-tagged capabilities ensure the proper amount of tax is charged based on the location of the sale, relieving consultants of the burden of trying to figure it out.

Additionally, merchants with the need to perform recurring billing and identify repeat customers should implement an mPOS solution that includes tokenization. This functionality allows the merchant to store a customer’s encrypted credit card information on the solution provider’s PCI-compliant server at the time of the transaction. The merchant can retrieve the encrypted data later via a simple web service call. Tokenization provides a secure way to perform recurring billing and identify repeat customers, while also eliminating the time and labor of entering duplicate data for subsequent transactions.

By finding an established partner with global experience to ensure compliance with security requirements, payment standards and other guidelines, direct sellers are able to take full advantage of the benefits of mPOS.

Patrick Crosson is Vice President of Strategic Accounts at ROAM, a mobile point of sale platform provider.

The Great Potential: Unlocking the Power of Emerging Markets

September 2, 2013 by DSN Staff Leave a Comment

Click here to order the September 2013 issue in which this article appeared.

Editor’s Note:

Our September cover story is an update on the March 2013 story, “Direct Selling’s Billion Dollar Markets,” with a focus on the great potential of emerging countries. We have elected to move our annual research on billion dollar markets from March to September each year in order to best utilize the extensive research conducted by the World Federation of Direct Selling Associations’ (WFDSA) Research Committee. (The most recent statistics, 2012, were just released this summer.) This team works over 5,500 person hours to gather, vet, analyze and report annual data to assess and size the direct selling market in each region of the world, and their data provides us with one of the primary sources for our own research.

Enjoy the update in this issue, and look for the next full coverage of DSN’s Billion Dollar Markets annual research each September going forward.

An industry that generates $166.9 billion annually wields exceptional power, especially when 89.7 million global citizens are the core of its strength. Regardless where in the world they call home—advanced or emerging markets—tenacious entrepreneurs use the direct selling business model to increase their incomes, enhance their own socioeconomic status and collectively improve local, regional and national economies.

Globally, the direct selling industry grew 5.4 percent in 2012 and a cumulative 13.9 percent since 2010. Posting that kind of increase is impressive, especially during a global economic recovery. But dissecting WFDSA’s 2012 global direct selling survey proved equally impressive when statistics showed emerging markets were responsible for 44 percent of global direct sales, a gain of 9 percent in just two years.

Of the 23 countries on Direct Selling News’ Billion Dollar Markets for 2012, only 10 are considered advanced direct selling markets. The remaining 13 are young and emerging. Markets like China, Malaysia, Colombia, Thailand, Russia and India have come on strong despite legislative and importing restrictions, cultural complications and lower GDPs. In these emerging markets—where 85 percent of the world’s population base lies—direct selling’s “Great Potential” is waiting.

Unlocking The Great Potential

To unlock these emerging markets it is necessary to understand the compelling reasons direct selling is flourishing.

“From an economic perspective, you have people with lower levels of education and little discretionary income or resources to invest in a business, and at the same time you have a rapidly growing middle class that can now afford to buy products like this from friends and family. You have demand and supply growing together, and it’s kind of like the perfect storm,” says Jeffrey Dahl, President of Amway Latin America.

This scenario plays out wherever emerging markets exist, wherever there are entrepreneurial-minded individuals who seek to improve their socioeconomic status.

European economic strife has caused a “classical story” to play out in recent years, according to Maurits Bruggink, Executive Director of SELDIA, the European Direct Selling Association. “When things go bad and people lose their jobs, they start being more interested in direct selling to complement and increase their incomes. It is a phenomenon in Europe right now that is a bit bigger and wider,” he says.

“You have demand and supply growing together, and it’s kind of like the perfect storm.”
—Jeffrey Dahl, President, Amway Latin America

While some emerging market direct sellers are motivated by disappearing job opportunities, for others high-wage jobs never existed in the first place. Dahl says, “In many emerging markets they aren’t used to the corporate orientation. They are entrepreneurs and work with small commercial opportunities. So direct selling is a natural extension for them.” And for many, direct selling is a socioeconomic equalizer and a path to the middle class.

CAPEVEDI, Peru’s direct selling association, surveyed 600 people about the socioeconomic impact of direct selling on families. Of respondents, 90 percent were women, 50 percent were over 40 years old and most were married with an average of five children at home. Also, 62 percent of the respondents indicated they did not have a job, were retired or only worked part time before entering direct sales.

Those families feel the impact of extra income generated by direct selling, and Lourdes Montagne, a staff member at CAPEVEDI, says, “Direct selling fosters a more democratized environment in many Peruvian families, providing the opportunity for equality or balance of economic income for each family member.”

Dr. Dora Hoan, Founder of Best World International, a direct seller based in Singapore, says, “The growth of the middle class means higher purchasing power and greater desire to improve their quality of life. This means more customers with more disposable income for direct sellers.”

Montagne agrees: “The growth of the middle class in Peru is hand-in-hand with the increase in their purchasing power, which automatically generates changes in the consumption habits of this social class.”

“The growth of the middle class means higher purchasing power and greater desire to improve their quality of life.”
—Dr. Dora Hoan, Founder, Best World International

People in emerging European markets like Poland or Slovenia, Bruggink says, want to be involved in direct selling because they don’t have access to Western products and retail distribution systems.

“The retail that you have in a lot of emerging markets is Mom and Pop,” Dahl says. “Buying from a Mom and Pop is a lot like the direct selling dynamic. You are buying from a family in the neighborhood. So it is little wonder that emerging markets are grabbing hold of direct selling as a viable business model.”

Embracing The Great Potential

“We believe that emerging markets are ‘The Great Potential,’ ” Hoan says. “After all, there are many enterprising people there who welcome business opportunities from direct selling. That being said, there are risks in these markets. The business regulations may not be conducive to direct selling; the people may not be welcoming or they may have limited purchasing power… but remember, no risk, no gain.”

The decision to expand internationally is certainly not as simple as contemplating mature versus emerging markets, but Dahl asserts, “It is a fair filter.” The regulatory environment, economic indicators and competition must be considered.

“Many companies choose to expand where direct selling associations are located and the industry is established,” says Jose Paez, Director General of Amway Mexico. “It’s easier to get in there and communicate your systems, communicate your mechanics, and get your permits to legally operate.”

But expansion strategies differ, depending upon the company and the target region. Miguel Arismendi, Chairman of ACOVEDI, Colombia’s direct selling association, sees new companies entering small and medium markets to test the Latin American waters before expanding to larger markets.

In Europe, the opposite is true. “When companies enter Europe, they do not enter in emerging markets,” Bruggink says. “They always seek a foothold in Western Europe, and that remains the strength of Western Europe—the economic stability of GDP, income per capita and regulatory assurance.”

Arismendi says, “It is a challenge and can be more difficult in some emerging markets than in others, but in general direct selling companies have adapted their portfolios and operations to the regulatory issues in the markets.”

“Companies are excelling in a very hybrid way and adapting their own operations to what these countries can provide.”
—Jose Paez, Director General, Amway Mexico

Explosive expansion of direct selling in China and India are a case in point. “If you look at what companies have done in those markets, they have adapted themselves. Companies in China can’t do what they have done in the U.S. or Europe,” Paez says.

In the case of most companies operating in China, for instance, they must open stores or nutritional centers in every small city because Chinese law forbids gathering or networking. “Companies have to adapt to these situations,” he says. “They are excelling in a very hybrid way and adapting their own operations to what these countries can provide. It is true that direct sales is having an impact and growing day by day, but again, not with the same mechanisms.”

The Great Bounce-Back Potential

Best World International is a medium-sized direct selling company based in Asia that cautiously and gradually expands into nearby countries. But, Hoan admits, chance and distributor connections have played a role in some expansions into “uncharted” countries. “Our overseas expansions happened this way. Nevertheless, for this type of expansion to happen, the direct sellers have to be very motivated and willing to brave all odds,” she says.

Paez adds, “Social media has helped almost everyone get connected wherever they are. People with friends in the U.S. are opening lines there using social media to do so.”

Dahl confirms, “There’s definitely a bounce-back effect that companies who operate in multiple markets are starting to dig into, focus on and build strategies to develop. Technology makes it much easier. People coming to the U.S., for instance, get exposed to a direct selling opportunity, and then it bounces back to friends and family in their homeland, and vice versa.”

“There’s definitely a bounce-back effect that companies who operate in multiple markets are starting to dig into, focus on and build strategies to develop. Technology makes it much easier.”
—Jeffrey Dahl

Even some advanced market growth, Dahl supposes, is likely the result of immigrants bringing positive cultural attitudes about direct selling to places like the U.S., where Hispanics, Koreans and Asian Indians are doing very, very well. “If I were a struggling company in the U.S. or another mature market, I would vector my resources to some of these segments that are limited in investment opportunity due to lack of resources, and with a cultural attraction to direct selling,” Dahl says.

Flexibility, sustainable systems, cultural awareness, and tenacious, open-minded staff and distributors make growth of any kind easier, whether the target is an emerging market or not.

Success in an emerging market is by no means easy or certain, but that could be said of mature markets as well. There are legislative hurdles to clear and reputations to build. But as more direct selling companies enter emerging markets, greater understanding takes hold and adds legitimacy to the industry in that market.

The acceptance of direct selling as a viable business option within emerging markets can empower individuals, improve the socioeconomic status of families and have far-reaching impact on the local, regional and national economies. As Hoan puts it, “The industry has room for growth, while the countries can benefit from its revenue. Individuals can make use of the business platform to empower themselves. On the whole, expansion into emerging markets is good for all parties involved.”

Billion Dollar Markets

1. United States—$31.6 Billion

The United States occupies the top spot on the 2012 Billion Dollar Markets list, up 5.9 percent since 2011 and outpacing overall U.S. GDP economic growth of 4 percent for 2012. The U.S. market makes up 19 percent of global direct sales overall. A closer look at U.S. growth by the U.S. Direct Selling Association showed that 60 percent of companies experienced growth in 2012.

The direct selling community includes some 15.9 million independent representatives, of which 77 percent are female and 68 percent participate in person-to-person sales. Wellness and services—including utilities and financial products—continue to grow steadily, thanks to increased consumer awareness and the deregulation of the energy industry. The breakdown by product category: wellness products (27 percent), household goods and durables (19 percent), cosmetics and personal care (17 percent), clothing and accessories (12 percent), financial services (10 percent), and utilities (8 percent).

“The strong performance of direct selling in the United States and around the world continues to underscore the economic and social relevance of this business model,” USDSA President Joseph Mariano says. “Despite progress toward economic recovery, there are still many Americans looking for a source of supplemental income. Coupled with increasing consumer confidence, both sales and interest in the opportunity are at near-record levels.”

“The strong performance of direct selling in the United States and around the world continues to underscore the economic and social relevance of this business model.”
—Joseph Mariano, President, USDSA

2. Japan—$22.7 Billion

The Japanese direct selling market decreased by 4.8 percent in 2012, and if trends continue this year they may slip rank to No. 3. Japan comprises 14 percent of global direct sales, with 3.4 million sellers (78 percent female) participating primarily in person-to-person (95 percent) sales. Cosmetics and personal care (30 percent), wellness (29 percent), and household goods and durables (19 percent) led Japanese product sales.

3. China—$20.0 Billion

China is a rapidly growing market and could eclipse Japan’s No. 2 ranking when 2013 statistics are available next June. WFDSA’s research estimates indicate China’s growth at 13.5 percent in 2012 with a market comprising 12 percent of global direct sales. Statistical reporting of product categories, number of direct sellers or sales by method are not available.

4. Brazil—$14.6 Billion

Comprising 9 percent of the global direct selling market, Brazil’s 6.7 million sellers grew this Latin American powerhouse 13.1 percent in 2012 through 100 percent person-to-person sales. While gender breakdowns were not available, Latin American direct selling is predominantly female.

5. Korea—$13.3 Billion

The direct selling community in Korea grew to 5 million sellers (79 percent female), up from 4.2 million in 2011. They expanded this market 4.3 percent and brought the global direct selling share of their country to 8 percent through person-to-person (75 percent) and party plan (25 percent) sales. Wellness (35 percent); cosmetics and personal care (26 percent); household goods and durables (12 percent); and books, toys and stationery (11 percent) led product sales.

6. Mexico—$7.3 Billion

Mexico’s direct selling community is 96 percent female and dominated by cosmetics and personal-care products (42 percent) and clothing and accessories (31 percent), while wellness (21 percent) is gaining traction. All told, Mexico increased revenues 7 percent in 2012; they comprise 4.3 percent of global direct sales.

7. France—$4.9 Billion

France formally recognized direct selling in 2012, which contributed to the country’s 4.1 percent revenue growth. In total, 500,000 sellers (79 percent female) participate in person-to-person (61 percent) and party plan (39 percent) direct selling methods. The home improvement category uniquely leads French direct selling at 37 percent, with household and durable goods second at 15 percent. France comprises 3 percent of global direct sales market share.

8. Malaysia—$4.7 Billion

Rising 7 percent and gaining 250,000 sellers, Malaysia’s direct selling market diversified from a 100 percent person-to-person in 2011 to a 90/10 split with party plan in 2012. Today some 4.8 million sellers (61 percent female) represent wellness (43 percent), household goods and durables (23 percent), as well as cosmetics and personal-care products (16 percent).

9. Russia—$4.3 Billion

From 2011 to 2012, the Russian direct selling market grew 4.1 percent, from $4.1 billion with 4.3 million sellers (86 percent female). Cosmetics and personal-care products comprised 67 percent of the Russian market, with wellness ranking second at 11 percent. And 86 percent of all sales are person-to-person.

10. Germany—$3.8 Billion

Despite economic turmoil within the European Union countries, Germany’s direct selling industry rose slightly—up 0.8 percent from $3.8 billion—as did their number of direct sellers (300,000 in 2012 versus 285,000 in 2011). Sales methods are split almost evenly, but females continue to dominate the field at 80 percent for the second year. Product category breakdowns are: household goods (34 percent), cosmetics (19 percent), wellness (11 percent) and home improvement (10 percent).

11. United Kingdom—$3.2 Billion

The United Kingdom’s direct selling revenue grew the most of any other European country in 2012, with overall revenues rising 7.2 percent from $2.9 billion. Wellness led the way in product category sales in the UK, comprising 39 percent of direct sales, while a mix of cosmetics and personal care (18 percent) and household goods and durables (16 percent) rounded out the industry. The size of the direct selling community was at 400,000, with 75 percent female. Of that, 70 percent are selling person-to-person, while 30 percent are earning through party plan sales models.

12. Colombia—$3.0 Billion

Rapid growth is seen in the emerging Latin American market of Colombia, where 1.5 million sellers caused that country’s direct selling revenue to rise 7.6 percent from $2.8 billion in 2011. Dominated by females (95 percent) conducting person-to-person sales (86 percent), Colombia’s direct selling customer wants cosmetics and personal-care (59 percent), clothing and accessories (23 percent), and wellness (10 percent) products.

13. Taiwan—$3.0 Billion

Slight growth (0.6 percent) was witnessed in the Taiwanese market in 2012, where 2.7 million sellers (70 percent female) represent wellness (58 percent), cosmetics and personal-care (15 percent), as well as home-care, household goods and durables, and clothing and accessories.

14. Italy—$3.0 Billion

Italy’s direct selling market suffered a loss of 4.9 percent in 2012, while gaining nearly 100,000 new members of its direct selling community (500,000). Females continued to dominate the Italian direct selling community (71 percent), and cosmetics and personal-care products comprised 33 percent of the market. Participation by males grew 5 percent in 2012 (29 percent), which may explain the 6 percent growth of person-to-person sales models and increased market share of wellness (20 percent) and foodstuffs and beverages (15 percent) companies.

15. Thailand—$2.9 Billion

2012 was a year of explosive growth in Thailand’s direct selling community, with some 800,000 new direct sellers signing on with companies, resulting in total revenue growth of 7 percent. Wellness products surged ahead to 39 percent of total category sales, while cosmetics and personal-care products dipped to 27 percent. Person-to-person sales increased 10 percent, totaling 69 percent of all sales methods used by a mostly female (67 percent) representative field; however, 3 percent more Thai males jumped into direct selling (33 percent).

16. Venezuela—$2.3 Billion

Despite appearing lower in the ranking this year, Venezuela’s direct selling industry increased 6.8 percent. Of the country’s 1.2 million sellers, 80 percent were female; however, an 11 percent increase in male participation in 2012 may be due in part to the growing wellness product category. While the traditionally female stronghold of cosmetics and personal-care items still led category sales at 30 percent, statistics show that wellness gained 13 percent in 2012. Person-to-person made up 95 percent of all sales.

17. Canada—$2.2 Billion

Canada’s 1 percent growth may be the result of the expanding category of cosmetics and personal care, which comprised 39 percent of product sales in 2012, as well as utilities, which posted 10 percent this year. All other categories suffered losses. Sales methodologies were almost evenly split within Canada’s salesforce of 700,000 independent representatives, of which 84 percent were female.

18. Argentina—$1.7 Billion

Marked growth in other Billion Dollar Markets caused Argentina to hold its No. 18 rank despite an astounding 12.5 percent growth in the country. Almost exclusively female (96 percent), Argentina’s direct selling community of 700,000 grew by nearly 80,000 in 2012. They were meeting the needs of customers, 67 percent of which sought cosmetics and personal-care items through one-on-one relationships (84 percent) with direct sellers.

19. Australia—$1.5 Billion

Cosmetics/personal-care and wellness products made up more than half of Australia’s direct selling product sales. Some 400,000 direct sellers (85 percent female) were practically split in half between party plan and person-to-person sales models. Australia’s direct selling revenues were up 4 percent from 2011 statistics.

20. Peru—$1.4 Billion

Adding some 50,000 Peruvian direct sellers to the community brought an 11.2 percent increase in revenues to this emerging market. Peru’s salesforce is predominately female at 91 percent, and examination of the most successful direct selling product categories reflects the gender of the selling community. Cosmetics and personal care rank No. 1 at 36 percent, with clothing and accessories (29 percent) a close second. Wellness represents 19 percent of the market.

21. Indonesia—$1.1 Billion

Indonesia advanced one ranking this year, having 11 percent growth due to nearly 1 million more direct sellers in country. Sales methodology and product category statistics were not reported in 2011 or 2012.

22. India—$1.1 Billion

Growth of 22.6 percent from $858 million in revenue in 2011 landed India on the Billion Dollar Markets list for the first time. India’s market is comprised primarily of wellness products (44 percent), but cosmetics and personal-care (33 percent) and home-care products (14 percent) are also integral to their success. With an ever-expanding seller base (4.9 million), nearly 1 million more in 2012 than the previous year, 63 percent are female and 38 percent are male, participating in person-to-person (69 percent) and party plan (23 percent) sales.

23. Philippines—$1.0 Billion

Wellness products are far and away the leading cause of the Philippines’ rise to the Billion Dollar Markets list for the first time this year. Revenues rose 31.3 percent from $770 million in 2011, thanks to 3 million sellers, split 60/40 female, conducting virtually all sales via person-to-person contact.

Regional Profiles

Asia Pacific

Asia Pacific is the largest region for direct selling, making up 44 percent of the industry’s global sales. Retail sales rose 4.4 percent in this region to $73.3 billion. Within this region the direct selling community experienced tremendous growth at 9.9 percent, raising the count of people participating in direct selling to 46.1 million in 2012.

Asia is home to much of the world’s population, so clearly part of these statistics is due to the sheer volume of people in that region; however, direct selling seems to be a great fit for the Asian markets and cultures as well. And because direct selling is profitable, it has become increasingly legitimate to choose it as a potential career—not merely as a fallback position.

There is a very strong work ethic in Asia. With few government security nets, people often want multiple jobs and income streams. Their entrepreneurial spirit and desire to have their own businesses are also strong. While in the Western world one goes to college and then gets a job, the preferred path in Asia is to start a business. Direct selling offers them this entrepreneurial fulfillment at a very low cost.

The Asian cultures are very comfortable with purchasing from friends or on the recommendation of friends or family members. For these reasons and more, the Asia/Pacific region will likely continue to experience significant growth in the foreseeable future.

The Americas

The Americas comprise 40 percent of global industry sales, split evenly between North America’s U.S. and Canadian market and the 11 markets that comprise South and Central America. Overall retail sales in the Americas rose 7.9 percent to $66.4 billion. While North America saw growth of 5.6 percent ($33.9 billion), South and Central America saw a double-digit increase of 10.4 percent, with sales reported at $32.6 billion.

Latin America’s impact on worldwide sales figures is notable. Miguel Arismendi, Chairman of ACOVEDI, the Colombian direct selling association, says the expanding middle class is causing health and wellness product categories to gain traction. “It is effectively, positively the entrance of males into the direct selling industry because it is an attractive category for them.”

Europe

The European market is comprised of Western, Central and Eastern Europe. All are governed by SELDIA, the European Direct Selling Association, and play by the same direct selling code of ethics as a result. Together, Europe makes up 16 percent of global industry sales—11 percent, Western; 5 percent, Central and Eastern.

European growth is holding steady despite a financial crisis still hanging over many European Union countries. While Western Europe, with more established and mature direct selling markets, rose 1.3 percent to sales totaling $17.7 billion, Central and Eastern European markets enjoyed a 4.3 percent increase. That brought their sales to $8.1 billion. In all, Europe rose 2.2 percent, totaling $25.9 billion.

Widely differing GDPs, income per capita, government interaction, familiarity with direct selling and cultural differences all weigh into the direct selling activity measured in Europe. Often, direct selling growth is a tug-of-war between the European Union regulation originating in mature markets and Central and Eastern Europe’s less restrictive governmental policies that give them competitive advantage. Maurits Bruggink, Executive Director of SELDIA, says, “I am hopeful that Central and Eastern European member states will be successful in overhauling pieces of over-regulation by the European Union.”

Africa and Middle East

Africa and the Middle East had an estimated 1 percent of global industry retail sales in 2012.

September 2013

September 2, 2013 by DSN Staff Leave a Comment

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Amway

Steve Van Andel

The U.S. Chamber of Commerce named Steve Van Andel Chairman of its board of directors. Van Andel, Chairman of Amway, will serve a one-year term.

As Chairman of Amway, Van Andel is responsible for managing the company’s daily operations and has led the business to become a stronger, more diverse competitor in the new economy.

Van Andel served a previous one-year term as Chairman of the U.S. Chamber ending June 12, 2002, and was then Chairman of the board’s Executive Committee. He will continue to act as Vice Chairman of the Chamber’s U.S.-Korea Business Council and work to advance an expanded trade agenda as Chairman of the board.

The U.S. Chamber of Commerce is the world’s largest business federation, representing the interests of more than 3 million businesses, as well as state and local chambers and industry associations.

Founded in 1959 by entrepreneurs Rich DeVos and Jay Van Andel, and based in Ada, Michigan, Amway offers consumer products and business opportunities through a network of more than 3 million distributors in more than 100 countries and territories worldwide.

Herbalife Ltd.

Steven Dentali

Chin-Kun Wang

Global nutrition company Herbalife announced that Steven Dentali, Ph.D., joins the company in the newly created role of Vice President, Botanical Sciences. Dentali will report to Vasilios Frankos, Ph.D., Senior Vice President, Global Product Science, Safety and Compliance, and former director of the U.S. FDA Dietary Supplements division.

Dentali will be responsible for all activities related to botanicals, including the identification, documentation and validation of the appropriate botanical ingredients, as well as formulations and processes that meet standards and requirements for product quality, efficacy, safety and regulatory acceptability.

Dentali joins Herbalife after a 22-year career in the U.S. herbal and dietary supplement industry, where he is recognized as a foremost expert on botanical product quality issues. He was most recently Chief Science Officer at the American Herbal Products Association (AHPA), where he helped to set quality standards for the botanical products industry.

Herbalife also announced the appointment of Chin-Kun Wang, Ph.D., an expert in human metabolism and nutrition, to its Nutrition Advisory Board.

The Nutrition Advisory Board is comprised of experts from around the world in the fields of nutrition and health who inform, educate and train Herbalife independent distributors on the principles of nutrition, physical activity and healthy lifestyle.

Wang is distinguished professor and former president of the Chung Shan Medical University in Taiwan. Wang’s research work is focused on human metabolism and the clinical evaluation of nutritional supplements, nutraceuticals, and functional foods and herbs. He has also authored and co-authored a number of articles and papers on these subjects.

Herbalife Ltd. is a global nutrition company that sells weight-management, nutritional and personal-care products intended to support a healthy lifestyle. Herbalife products are sold in more than 80 countries to and through a network of independent distributors.

Medifast Inc.

Barry B. Bondroff

Medifast Inc., a manufacturer and provider of clinically proven, portion-controlled weight-loss products and programs, announced the appointment of Carl E. Sassano to the Medifast board of directors and Barry B. Bondroff, CPA, as Lead Director. Sassano will also serve on the company’s Compensation Committee.

Sassano joins the board with over 40 years of corporate experience. Sassano is a Partner in CSW Equity Partners, a private equity investment company, and serves as Chairman of the Board of Voiceport, a company in the CSW portfolio. Sassano is currently a member of the board of Transcat Inc., serves as their Lead Director, and was Chairman of the board from October 2003 until July 2013.

Bondroff has served as a Director on the Medifast board since 2008. He is an officer and director with Gorfine, Schiller & Gardyn, PA, a full-service certified public accounting firm. Bondroff has over 42 years of experience providing companies of all sizes and across varied industries with practical accounting, assurance, tax, business, technology and financial advisory services.

Medifast was founded in 1980 and is located in Owings Mills, Md. It sells its products and programs via four distribution channels: the Web and national call centers, the Take Shape For Life personal coaching division, Medifast Weight Control Centers and a national network of physicians.

XANGO LLC

Joe Morton

Kent Wood

XANGO LLC, a global wellness and network marketing company, announced the appointment of two company founders to new roles: Joe Morton will serve as President of XANGO Americas & Australia, and Kent Wood will take on the role of President of XANGO Europe, CIS & South Africa.

Morton discovered the mangosteen fruit as a global product opportunity, which inspired the launch of XANGO® Juice and a new category of nutritional supplements. A passionate advocate of direct selling, Joe has dedicated his executive career to working on distributor relations and building dialogue with sales leaders.

Kent Wood spent most of his career auditing, consulting or being employed by a number of direct sellers in Utah. One of XANGO’s six founders, he was XANGO’s original Chief Financial Officer. Since then, Wood has served in many capacities, namely XANGO’s Chief Operating Officer, President of Operations and President.

XANGO was the first company to market a premium mangosteen beverage, XANGO® Juice, to consumers worldwide. XANGO is privately owned and powered by a global network of more than 2 million independent distributors in the United States and more than 40 international markets.

Just Energy Group

Brett Perlman

Just Energy Group Inc. announced that Brett Perlman was elected to the board of directors. Perlman is President of Vector Advisors, a management consulting firm that provides services to telecommunications and energy clients.

Perlman previously served as Commissioner of the Public Utility Commission of Texas, where he was responsible for leading the successful restructuring of Texas’ $37 billion electric utility industry as the electricity market opened to competition.

Prior to his appointment to the Texas PUC, Perlman was a management consultant with the Texas office of McKinsey & Company, a global management consulting firm.

Perlman will serve as a member of Just Energy’s Audit Committee and Governance Committee.

Established in 1997, Just Energy is a competitive retailer of electricity and natural gas. The parent company of direct seller Momentis, Just Energy serves close to 2 million residential and commercial customers through a wide range of energy programs and home comfort services.

CAbi LLC

CAbi LLC (Carol Anderson by invitation), a direct sales marketer of designer ready-to-wear women’s apparel, announced that it has appointed Lynne Coté, a retail industry veteran, as CEO and member of the board.

Coté brings more than 25 years of retail experience as well as success delivering brand expansion strategies to market. She joins CAbi from clothing retailer Tribal Sportswear Inc., where she served as CEO since 2009 and led the company’s restructuring and launch of new product lines. Coté also spent six years with Jones Apparel Group as CEO of Jones Apparel’s business divisions.

For over 25 years, women’s apparel designer Carol Anderson sold her collections in high-end department stores and specialty boutiques across the country. Launched in 2001 and based in Los Angeles, CAbi is a social selling apparel business.

Youngevity International Inc.

Raffy Lorentzian

Bill Thompson

Youngevity International Inc. announced the appointment of Raffy Lorentzian to serve as its Controller. Lorentzian’s most recent experience was as Chief Financial Officer of National Technical Systems Inc.

Lorentzian is a corporate finance executive with over 20 years of public company reporting experience and extensive knowledge of accounting and SEC compliance rules. As the CFO of National Technical Systems, he also led the company’s annual strategic planning process and the financial due diligence for 11 completed acquisitions.

Youngevity also announced that Bill Thompson has joined its board of directors. Thompson currently serves as the Chief Financial Officer of Broadcast Company of the Americas, which operates three radio stations in San Diego. He previously served as Corporate Controller for the company.

The board of directors also announced the formation of an audit committee chaired by Thompson as well as an acquisition committee chaired by Dave Briskie, Youngevity International’s CFO.

Youngevity International Inc. is a fast-growing, innovative, multidimensional company that offers a wide range of consumer products and services, primarily through person-to-person selling relationships that comprise a “network of networks.”

ForeverGreen Worldwide Corp.

ForeverGreen Worldwide Corp., a provider of nutritional foods and other healthy products, announced that Bob Mower Steed joined the company as President, International. Mower Steed has 25 years’ experience in product development, product branding, marketing and sales.

He was an integral part of the growth of two successful businesses during the last 25 years. Under his leadership, Mower Steed’s two companies achieved nearly $10 billion in combined sales, peaking at $1 billion annually before they were eventually acquired.

ForeverGreen Worldwide Corp. develops, manufactures and distributes an expansive line of all-natural whole foods and products to North America, Australia, Europe, Asia and South America.

Please submit news of executive promotions and hires at your company to be included in the Executive Announcements section of Direct Selling News. Email pr@directsellingnews.com.

Financial News, September 2013

September 2, 2013 by DSN Staff Leave a Comment

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AL International Inc.

AL International Inc. (YGYI—OTC.BB), a fast-growing, innovative, multidimensional company that offers a wide range of consumer products and services, announced that the company has effectuated its corporate name change to Youngevity International Inc.

In conjunction with the name change, the company also began trading under the ticker symbol “YGYI” within the OTCQX Marketplace. Its recent ticker symbol change and launch of a new corporate website reflect the company’s new name, which is part of a larger rebranding effort intended to more clearly represent Youngevity International’s focus on its commitment to operate as a global consumer products company.

The company’s common stock has been assigned a new CUSIP number of 987537107 in connection with the name change. Outstanding stock certificates are not affected by the name change and do not need to be exchanged.

The OTCQX® Marketplace is the highest market tier of the U.S. Over-the-Counter (OTC) market, providing investors with an objective measure to distinguish the best OTC-traded companies. To qualify for the OTCQX, companies must meet high financial standards, be current in their disclosure, and be sponsored by a professional third-party advisor.

CVSL Inc.

CVSL Inc. (CVSL—OTC.BB) and Agel Enterprises LLC announced that they have signed a letter of intent for CVSL to acquire Agel as part of its growth strategy in the direct selling industry.

Founded in 2005 and based in Utah, Agel offers a line of nutritional gel supplement products in markets around the world, including Europe, North America, Latin America and Asia.

CVSL Chairman John Rochon said that acquiring Agel will allow CVSL to enter the nutritional supplement market as well as the skincare market, while establishing a global presence. He also said CVSL intends for current Agel management to continue in their present roles.

Jeff Higginson, Co-CEO of Agel, said that signing a letter of intent to join CVSL is “a major step forward for Agel’s future.”

Quarterly Results

Avon Products Inc.

Avon Products Inc. (AVP—NYSE) reported second quarter 2013 results.

For the second quarter of 2013, total revenue of $2.5 billion decreased 2 percent, but increased 2 percent in constant dollars, primarily due to an increase in average order, which partially benefited from inflation in Latin America.

Second quarter 2013 gross margin was 62.7 percent. Adjusted gross margin was 63.3 percent, 40 basis points higher than the prior-year quarter.

Operating profit was $202 million and operating margin was 8.1 percent in the quarter. Operating profit included a $17 million charge associated with the highly inflationary accounting for a 32 percent devaluation of Venezuelan currency, an accrual of $12 million for the offer of settlement relating to the Foreign Corrupt Practices Act investigations and $8 million associated with costs to implement restructuring. Adjusted operating profit was $239 million and adjusted operating margin was 9.5 percent, 300 basis points higher than the second quarter of 2012.

As part of the Avon’s refinancing activities, during the second quarter of 2013, the company prepaid the $500 million principal of its 2014 notes plus a make-whole premium. In connection with this prepayment, the company incurred a loss on extinguishment of debt of $13 million.

Second quarter 2013’s net income from continuing operations was $85 million, or 19 cents per diluted share. Second quarter 2013’s adjusted net income from continuing operations was $127 million, or 29 cents per diluted share.

In July 2013, Avon completed the sale of its Silpada business. Silpada has been classified within discontinued operations for all periods presented. In the second quarter of 2013, the company recorded within discontinued operations a pre-tax charge of $79 million ($50 million net of tax) reflecting the expected loss on sale.

Net cash provided by operating activities was $70 million for the six months ended June 30, 2013, compared with $37 million in the prior-year period, favorably impacted by improved operating profit and lower income tax payments.

Second quarter 2013 revenue in Latin America was $1.25 billion, up 1 percent year over year, or up 7 percent in constant dollars. Q2 revenue in Europe, Middle East and Africa was $678.4 million, up 2 percent, or up 5 percent in constant dollars. North America’s second quarter revenue was $380.3 million, down 12 percent year over year and in constant dollars. Asia Pacific’s revenue was $198.1 million, down 9 percent, or down 10 percent in constant dollars.

In other company news, Avon declared a regular quarterly dividend on its common stock of 6 cents per share, payable Sept. 3, 2013, to shareholders of record on Aug. 15, 2013.

Blyth Inc.

Blyth Inc. (BTH—NYSE), a direct to consumer company and designer and marketer of health and wellness products, candles and accessories for the home, reported sales and earnings for the second quarter of 2013. Net sales for the three months ended June 30, 2013, decreased approximately 32 percent to $211.7 million from $309.5 million for the comparable prior-year period, primarily due to lower sales at ViSalus and, to a lesser extent, at PartyLite.

Blyth’s operating profit for the second quarter was $1.2 million this year, versus $17.8 million last year, largely driven by the decline in sales.

Net loss attributable to Blyth Inc. was $1.4 million for the three months ended June 30, 2013, compared to earnings of $8.0 million in the comparable prior-year period. Diluted Earnings per Share Attributable to Blyth Inc. were a loss of 8 cents for the second quarter, compared to earnings per share of 46 cents in the comparable prior year period.

Net loss attributable to Blyth Inc. common stockholders was $3.2 million for the three months ended June 30, 2013, which includes a downward adjustment of $1.8 million related to dividends paid to the non-controlling interest holders of ViSalus in excess of their allocable share of the income earned by ViSalus. Giving effect to this adjustment, diluted earnings per share attributable to Blyth Inc. common stockholders were a loss of 20 cents for the second quarter, compared to earnings per share of 46 cents in the comparable prior year period.

During the second quarter, the company announced it would redeem for cash all of its outstanding 5.5 percent senior notes due Nov. 1, 2013. As of June 30, 2013, $71.8 million aggregate principal amount of notes remained outstanding. On May 10, 2013, the company completed the sale of $50 million aggregate principal amount of 6.0 percent senior notes due June 2017 and, on July 10, used the proceeds from the sale of these notes, together with available cash, to redeem the outstanding 5.5 percent notes.

In the Health & Wellness segment, consisting of ViSalus, second quarter net sales decreased 47 percent to $101.5 million, versus $190.4 million for the same period last year. Health & Wellness second quarter segment operating profit was $2.8 million this year versus $18.6 million last year.

In Candles & Home Decor, consisting of PartyLite, sales were $77.8 million in the second quarter, versus $87.9 million for the same period last year, a decline of 12 percent. Second quarter operating loss for the Candles & Home Decor segment was $0.3 million, versus profit of $1.7 million in last year’s second quarter.

Educational Development Corp.

Educational Development Corp. (EDUC—NASDAQ) reported results for the fiscal fourth quarter and the full year ended Feb. 28, 2013, along with their quarterly cash dividend.

For the fiscal year 2013, the company reported net revenue of $25.5 million, a decrease of $785,800 when compared to $26.3 million for the previous year, and net earnings of $802,900, compared to $1.4 million. Earnings per share were 20 cents, compared to 36 cents the previous year on a fully diluted basis.

For the fourth quarter 2013, the company announced net revenues of $5.6 million, compared to $5.9 million for the same period last year. As a result of year-end inventory and accrual adjustments of approximately $375,000, the company reported a 2013 fourth quarter net loss of $211,200, compared with net earnings of $269,600 for the 2012 fourth quarter.

Herbalife Ltd.

Herbalife Ltd. (HLF—NYSE), a global nutrition company, reported second quarter net sales of $1.2 billion, reflecting an increase of 18 percent compared to the same time period in 2012, on volume point growth of 14 percent. Adjusted net income for the quarter of $150.7 million, or $1.41 per diluted share, compared to the second quarter 2012 net income of $132.0 million and EPS of $1.09, respectively. On an as-reported basis, second quarter 2013 EPS of $1.34 increased 23 percent, compared to the $1.09 reported in the comparable quarter last year.

For the quarter ended June 30, 2013, the company generated cash flow from operations of $213.8 million, an increase of 56 percent compared to 2012; paid dividends of $30.9 million; and invested $31.3 million in capital expenditures.

For the second quarter, revenue in North America was $247,564, up 10 percent compared to $224,661 a year ago. In Mexico revenue was $145,638 up 18 percent compared to $119,449 in 2012. Q2 revenue in South and Central America was $222,362, up 31 percent compared to $152,583. In the EMEA, revenue was $186,286, up 13 percent compared to $161,635 the previous year. In Asia Pacific revenue was $299,240, up 0.9 percent compared to $296,548. China’s revenue was $118,149, up 35 percent compared to $77,072.

In other company news, Herbalife reported that its board of directors has approved a dividend of 30 cents per share to shareholders of record Aug.13, 2013, payable on Aug. 27, 2013.

Tupperware Brands Corp.

Tupperware Brands Corp. (TUP—NYSE), a portfolio of global direct selling companies, selling innovative, premium products across multiple brands and categories, announced second quarter 2013 operating results.

Second quarter 2013 net sales were $688 million. Emerging markets, accounting for 65 percent of sales, achieved a 14 percent increase in local currency, driven by large populations, penetration of unserved and underserved consumers and emerging middle classes.

GAAP net income was $76 million, versus $13 million in the prior year. 2012 included $76.9 million of pre-tax, non-cash impairment charges to write down purchase accounting intangibles, as well as $7.5 million pre-tax gain from the sale of a previously idled manufacturing facility.

The company returned $133 million to shareholders through a dividend payout of $33 million and the repurchase of 1.23 million shares for $100 million. Since 2007, 18 million shares have been repurchased for $1 billion, with $1 billion left under an authorization that runs until February 2017.

Sales in Europe were up 3 percent versus last year reported and in local currency. Sales in Asia Pacific were up 13 percent reported and 16 percent in local currency, driven by the emerging markets up 20 percent in local currency. North America sales were up 11 percent reported, 8 percent in local currency, and reflected Tupperware Mexico sales up 12 percent.

Sales for Beauty North America were down 5 percent reported and down 10 percent in local currency. BeautiControl sales were down 26 percent. Sales in South America were up 18 percent reported and 22 percent in local currency, primarily as a result of continued growth in Brazil that was up 32 percent in local currency.

USANA Health Sciences Inc.

USANA Health Sciences Inc. (USNA—NYSE), a developer and manufacturer of high-quality nutritional, personal-care, and weight-management products, announced record financial results for its fiscal second quarter ended June 29, 2013.

For the second quarter of 2013, net sales increased by 17.5 percent to $189.1 million, compared with $160.9 million in the prior-year period. This growth in net sales was driven by increases in both the company’s Asia Pacific and North America/Europe regions.

Net earnings for the second quarter increased to $24.2 million, an improvement of 44.6 percent, compared with the prior-year period. Earnings per share for the quarter increased by 55.0 percent to $1.72, compared with $1.11 in the second quarter of the prior year. Total diluted common shares outstanding as of June 29, 2013, were 14.1 million, compared with 15.1 million as of June 30, 2012.

Net sales in Asia Pacific increased by 24.3 percent to $122.4 million, compared with $98.4 million for the second quarter of the prior year. This improvement was due to strong sales growth in the Greater China and Southeast Asia Pacific regions.

Net sales in North America/Europe increased by 6.9 percent to $66.8 million, compared with $62.5 million in the prior-year period. The company generated double-digit sales growth in Mexico and moderate sales growth in the United States, Canada, and France.

The company ended the quarter with $96.1 million in cash and cash equivalents. For the second quarter, cash generated from operations totaled $27 million.

Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.

Letter from John Fleming, September 2013

September 2, 2013 by John Fleming Leave a Comment

Click here to order the September 2013 issue in which this article appeared.

This fall publication is a reminder of how rapidly the year is moving to closure. We started the year with much collective optimism for the direct selling industry, and overall we have not been disappointed. Both revenue and the number of participants at the independent contractor level appear to remain in growth mode. Some companies have hit bumps, some have overcome the most severe of challenges and others are racing into the final quarter of the year in high gear.

Our greatest concern during the year related to how the overall industry would fare against the attacks on a few of our publicly held companies. Those attacks may have been new, but the accusations were not. In fact, Amway had successfully helped to educate both regulatory agencies and external industry observers in its successful defense of the direct selling business model in 1979. In this month’s issue, we summarize a longer article written by Jeffrey Babener, an attorney with over 25 years of dedicated focus on the direct selling industry. Mr. Babener’s article is a reminder to us of battles fought and won, which have become a part of our history. As time moves on, newer entrants and external observers may not get this type of information, which is so significant to the foundation and evolution of the direct selling business model. They may miss the research that is so important to charting our future. We were pleased to be able to publish this article and the insight shared within it.

In this issue, you will notice that we bring to you “Billion Dollar Markets,” one of our major stories each year. We typically slot it in March but have now moved it to September in order to take advantage of the great work being done by the World Federation of Direct Selling Associations’ Research Committee. Their information is now released in the summer, which gives us adequate time to bring the story to you in the September issue.

Our Top Desk article is always contributed by a company leader who is usually the CEO or a C-level executive. In this month’s issue, Univera’s CEO Randy Bancino, an avid sailor, brings us one of the most unique perspectives we have received over the years relative to leadership and what’s critical to being successful in that role. Randy makes many strong points in his article, and they are all analogous to sailing. Respecting the wind is something no sailor can ignore. Randy shares this principle and many more in his article, as well as how they apply to direct selling.

AdvoCare grabs the Company Spotlight in this issue. This year AdvoCare ranked No. 4 in the DSN Global 100 category of Greatest Growth Percentage over prior year with a growth rate of 84.8 percent. They are one of a few direct selling companies that have chosen to incorporate a strong sports marketing focus. If you are a NASCAR fan, you are also getting to know AdvoCare and the famous No. 3 car.

We also found this month’s Working Smart article to be of great importance to the entire industry. Technology is paving the way for so many customer-focused improvements that allow direct sellers to compete and beat practically any traditional retailer at the point of sale (POS) experience. Direct sellers have always been able to provide the relationship, information and education that a traditional retailer cannot compete with, but the customer service proposition has often been a bit cumbersome. In past years, placing the order through an independent contractor included the time it would take to complete the order, submit the order, process the order and deliver the order. Being able to accept customer credit cards has become a great enabler, but it still behooves companies to continuously look at how independent contractors handle their customers’ credit cards and most importantly, the personal information. New technologies have bred new point of sale systems that actually link to the independent contractor’s back office. There he or she can safely transmit the order into the company’s order processing system immediately allowing for quicker delivery and greater customer satisfaction. Perhaps one of the most important benefits to be gained from these new POS systems would be their PCI Compliance conformance. PCI compliance codes and laws are expected to become more stringent and enforced as credit card fraud continues to be a major challenge across all industries and in all markets.

As we closed the folder labeled September, we realized that we are entering the most exciting quarter of the year for direct selling. Nine months have passed in 2013, and since we are still in the baseball season, I will use the baseball analogy of what it means to go into the bottom-half of the ninth inning knowing that you need one more run to not only win the game, but also win the season! 2013 will be a season that direct selling wins based on everything that has been observed over the first nine months of the game—or in this case, the year. Regardless of what may be going on in our country and the world, what you do and what you provide through your companies is about as refreshing as it gets—being positive, optimistic, hopeful and aspiring to make a difference in the lives of those who represent your brands and those who benefit from what you offer!

Until next month… enjoy the issue!

John Fleming
Publisher and Editor in Chief

Top Desk: Univera’s Randy Bancino

September 2, 2013 by DSN Staff Leave a Comment

Click here to order the September 2013 issue in which this article appeared.

Lessons from a Sailor

Someone once told me that “one good analogy is worth three hours of discussion,” and I believe it. When I get the opportunity to mentor younger direct selling executives as they come up through our organization, I often use analogies to describe the fundamentals of our industry. One of my favorite analogies involves the construction of a sailboat and the principles of sailing. For me, this has become an even more appropriate analogy to use, since our Univera offices look out over Puget Sound and most days I can point directly at sailboats as they cruise by.

In my experience there are two basic types of boaters: sailors and power boaters. As in any subdivided sport, activity or philosophy, each group believes they have made the best choice and tend to view members of the other group with withering disdain. In our story practitioners of other distribution methods—including traditional retailers—are the power boaters, and we direct sellers are the sailors.

Just as traditional retailing and direct selling have some crossover in operating methods, power boating and sailing have much in common, but also in many ways they are very different. For example, in strategy, power boaters generally decide on their desired destination, aim their boat in that direction, press the throttle forward and move in a more-or-less direct route to that point on the horizon. Sailors also choose their destination but must factor in several other variables—most importantly the wind. Depending on the wind speed and direction, they must set the rigging (the ropes and sails) on their boat to capture the wind’s energy and sometimes move their boats in indirect routes to reach their destination. This does not mean that they are at the mercy of the wind, but rather that they must adapt their course and their actions to harness the power of the wind. In direct selling, our independent contractors are the wind that provides the energy to move our businesses forward, and we must consider them and create business strategies that most effectively harness their power.

Sometimes power boaters will cross over and trade in their boats for the clean lines and elegance of a sailing vessel. Similarly, during my 30 years in this industry, I have occasionally seen corporate executives come to direct selling from other industries. Some have grasped the fundamentals in an almost instinctive way. Others have struggled to understand something that at face value looks like a familiar consumer products model but behaves in a very different way. Inevitably they learn that while some of the fundamentals transfer, the essence of direct selling, as in sailing, has very different dynamics. Some go on to learn the lessons of sailing and become fine skippers, while others return to the familiarity and relative comfort of the power boat cockpit.

Lest we lifelong sailors become too smug, we should always look for opportunities to learn from our power boating friends. After all, we are no longer using a sextant to measure our progress—or flagmen to communicate with other boats—and GPS has replaced the old paper charts we used to rely on. As direct sellers, we have learned a great deal from modern techniques in data analytics, market segmentation and leveraging social media, to name a few practices and disciplines that we have adapted.

8 Guiding Principles for Success

Respect the wind. The “energy” of your field will greatly impact the speed at which you reach your goals. Understand it, respect it and adapt accordingly.

Know your sails. Fully understand the role that Opportunity vs. Product play in motivating your field. What’s the primary source of power behind your business?

Reef your compensation sails. Any adjustments to the compensation plan should be done in very small increments and with great caution. It is always easier to increase compensation than decrease it.

Deploy spinnakers only under the right conditions. Promotions and incentives can create momentum; overused, they’ll erode profitability rapidly.

Check gauges often. Measure and track sales, recruiting, activation, productivity and retention, and make sure each part of your strategy addresses these metrics.

Don’t change the sails mid-tack. Significant compensation plan modifications, especially in the midst of a qualification period, create disruption, slow down momentum and result in loss of trust.

Beware of pirates and sirens. Be vigilant against unscrupulous competitors and so-called expert field leaders who wish to join you (at a price).

Avoid the rocks. Know and respect the regulatory environment, or you could crash and burn!

Maybe the most important lesson that we can teach our direct selling crew is that good sailors respect the wind, and they should know that without the wind the boat simply does not move. At the same time, it does not mean that the boat only moves in the direction the wind is blowing. The captain of the boat sets a course and sets the sails to harness the energy of the wind to move to the determined destination. A good captain can use almost any wind to go in almost any direction.

The boat’s sails are the key features that allow a captain to harness the energy of the wind. A sailboat has two standard sails: the mainsail and the jib. The mainsail is the one that extends back from the mast, while the jib extends forward. Although both sails play a critical role in sailing the ship, in most situations the mainsail is the primary sail providing the majority of the power.

The most important lesson that we can teach our direct selling crew is that good sailors respect the wind, and they should know that without the wind the boat simply does not move.

In this analogy, our products and our opportunity are the two standard sails. In some companies, the products are the mainsail, inviting and capturing the majority of the energy. Other companies may prefer to use the business opportunity as their mainsail. Whichever choice is made, both sails work in harmony to achieve maximum performance. It is critically important to know which sail fulfills which role, as putting the wrong sail in the wrong place causes confusion and significantly slows the boat’s progress.

In our industry, being unclear about the roles of product and opportunity ultimately confuses the field and, worse, can fail to harness their energy.

An important part of sailing is understanding how much of the ship’s sail to let out, and how much to strap down. The “reefing” is what allows you to determine how much sail is let out, and it allows for very small adjustments. As an experienced sailor, I can tell you that it is wise to start out with your sails reefed (tied down), and to let out additional sail as you need it, because it is much easier to let out more sail than to pull sail in. The same can be said about managing your compensation plan. In other words, be careful how much canvas (cash) you put out there, because it is hard to reel it back in, and in strong winds having let out too much can capsize your boat!

Some boats also have a special sail known as a spinnaker—that colorful, parachute-like sail you see out front of some boats. Deployed under the right conditions, the spinnaker can get extra speed out of the boat. In our analogy, the spinnaker represents a special incentive or promotion. It should only be used under specific circumstances and must be used with great care as it can wreak havoc or cause a significant slowdown when deployed during the wrong conditions. But when used correctly, it is beautiful to watch and it causes the boat to surge forward as it attains maximum speed—just as the right incentive can create excitement and a surge in sales for your field.

As the boat is underway, we are down in the cockpit reading the gauges to measure our progress. On the sailboat we would be looking at wind direction, speed and depth, and mapping our position on the charts. In the direct selling cockpit we are constantly reviewing sales, recruiting, activation, productivity and retention. We are also mapping our position against our strategic plan to ensure we are progressing toward our goal.

While we continually adjust our rigging to get the maximum speed out of our boat, there are also mistakes we can make that will slow our boat or even bring it to a dead stop in the water. One of the more common mistakes direct selling sailors make that can significantly reduce their speed is considerably modifying a sail (or completely switching it out) while the boat is underway. It can be a scary sight as the wind is howling and the crew is madly scrambling around the deck to make the changes. One of the great mysteries of the sea is that once the modified sail is finally hoisted into place, more often than not the wind goes dead calm and the boat begins to drift. This is just like the chaos that can be created in the field by making significant compensation plan changes while the business is underway. This too can bring your business to a complete halt.

An even more dangerous mistake is a cavalier attitude that ultimately runs your boat up onto the regulatory rocks. Wise captains know their charts and never sail even close to these dangerous waters. Interestingly enough, these dangerous waters also tend to be inhabited by pirate ships that will attempt to steal your wind and plunder your boat.

Speaking of unsafe waters, beware the songs of the sirens. The sirens are the so-called professional networkers who sing promises of bringing their large groups from some other organization to yours. Theirs songs can be alluring as you envision bringing hundreds or even thousands of new associates into your organization all in one fell swoop! Listen carefully. Most of these promises of quick growth will evaporate as you reach out to embrace them, and you risk veering totally off course as you chase them into unsafe waters.

It can be a temptation, when frustrated with a lack of progress, to stand upon the deck of the ship and shake one’s fist at the wind, cursing it, because it will not cooperate and blow at the speed and in the direction the captain wants.

This is a place where my analogy breaks down, because the actual wind does not care what anyone thinks. However, our independent contractors know exactly what we think of them, and they care deeply. They look to the home office as their support system and partner in success. To disrespect the field is to cause the winds to still and your boat to languish in the water.

2013 marks Randy Bancino’s 30th year being associated with the corporate side of network marketing. Currently President and CEO of Univera, a DSN Global 100 Top 75 organization, he has held wide-ranging roles in the industry. He has also spent years as a managing partner with a consulting firm specializing in direct selling and headed the international division of a medium-sized, publicly traded company.

Executive Connection with Richard Wright, President and CEO, AdvoCare

September 2, 2013 by DSN Staff Leave a Comment

In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Richard Wright, President and CEO of AdvoCare, about leadership, building brand awareness and helping others live a better life.

DSN: What is the one thing you enjoy most about being the President and CEO of AdvoCare?

Richard Wright

RW: What I enjoy most about my position is helping others reach their goals. Whether that’s through finances, weight loss, or more time with family, it’s truly a rewarding experience. Helping people take control of their lives is something that is very important to me, and I wake up every day inspired by the thousands of AdvoCare Independent Distributors who are living life on their terms.

DSN: What is your long-term vision for AdvoCare?

RW: My long-term vision for AdvoCare is becoming a billion-dollar company. That’s our goal, and we’re committed to doing it the right way with integrity. We are continuing to build brand awareness, which, in turn, builds our Distributor base. Earlier this year we hit a milestone by reaching 300,000 AdvoCare Independent Distributors.

DSN: What’s been the most fun?

RW: Sherry and I enjoy spending time with our Distributors and building relationships with them. We’ve made great friends through AdvoCare. Whether we’re traveling together on AdvoCare incentive trips around the world or together at Success School—our biannual training event—it’s always fun to experience new places and spend time together.

DSN: You and your wife Sherry are a team, not only in life but also in business. What does her involvement mean to you?

RW: Sherry and I are a team in every sense of the word. She’s a very talented person, and we wouldn’t be where we are without her. Sharing our passion of helping others live a better life truly helps drive this business. She is an inspiration to not only me but also thousands of others.

DSN: What do you like to do when you just want to relax?

RW: Sherry and I enjoy spending time on the Gulf Coast in Florida with our family.

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At its International Convention in August, Ronald McDonald House Charities recognized ACN as one of the organization’s three Signature Partners. The designation of Signature Partner indicates those whose annual donations total between $500,000 and $1 million.

Your Inspiration at Home’s hand-crafted, gourmet seasonings collected 62 medals at the 2013 Royal Hobart Fine Foods Awards in Australia, where the company was founded in 2011 prior to its acquisition by Dallas-based CVSL earlier this year.

Pyramid Scheme Operators and Critics of Direct Selling Count on Confusion

History repeats itself. Just as Yogi Berra famously said, “It’s déjà vu all over again.”

Some Background

In In Re Koscot Interplanetary Inc. (1975), the FTC established the earliest guidelines regulating illegal pyramids and other unlawful entrepreneurial chains.

The Practices of Established Direct Sellers

Since the landmark approval of the multilevel marketing model in the 1979 seminal administrative law decision, In the Matter of Amway, no federal prosecutions have been aimed at multi-decade established direct sellers.

Avoid some common pitfalls with these best practices.

Ensure secure transactions.

Security is the most important consideration when it comes to mobile POS.

Enhance your brand.

Find a partner that can white-label the entire solution, including the card reader, the payment app, online management tools and even customer receipts.

Boost profits and save costs.

Wow consumers and consultants.

Improve operational efficiencies.

Unlocking The Great Potential

“You have demand and supply growing together, and it’s kind of like the perfect storm.” —Jeffrey Dahl, President, Amway Latin America

“The growth of the middle class means higher purchasing power and greater desire to improve their quality of life.” —Dr. Dora Hoan, Founder, Best World International

Embracing The Great Potential

“Companies are excelling in a very hybrid way and adapting their own operations to what these countries can provide.” —Jose Paez, Director General, Amway Mexico

The Great Bounce-Back Potential

“There’s definitely a bounce-back effect that companies who operate in multiple markets are starting to dig into, focus on and build strategies to develop. Technology makes it much easier.” —Jeffrey Dahl

Billion Dollar Markets

1. United States—$31.6 Billion

“The strong performance of direct selling in the United States and around the world continues to underscore the economic and social relevance of this business model.” —Joseph Mariano, President, USDSA

2. Japan—$22.7 Billion

3. China—$20.0 Billion

4. Brazil—$14.6 Billion

5. Korea—$13.3 Billion

6. Mexico—$7.3 Billion

7. France—$4.9 Billion

8. Malaysia—$4.7 Billion

9. Russia—$4.3 Billion

10. Germany—$3.8 Billion

11. United Kingdom—$3.2 Billion

12. Colombia—$3.0 Billion

13. Taiwan—$3.0 Billion

14. Italy—$3.0 Billion

15. Thailand—$2.9 Billion

16. Venezuela—$2.3 Billion

17. Canada—$2.2 Billion

18. Argentina—$1.7 Billion

19. Australia—$1.5 Billion

20. Peru—$1.4 Billion

21. Indonesia—$1.1 Billion

22. India—$1.1 Billion

23. Philippines—$1.0 Billion

Regional Profiles

Asia Pacific

The Americas

Europe

Africa and Middle East

Amway

Herbalife Ltd.

Medifast Inc.

XANGO LLC

Just Energy Group

CAbi LLC

Youngevity International Inc.

ForeverGreen Worldwide Corp.

AL International Inc.

CVSL Inc.

Quarterly Results

Avon Products Inc.

Blyth Inc.

Educational Development Corp.

Herbalife Ltd.

Tupperware Brands Corp.

USANA Health Sciences Inc.

Lessons from a Sailor

8 Guiding Principles for Success

The most important lesson that we can teach our direct selling crew is that good sailors respect the wind, and they should know that without the wind the boat simply does not move.

In this month’s Executive Connection, Direct Selling News Publisher and Editor in Chief John Fleming speaks with Richard Wright, President and CEO of AdvoCare, about leadership, building brand awareness and helping others live a better life.

DSN: What is the one thing you enjoy most about being the President and CEO of AdvoCare?

DSN: What is your long-term vision for AdvoCare?

DSN: What’s been the most fun?

DSN: You and your wife Sherry are a team, not only in life but also in business. What does her involvement mean to you?

DSN: What do you like to do when you just want to relax?

“You have demand and supply growing together, and it’s kind of like the perfect storm.”
—Jeffrey Dahl, President, Amway Latin America

“The growth of the middle class means higher purchasing power and greater desire to improve their quality of life.”
—Dr. Dora Hoan, Founder, Best World International

“Companies are excelling in a very hybrid way and adapting their own operations to what these countries can provide.”
—Jose Paez, Director General, Amway Mexico

“There’s definitely a bounce-back effect that companies who operate in multiple markets are starting to dig into, focus on and build strategies to develop. Technology makes it much easier.”
—Jeffrey Dahl

“The strong performance of direct selling in the United States and around the world continues to underscore the economic and social relevance of this business model.”
—Joseph Mariano, President, USDSA