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Stock Rises as Herbalife, Icahn Reach Agreement

March 1, 2013 by DSN Staff Leave a Comment

Herbalife

Herbalife shares ended the day up 7 percent yesterday, following an announcement of the company’s latest agreement with billionaire investor Carl Icahn. In accordance with the agreement, Icahn and entities party to the investor now hold a 13.6 percent stake in the company, with the right to increase the size of their ownership position up to 25 percent. Herbalife also announced that it will expand the size of its Board of Directors, adding two Icahn representatives to the nine sitting members.

Read the full Wall Street Journal story here.

Filed Under: Daily News

Amway Pilots Storefront at Citi Field

March 1, 2013 by DSN Staff Leave a Comment


Amway Center
Amway Business Center At Citi Field


Amway

Amway recently celebrated the opening of the Amway Business Center at Citi Field, home of the New York Mets. A website introducing the storefront describes it as a one-of-a-kind space for Amway’s Independent Business Owners (IBOs) “to freely connect, learn new valuable insights, and share the exciting Amway opportunity with prospects.”

The Business Center provides a space for the pioneering company to offer open training sessions and host private events. Also available on-site are ordering kiosks where IBOs can place their regular orders. When the Mets season begins in April, the Business Center’s doors will be open to the crowds that converge upon 126th Street several times a week. Visitors can purchase limited product available on-site and learn more about Amway’s business opportunities.

For more information on the Amway Business Center, click here.

Filed Under: Daily News

Overcoming Obesity with Team Beachbody

March 1, 2013 by DSN Staff Leave a Comment


Click here to order the Direct Selling News issue in which this article appeared.


Team Beachbody

Company Profile:

  • Founded: 1998
  • Headquarters: Santa Monica, Calif.
  • Top Executives: Chairman and CEO Carl Daikeler, President Jon Congdon
  • Products: In-home fitness video programs, nutritional supplements and personal-care products

Transformation. It’s an important word with many meanings for direct sellers. But at Team Beachbody®, it’s the whole business.

Team Beachbody distributors, called Coaches, are brand evangelists who have transformed themselves by using the company’s in-home fitness programs such as P90X®, INSANITY®, Ten Minute Trainer® and Brazil Butt Lift® and have decided to pay it forward. Their personal transformations turn each Coach into a living billboard that opens the door to conversations about how they can help others get fit and healthy.

Both the company and its Coaches have benefitted from transformation. Beachbody got started in 1998, when Carl Daikeler and Jonathan Congdon, now the company’s CEO and President, respectively, opened a direct response marketing business that made heavy use of infomercials. They didn’t set out to own a health and fitness company. Daikeler says they just wanted to make successful TV infomercials. Within a couple of years, they were focused on fitness.

But over time they recognized what they viewed as a gap in the marketplace. Many people would watch their infomercials, be interested, recognize the Beachbody name, but never order. Beachbody experimented with offering videos at Target stores, but the trial had little success. Clearly, they needed a different approach. They decided to fill the gap and take advantage of Beachbody’s brand awareness at the same time by adding a network marketing arm to their business.

“When you advertise your products on TV with over $100 million of ads every year, there is a lot more awareness created than people who will actually order,” Daikeler explains. “We felt it would be better to put the opportunity for selling these products into the hands of people who had success with them, rather than put them on retail shelves. Our hope was that the network marketing business would grow to be bigger than the TV business.”

Motivation for Transformation

In 2007 the founders launched Team Beachbody. The response was dramatic. People who were already recommending Beachbody tools to their friends were excited to get paid for doing it—plus, they now had additional motivation to stay healthy. Today they have grown into a force of some 100,000 Coaches who have successfully used the products to transform their bodies.


“Put the prospect of financial reward into the people who need the motivation for behavior change. That’s how this [obesity] trend will end.”
—Carl Daikeler, Chairman and CEO


“We’ve all experienced that it’s one thing to lose weight, but it’s a whole other thing to keep the weight off, especially when it’s done through hard work and good nutrition,” Daikeler says. “So having this additional layer of motivation and financial rewards turned out to be an ‘aha!’ moment for us that we never expected. That’s why we feel that network marketing is the perfect way to solve the trend of obesity in this country. Put the prospect of financial reward into the people who need the motivation for behavior change. That’s how this trend will end.”

Team Beachbody’s Coaches are the missing link to reversing that trend, the company believes. Not only do they offer products that keep workouts interesting and challenging, but they provide the accountability, encouragement, recognition and support that keep clients in front of their televisions day after day, week after week—not watching reality shows or playing video games, but exercising to exhilarating exhaustion with Beachbody fitness programs. The Coaches’ major daily tool for keeping clients engaged: challenge groups they run through social media. Challenge groups provide a comprehensive approach. They combine a fitness program and premium nutrition, plus peer support and accountability among people with similar goals. Coaches facilitate the groups, providing the framework that helps people get off the couch, get started and then keep going.

Daikeler illustrated how important Coaches are last year at VideoPlus University, the annual educational event for direct selling executives put on by VideoPlus. When he asked a roomful of direct sellers how many of them owned a P90X DVD program—Beachbody’s 90-day home fitness system designed to get users in the best shape of their lives—hands went up around the room. Then the kicker:  “How many of you have completed it?” he asked. Scanning the room and seeing very few hands in the air, he responded, “We’ve got work to do.”

That work is where Coaches come in. Team Beachbody makes the Coaching process about helping people first—“solving, not selling,” according to Daikeler. Challenge groups are one of their main methods.

Strength in Numbers

Daikeler says that the first challenge group consisted of Congdon, trainer Tony Horton and himself back in 2001. They worked out together to Beachbody’s first mega-successful fitness program, Power 90®, the predecessor to P90X—both created and led by Horton. The three held each other accountable for completing the video workouts over a 90-day period. Because they were using Horton’s video program, the emphasis within the small group, even for Horton, was on being an accountability partner.

Logos


“The more you succeed, the more everyone succeeds, because transformation attracts more people into the ecosystem.”
—Carl Daikeler


“Over the course of 90 days, you need somebody to ask, ‘How’s it going?’ or even, ‘Have you started the program?’ ” Daikeler explains. “The value of any challenge group is that members will all contribute to helping everyone stay accountable and work toward the success of the whole. It’s great for network marketing because you’re not succeeding at anyone’s expense. The more you succeed, the more everyone succeeds because transformation attracts more people into the ecosystem.”

Daikeler says that the rate of success for people in challenge groups is much greater than among people who just buy products from a TV infomercial and choose to go it alone.

To provide even more incentive to help clients achieve their goals, Team Beachbody offers the Beachbody Challenge contest, complete with daily, monthly and quarterly cash awards, as well as a $100,000 grand prize awarded annually to the most inspiring male and female success stories. To enter, people who have completed any Beachbody fitness program simply submit their “before” and “after” photos, along with their transformation story. The most compelling stories are considered for prizes, and everyone who enters receives a T-shirt. A sister challenge is the Ultimate Health Transformation Challenge, which is open to people who use the company’s nutritional products such as Shakeology® or Beachbody Ultimate Reset™.


One Beachbody Challenge Grand Prize winner recently appeared on Good Morning America, where he was quick to plug Team Beachbody for helping him lose 200 pounds.


In each challenge, both the winning customer and their Coach are rewarded. More than 2 million people joined the Beachbody Challenge last year. Between the $500 daily prizes, the $1,000 monthly awards, the $5,000 quarterly awards—which also include a travel prize—and the yearly grand prize, Team Beachbody invests well over $1 million a year in the challenges.

One Beachbody Challenge Grand Prize winner, who has since become a Coach, was recently featured in People magazine’s annual “half their size” issue and appeared on Good Morning America, where he was quick to plug Team Beachbody for helping him lose 200 pounds.


Beachbody’s core purpose statement is proudly displayed in the Santa Monica, Calif. headquarters.Beachbody’s core purpose statement is proudly displayed in the Santa Monica, Calif. headquarters. P90XP90X The “Shakeology Wall of Ingredients” displays the host of superfoods and ingredients found in every serving.The “Shakeology Wall of Ingredients” displays the host of superfoods and ingredients found in every serving.

Products That Produce Results

The challenges also provide tens of thousands of additional success stories to promote Beachbody. “Before” and “after” photos go into infomercials, DVDs and on websites, helping to fuel the further success of Coaches, and of the company. And challenge groups themselves produce a collection of successful clients who have worked with a Team Beachbody Coach. Their success and enthusiasm turns them into a constantly expanding warm market for new Coaches.

“The most fundamental and important thing about our business is customer success,” Daikeler emphasizes. “Selling products is one thing, but for long-term business success and ongoing growth, customers have to get results.”

Clients take a multipronged approach to achieve their best body ever and to compete for awards. In addition to joining a challenge group, they choose from Beachbody’s catalog of fitness DVDs or classes at gyms across the country, designed to provide an appropriate solution for everyone, from the beginner to the competitive athlete. The DVDs feature fitness celebrities such as Tony Horton, Shaun T, Chalene Johnson and Leandro Carvalho, who lead video “classes” with their unique, results-producing workouts. The classes in gyms are run by Beachbody certified trainers, many of whom are also Team Beachbody Coaches.

But winning the war on weight isn’t about exercise alone. Nutrition plays a vital role in weight loss, ongoing fitness and in recurring monthly Coach commissions. Team Beachbody’s nutrition powerhouse is Shakeology, a low-calorie, high-nutrition meal replacement shake that is available exclusively through Team Beachbody Coaches, which helps boost Coach retention and commissions. Repeat Shakeology sales are at the heart of a Coach’s commission check. The strategy works. Shakeology is the company’s fastest-selling brand, with revenues that have grown from $6 million in 2009 to almost $200 million last year—all by word-of-mouth. Team Beachbody supplements those sales with its entry into the cleanse marketplace, Beachbody Ultimate Reset. Derm Exclusive™, Beachbody’s TV-promoted anti-aging skincare products, complements the growing product line as well.


The pipeline of new products, videos, challenges and online support, as well as the Coaches’ dedication to the company’s mission to end the trend toward obesity, combines to create a high level of Coach retention.


The pipeline of new products, videos, challenges and online support, as well as the Coaches’ dedication to the company’s mission to end the trend toward obesity, combines to create a high level of Coach retention. Daikeler believes that the company’s strong brand plays a big role in retention, as well, and he says that Beachbody’s ongoing program of infomercials supports the success of its Coaches.

“I consider Beachbody and Team Beachbody to be one company, and the job of the advertising machine that falls under the Beachbody umbrella is to generate more awareness and more new customers that we can assign to our Coaches,” he says. “In network marketing the hardest thing for a new entrepreneur is to expand their prospect list once they’ve run through immediate friends and family. Through advertising and lead generation, we can expand their prospect list for them. It’s one of the things most exciting about our brands. A Coach can walk into Starbucks wearing a P90X T-shirt, and people start up conversations with them. I call it ‘wear and share.’ It’s been one of the most amazing aspects of this business for people who don’t like the idea of selling.”

Sometimes that conversation begins with the fact that the stranger already owns a P90X program—or other Beachbody fitness program—but has faced challenges.

“Every person who buys our program through TV will encounter the same challenge: ‘How will I get my nutrition under control now that I’m getting my exercise under control?’ The answer is Shakeology,” Daikeler says. “Even if that person in Starbucks is already doing the exercise program, let me help nutrition with Shakeology. Every time someone starts a conversation about one of the fitness programs because you’re wearing the logo, it’s an opportunity to help them solve the diet problem.”

All that opportunity is fueled by infomercials that sell fitness video programs directly to consumers, and Daikeler strongly believes that the channels are more synergistic than competitive. Even the Beachbody website cross-promotes Team Beachbody.

Motivated by Mission

The whole package helps attract and retain Team Beachbody Coaches, but the overriding key is the company’s mission to end the trend toward obesity.


“If people come through the door with the right intent [achieving a health, fitness and life transformation], they’ll be around for a long time because the products work.”
—Carl Daikeler


“It’s one of the reasons we experience less turnover in our network,” Daikeler says. “People aren’t first attracted to the business because of any get-rich-quick potential. We don’t really preach the financial opportunity as much as we promote the health, fitness and life transformation opportunity. If people come through the door with the right intent—achieving that mission—they’ll be around for a long time because the products work. It’s also why we attract people who were never interested in network marketing before. Getting themselves healthy, fit, and then doing it for their family and friends is a big problem they want to solve. The fact that they can generate income is an outrageous benefit that often surprises people who really succeed in generating substantial interest.”

Daikeler describes a Team Beachbody Coach’s job as encompassing three vital behaviors. First, the expectation is for them to be a product of the product—work out and drink Shakeology to become a walking billboard for their own Coaching businesses. Second is to be visible and vocal about being involved with a fitness program, and to invite people to their challenge groups. Finally, they are expected to stay involved with personal development. Team Beachbody invests in Coach development by making a library of resources available in each Coach’s online back office.

All that investment—in Coaches, in advertising, in challenge rewards, even in philanthropy—is creating steady growth. The company plans additional technology investments to make its programs more accessible, as well as recognition and TV advertising that celebrate its Coaches’ achievements.

There’s a lot to celebrate. Team Beachbody has achieved strong, steady growth year over year among Coaches and revenues. Its mission to transform America from a nation where two-thirds are overweight or obese creates a substantial opportunity for Coaches who are committed to being part of the solution.

“Through our core mission and core values as a company, from the top down, we promote what our priorities are if you want to be aligned with Beachbody,” Daikeler summarizes. “The message coming from me and Beachbody is that we want to have a very positive impact on people around us and on society at large. It’s the basis for creating products, making changes to existing products, and for how we recognize the leaders in our business. In any business, it’s important to have consistent messaging on the things that are important. In our business, it’s about helping people fulfill their goals and transform their lives.”

Picky Practices Produce Premier Product

Carl DaikelerCarl Daikeler

One evening, when admitted veggie-hater Carl Daikeler, also Team Beachbody’s Co-Founder, Chairman and CEO, was having dinner, his nutrition-expert wife Isabelle told him: “You eat like a second grader.”

Daikeler owned his poor eating habits. But the self-described pizza-and-burger guy just doesn’t like vegetables. So he challenged his wife.

“You’re the nutrition and formulation expert,” he recalls saying. “Why don’t you create something that will give me the nutrition I need?”

At first Isabelle refused. She had gone through that process for other companies, developing highly nutritious meal replacements packed with superfood ingredients. But then the accountants got involved, insisting that the cost was too high and the margin too low. But she was now married to a company’s top decision-maker, and he assured her that she should go for it. He encouraged her, promising that he wouldn’t let cost undermine the objective of delivering on the promise of creating “the healthiest meal of the day” for Carl himself.

Isabelle built a team that included Darin Olien, who BusinessWeek called “Superfood Man,” to develop a formula for a shake that includes 70 of the world’s most nutrition-dense foods. The shake, now available only through Team Beachbody Coaches, is called Shakeology. At first glance, it seems a little pricy at $120 for a month’s supply. But Daikeler says it’s worth every penny—especially considering the host of superfoods and healthy ingredients in every serving.

“I have hardly missed a day with that shake in three and a half years,” he says. “The few times I have missed, I feel the difference. That’s saying a lot for a guy who has never eaten cauliflower.”

Apparently, a lot of people agree with him. The shake generated almost $200 million in revenue in 2012.

Shakeology


Filed Under: Feature Articles

Direct Sales Professionals: The DSA Has Your Back

March 1, 2013 by DSN Staff Leave a Comment


Click here to order the Direct Selling News issue in which this article appeared.


DSA


Concerned about how California Representative Darrell Issa’s proposed legislation impacting disclosure requirements is related to documentation of independent contractors? Interested in staying on top of recent court cases and legislation that impact your success in the direct selling industry? Wondering whether your state legislature is considering a law that could affect your business? Need to know the legal definitions of direct selling terms? Curious about industry trends and research? The Direct Selling Association (DSA) has you covered.


The DSA’s mission: “To protect, serve and promote the effectiveness of member companies and the independent business people they represent. To ensure that the marketing by member companies of products and/or the direct sales opportunity is conducted with the highest level of business ethics and service to consumers.” Many company executives may not realize the wealth of information and resources made available by the DSA.


Joseph MarianoJoseph Mariano

Their goal is simple and simply stated. “The whole point of the organization is to demonstrate and deliver value to our members,” says Joseph Mariano, President of the DSA. If he and his colleagues had one big wish it would be that direct selling company executives were more aware of the wide range of benefits and services they have at their disposal. “We have the benefit of having a number of people who have worked many, many years here and have really devoted their lives and their careers to direct selling.”


“The whole point of the organization is to demonstrate and deliver value to our members.”

—Joseph Mariano, President


Importantly, Mariano points out, the DSA is not a company—it’s a trade association, which is not-for-profit and is engaged in representing the entire industry, providing significant benefit to its members and the direct selling industry at large. Mariano believes that many members and potential members may not be fully aware of the value DSA provides.

He credits the strong and long-term staff members of the organization for providing the exceptional value that the DSA has been able to offer over the years. And it has been many years that the DSA has actively represented the interests of sales professionals—over a century in fact. The organization was formed in 1910 and was originally called the Agents Credit Association. Its first 10 members included the California Perfume Co., which is now Avon Products Inc. After growing in membership and focus—and following a few name changes—the group now known as the Direct Selling Association was named in 1968 and moved to Washington D.C., where it remains today.

Big Benefits

Membership in the DSA provides a wide variety of benefits for direct selling executives, ranging from research services to education and professional development programs to peer networking councils to salesforce support. Some benefits are available to the general public, such as DSA’s informational website, www.directselling411.com, which provides factual information and addresses common myths about direct selling.


“We use research primarily, although not exclusively, to support our industry advocacy efforts, with the participation of our member companies.”
—Joseph Mariano


Mariano points out that membership in the DSA has significant benefits, especially in the areas of research and data collection. He says, “We use research primarily, although not exclusively, to support our industry advocacy efforts, with the participation of our member companies. The data in and of itself can be an extraordinarily valuable tool for larger companies, but certainly for the smaller companies trying to figure out how they compare to the rest of the direct selling marketplace.” The data can provide insights for direct selling professionals into:

  • Where they should be focusing their resources for growth
  • What other companies are doing and how they’re succeeding or not succeeding
  • Whether their downturn or their upswing is a result of their own skill or is a factor, as it typically is, of trends that are affecting the entire industry

In addition to this targeted research, the DSA’s website, dsa.org, holds a vast storehouse of information that members can access to serve their needs, including such items as guidance on taxes for independent contractors and other IRS issues, information on the differences between legitimate direct selling companies and illegal pyramid schemes, as well as guidelines for offering prizes and gifts to both salespeople and end consumers.


Rep. Pete Sessions (R-Texas) is the latest recipient of DSA’s Champion of Free Enterprise Award. The award was presented in September 2012 by DSA President Joseph Mariano (left) and the current Chairman of the DSA, Brent Chapman (right), Herbalife’s General Counsel.Rep. Pete Sessions (R-Texas) is the latest recipient of DSA’s Champion of Free Enterprise Award. The award was presented in September 2012 by DSA President Joseph Mariano (left) and the current Chairman of the DSA, Brent Chapman (right), Herbalife’s General Counsel. DSA President Joseph Mariano (right) speaks with Beachbody CEO Carl Daikeler at DSA’s largest educational and professional development event, the DSA Annual Meeting in June 2012. DSA President Joseph Mariano (right) speaks with Beachbody CEO Carl Daikeler at DSA’s largest educational and professional development event, the DSA Annual Meeting in June 2012.

Government, Legal and Regulatory

Government relations is another significant focus of the organization, notes Mariano, and something that he feels members are not as fully aware of as they could be. While he recognizes and understands the tendency of many companies, especially smaller ones, to be not particularly interested in politics or government, he believes that the companies that don’t participate “are missing a great opportunity to develop relationships and a rapport with their own officials.” Those relationships, he says, “can ultimately really rebound to the benefit of that company tremendously in the local community.” Mariano encourages companies to reach out to the DSA for assistance in helping them forge these relationships.

In the last year the DSA has provided resources to voters and the general public that publicize the voting histories of politicians at national and state levels, and identify those “champions of direct selling” who support legislation and are regulation friendly to direct sellers. On the website www.legislativerecognition.dsa.org, DSA writes, “Promoting legislation is not a simple task, and often requires a great deal of time, effort and dedication to ultimately craft good policy. The DSA Government Relations staff and executives from member companies reach out to legislators and elected officials from both political parties. These individuals then engage and educate their fellow lawmakers on the benefits of direct selling, and the critical nature of laws that encourage entrepreneurship and economic growth.”

Visitors can click on an interactive map of the United States to see short profiles of the champion and what legislation or efforts they have supported.


Truly, the impact of DSA’s lobbying and legislative activities is chief among the benefits for the entire industry.


Truly, the impact of DSA’s lobbying and legislative activities is chief among the benefits for the entire industry. There are a multitude of governmental, legal and regulatory issues that impact those in the direct selling industry, from independent contractor tax issues to the regulation of door-to-door sales to a significant number of bills introduced in Congress. In fact, the DSA is currently monitoring dozens of issues and proposed legislation across the country. DSA keeps an updated listing of these issues; but even more important, the DSA’s Political Action Committee (DSAPAC) lobbies actively on members’ behalf to influence the outcome of these issues.

The DSA takes a position on each and every item—they could be Neutral, meaning there appears to be no impact on the industry; they could Support the item, or they could Oppose/Amend the item. When an item is opposed or needs to be amended, the staff works with lawmakers and others to help them understand the impact, sometimes unintended, of the proposed item.

Adolfo FrancoAdolfo Franco

“A great deal of our activities has to do with educational issues, market access and a continually changing marketplace,” says Adolfo Franco, Vice President, Global Affairs, for DSA.

A lot of the challenges of regulatory work will always be ongoing, he says. Despite what may be good intentions at the federal or state level, a lot of regulatory activity has negative consequences for direct sellers. “We need to point those things out, correct them and promote the industry to show how we’re making a huge impact on the American economy.”

Franco also points out that some legislative or regulatory efforts may be honest attempts by lawmakers to accomplish other agendas, but will have a detrimental effect on direct sellers. “Then it’s incumbent upon us,” he says, “to step to the plate and take the leadership as the trade association speaking on behalf of our nearly 200 member companies and getting them behind us.”

It’s truly a never-ending process. Bills that would negatively impact the industry are constantly being introduced at both the national and state levels, and the DSA monitors each and every one of them for potentially adverse effects. There is a bill, for example, currently in the Massachusetts House Committee on Ways and Means (MA H 4118) that would provide municipalities with authority to require an annual licensing fee of $50 from every “residential commercial seller.” The DSA opposes this bill as it is written, as it would add undue burdens on all direct sellers.


“Appropriately defining independent contractor status is paramount.”
—Adolfo Franco, Vice President, Global Affairs


Franco also says that the association is constantly facing challenges related to the definition of independent contractors, which has a significant impact on the industry. “Appropriately defining independent contractor status is paramount.”

Franco points out that there are some who believe independent contractors should be treated as employees. He believes that while this would not destroy the model, it would certainly impact it in areas ranging from withholding to unemployment compensation to benefits. The staff at DSA evaluates all legislation that touches on these issues and actively works through lobbying efforts, personal relationships and education to protect the independent contractor status.

The DSA has its eyes and ears attuned to any legislation that could have negative effects on the industry. In another example, WA HB 1440, a bill sponsored by Representative John McCoy (D-Wash.), has been introduced that would create a presumption that an employer-employee relationship exists when a person performs services for remuneration. The DSA has opposed this bill and has actively worked to raise awareness and support against it, because it could require that all direct selling companies treat independent contractors as employees until they prove to the Washington Department of Labor and Industries otherwise. Until that occurs this bill could require the companies to complete paperwork and withhold taxes and even collect worker’s comp and unemployment monies from their salespeople. Clearly this would impede or even cripple companies.

In contrast, the DSA supports House Assembly bill US H 6653—the Independent Contractor Tax Fairness and Simplification Act of 2012, which seeks to create a new safe harbor for companies using independent contractors and was sent to the House Ways & Means Committee in December 2012.

These are the kinds of issues that all direct sales professionals need to be aware of, but few if any have the time, resources or clout to successfully monitor—let alone influence—the outcomes of such actions. Fortunately, for DSA members and the entire industry, DSA does.

In addition to remaining up to date and working to influence policy and regulations, the association has a major focus on education—of members and markets—and most notably a focus on molding industry perceptions.

Molding Industry Perceptions

When an industry is represented by over 50 million independent contractors worldwide, and each has a personal touch incorporated into their selling methods, issues can develop that uniform brands such as General Motors or Coca-Cola don’t face. The fact that individuals from all walks of life can build independent businesses is one of direct selling’s greatest strengths. It can also create challenges with misinformation and misperceptions. The DSA plays a key role in the process of shaping industry perceptions; in fact, it is a major area of focus.

“Over the last five years, and particularly over the last two or three, I think there is an unprecedented understanding on the part of our members and certainly among company leaders that the industry as a whole has to get out there and aggressively address the perception of the industry,” says Mariano. “We’ve devoted more resources as an association to that than ever before in so many ways.”

Amy RobinsonAmy Robinson

Amy Robinson has a significant impact here in her role as Senior Vice President and Chief Marketing Officer for the DSA. She makes an important distinction between the initiatives and actions that members take to promote their companies and what the DSA does to promote the industry. While member companies all have their own unique products, programs and selling mechanisms, there are certain key issues that unite them. She says, “What we try to do as an association is to identify those things that unite all direct sellers on common ground. We focus on these things to help the public understand what direct selling is fundamentally all about. This allows the companies and their independent contractors to focus on their specific company and products, without having to explain the entire industry.”


“What we try to do as an association is to identify those things that unite all direct sellers on common ground.”
—Amy Robinson, Senior Vice President and Chief Marketing Officer


That difference in focus is not always clearly understood, acknowledges Mariano. But, as he, Franco and Robinson stress, as a trade association the DSA is focused on industry issues, not individual company issues. It doesn’t lobby on the behalf of individual organizations, but on behalf of the direct selling industry as a whole. However, through those efforts, individual companies ultimately benefit.

From an individual company standpoint, says Robinson, the goal is to help them focus on what they know best—their own products—rather than needing to be industry spokespeople or supporters.

Mariano adds, “We provide a fulcrum, a focus if you will, for company executives to come together, share information and make decisions.” Indeed, events over the last year have highlighted the value of the DSA’s work even more. From attacks in magazine articles to short sellers impacting stock prices by spreading misinformation, those opposed to the industry are seeking ways to be heard. The DSA’s efforts to strengthen public understanding of the industry and its many benefits have never been more necessary than now. “I think it’s clear that there are misunderstandings about the channel,” he says. “That hurts everybody and is a disadvantage to us in the marketplace.”

Franco says, “There is a difference between a company being under attack and the model being under attack. The role the association can play is by speaking as the trade association, as the entity charged with explaining not a company’s particular challenge, be it regulatory or otherwise, but exactly what direct selling is and why it’s legitimate.” That role, he says, is uniquely DSA’s as a trade association.

It’s an important role because laying the foundation for the industry as a whole ultimately benefits all. Mariano adds, “No matter how good your individual company brand may be and how much progress you’ve made in promoting your own company, if there is a question about the underlying business method then the industry really has to answer that cohesively and uniformly.” And that is what DSA is continually striving to do.

Global Impact


Over 58 countries have established a direct selling trade association within their borders.


Though this article has focused on the efforts of the U.S. DSA, trade associations for direct selling are established all over the world. There are actually two groups that represent the various DSAs: the World Federation of Direct Selling Associations, and Seldia, the European Direct Selling Association. Over 58 countries have established a direct selling trade association within their borders to accomplish the same work that has been described here.

The staff at these associations, along with the member company executives who carry out much of the work and effort with them, take seriously their responsibility to protect and defend an entrepreneurial opportunity and way of life that we call direct selling.


The Direct Selling Education Foundation (DSEF)

DSEFThe DSA would be remiss, says DSA President Joseph Mariano, if it did not note the significant contributions that have been made by the Direct Selling Education Foundation, which was created by DSA 40 years ago as a charitable, not-for-profit arm. DSEF engages the academic community, the consumer protection community and the entrepreneurial community about direct selling, but also about other issues to build credibility with those audiences so they have a better understanding of direct selling.

Charlie OrrCharlie Orr

DSEF’s board of directors comprises representatives from institutes of higher learning and consumer advocacy organizations, as well as corporate leaders in the direct selling industry. Executive Director Charlie Orr oversees the daily operations of the DSEF, and communicates regularly with its board. DSEF’s focus is on helping its supporters, and DSA members, by building relationships with key collaborators, including the Better Business Bureau, the Federal Trade Commission and the National Association of Community Colleges. These relationships help to combat pervasive stereotypes that DSEF and DSA continue to work to overcome.

The different focuses of the two organizations can be summed up like this: DSA is focused on promoting and protecting the industry. DSEF is focused on engaging and educating outside stakeholders, the public—and direct sellers.


Filed Under: Feature Articles

March 2013

March 1, 2013 by DSN Staff Leave a Comment

Avon Products Inc.

David Powell

David Powell

Avon Products Inc. announced the appointment of David Powell as Senior Vice President of Business Transformation and Global Supply Chain. Powell will report to Sheri McCoy, Avon’s CEO, and will join the company’s Executive Committee.

Powell will lead Avon’s Global Supply Chain organization, including sourcing, manufacturing, logistics and delivery. In addition, he will be responsible for the company’s business transformation efforts, including Process Excellence and the Global Project Management Office for cost savings, as well as the company’s Service Model Transformation project, which aims to simplify how Avon Representatives do business with the company.

Avon, the company for women, is a leading global beauty company, with over $11 billion in annual revenue. Avon markets to women in more than 100 countries through over 6 million active independent Avon sales representatives.


MonaVie

Mauricio BelloraMauricio Bellora

MonaVie, a health and wellness company, announced the appointment of Mauricio Bellora as President and CEO.

Bellora brings experience in business development and leadership to MonaVie. Previously, he was CEO and President of DaumDeuman, a consulting firm that specializes in partnering with direct selling companies to create and implement effective strategies for growth and sustainability. He has an approach to direct selling that includes focus on Web 2.0 and social responsibility.

Bellora gained the knowledge he needed to work as a consultant through his combined 27 years of executive management experience that included time at two of the largest direct selling companies in the world, leading the global product and market expansion efforts for those companies.


Vivint Inc.

Alex DunnAlex Dunn
Matthew EyringMatthew Eyring
Dan Rapp Dan Rapp

Vivint Inc., the largest home automation services company in North America, announced the promotion of Alex Dunn as President. In this new role, Dunn will oversee the strategic direction of the company and manage Vivint’s rapid revenue growth and future expansion plans. He will also direct ongoing initiatives, innovations and performance benchmarks to help Vivint achieve its short- and long-term goals.

Dunn was previously Chief Operating Officer at Vivint, where he oversaw the company’s daily operations, financial activities and business processes.

Also Matthew Eyring has been appointed as the company’s Chief Strategy and Innovation Officer. In this newly created position, Eyring will lead the organization’s directional growth initiatives in home automation, residential security, and solar markets as well as provide guidance and direction on new initiatives.

Vivint Solar, a division of Vivint Inc., has also named Dan Rapp as its new Chief Technology Officer. As CTO, Rapp will oversee Vivint Solar’s technology strategy and software development, including the creation and implementation of advanced data reporting and an enhanced customer interface.

Vivint Solar designs, installs and maintains cost-effective solar energy systems. Vivint Inc. is a provider of home technology services in North America and has a technology-based platform that integrates a wide range of wireless features and components that deliver simple, affordable home security, energy management, home automation and solar solutions.


4Life Research

Preston RichardsPreston Richards Daniel TaylorDaniel Taylor
Nao LauNao Lau

4Life Research has announced three corporate promotions in its International Department.

Preston Richards has been promoted to Vice President, International, and will assume responsibility for 4Life markets in Japan, South Korea and Europe. His responsibilities will include working with country general managers to improve operations, growing sales and deploying effective marketing strategies to support 4Life distributors. Richards joined 4Life in February 2010 as Director of International over 4Life’s Southeast Asia markets. He’s worked in the industry since 1992.

Additionally, Daniel Taylor and Nao Lau have been promoted to senior directors of international. Taylor’s responsibilities include Mexico, 4Life’s Central America countries and the Caribbean region. Lau’s responsibilities include Chile, Bolivia, Venezuela, Peru and 4Life’s Emerging Market’s in South America. In each of their new roles, Taylor and Lau will work with in-country employees to execute field communications and marketing initiatives, as well as with country general managers and vice presidents in the areas of operations and logistics.

4Life was founded in 1998 and has opened offices in 22 countries around the world to serve hundreds of thousands of distributors and customers.


Jusuru International Inc.

June DhillonJune Dhillon

Jusuru International Inc. announced the appointment of June Dhillon as Vice President of Marketing. Reporting to Jusuru President, Asma Ishaq, Dhillon brings experience in both the nutritional world and in the direct sales industry.

Dhillon’s career of over 25 years, with 17 years in direct sales, includes having held positions as Executive Director of Marketing, Corporate Marketing Consultant and Manager of New Business and New Product Development for global corporations. Dhillon has managed all aspects of the marketing function while supporting international growth into over 30 countries with over $3 billion in sales.

As Jusuru Vice President of Marketing, Dhillon will develop strategic marketing and communication tools, including videos, website enhancements, and sales and training support materials.

Jusuru is a direct seller of nutritional and skincare products that target joint and skin health for humans, pets and horses. The company’s products are powered by its BioCell Collagen®, a multi-patented joint and skin health nutraceutical ingredient, which Jusuru markets exclusively through independent representatives.


Regal Ware Inc.

Rick HeathRick Heath

Regal Ware Inc. has announced the appointment of Richard (Rick) Heath to the position of Executive Vice President, Regal Ware Worldwide. Heath will be responsible for global strategic business development, and sales and marketing activities for all Regal Ware brands, including Saladmaster®, Kitchen Fair® and Lifetime®. He will also oversee operations and human resources for the corporation.

Heath brings more than 20 years of experience in the direct selling industry, with emphasis on global solutions for salesforce expansion and brand growth in both party plan and multi-level marketing selling models.

Regal Ware is a manufacturer of high-quality stainless steel cookware and cast aluminum cookware in the United States with a legacy of quality manufacturing dating back to 1911. Regal Ware products are available direct-to-the-consumer through independent distributors worldwide.


Origami Owl

Darleen SantoreDarleen Santore

Origami Owl, a social selling jewelry company, is expanding its leadership with the appointment of Darleen Santore as its first-ever Chief Performance Officer.

As CPO, Santore will bring focus to achieving maximum individual and organizational performance; providing guidance on leadership and management development, goal setting and achievement, plan execution and accountability; and overcoming obstacles to success. Santore will also monitor trends and issues facing the direct sales industry, as well as partner with Origami Owl’s Founder, Isabella Weems, to create an educational program for the organization’s designers or sales consultants.

Santore most recently served as a consultant to individuals seeking both personal and professional performance and leadership counsel. In 2008, she established the D.E.A.L. Coaching & Consulting Group, where she has provided counsel to individuals and organizations.

Origami Owl Custom Jewelry was founded in 2010 and today has over 7,000 designers in all 50 states.


SeneGence International

Leslie Boyd-BradleyLeslie Boyd-Bradley

SeneGence International®, a direct sales company specializing in long-lasting cosmetics and anti-aging skincare, announced the appointment of Leslie Boyd-Bradley as the new Director of Distributor Development. In her new position, Boyd-Bradley will help motivate the field to sponsor and train new distributors, help promote new leaders and drive the company’s overall growth.

Boyd-Bradley was born into direct sales. With almost 40 years of experience, she watched and worked with her parents to build a business and career as a distributor. She moved into an executive position and continued her executive career with several party plan companies.

Founded in 1999, SeneGence is a privately owned company that sells skincare, anti-aging, cosmetics and body-care products, including its patented long-lasting lip color, LipSense®. SeneGence is currently doing business in 11 countries.

Filed Under: Daily News

Letter from John Fleming, March 2013

March 1, 2013 by John Fleming Leave a Comment

John Fleming

As we continue to receive submissions for the 2012 DSN Global 100 listing, it is most exciting to observe the growth that has occurred, especially when we see record growth in many companies. Our 2012 ranking will be posted online after the DSN Global 100 Banquet on the evening of April 3. Our keynote speaker for the evening is Mr. Alessandro Carlucci, the Chairman of the World Federation of Direct Selling Associations and CEO and President of Natura Cosmetics in Brazil. It will be an evening of celebration and recognition of those companies that have led the way in providing the most diverse forms of free enterprise opportunity, more than any other channel of distribution in the world!

Thus far, of the publicly held companies that have released, we see increases in revenue over the prior year in over 80 percent as we prepare to go to press. Amway, a privately held company, has always been very transparent about its results and several media outlets took note of their announcement last week that sales for 2012 topped $11.3 billion, up from the $10.9 billion reported for 2011. Direct Selling News was able to schedule an interview with Doug DeVos, President of Amway. Amway has posted consistent growth over the past few years so we were very interested in what may be triggering this growth in a world that continues to address economic challenges.

Sales increased in all top 10 Amway markets, which were named as China, India, Japan, Korea, Malaysia, Russia, Taiwan, Thailand, Ukraine and the United States. In response to our first question, Doug said, “The beginning of what is happening today really started with the implementation of a Growth Through Innovation strategy implemented over six years ago. The strategy started with a lot of questions such as: Are we innovating? Are our products what they need to be for our Independent Business Owners? Is our service what it needs to be? Are we using technology well enough? Are we using technology in a way that helps our Independent Business Owners utilize social media? We knew we had to get beyond the economic issue. Economic condition should not drive the results of our business. We had to get better.”

When we asked Doug about how large a part the founding vision plays in the role of Amway today and the Amway of the future he said: “Everything! For more than 50 years Amway has provided people with an opportunity to have a business of their own, backed by strong brands, innovative products supported by localized sales, and business skills and training. Our founding vision is the same story with innovation applied because we can always get better.”

2012 represented the first time in 20 years that sales increased in each of Amway’s top 10 markets. Doug went on to say, “Those markets are now diverse. Some are young markets, some are old markets and there is a lot of geographic diversity. Our story is the same but it is a much better story that is making a difference in the lives of people around the globe.”

Amway is also planning to make heavy investment into facilities and research. Approximately $335 million will be invested in 2013 into four facilities in the U.S., a new manufacturing facility in India and additional sites in both China and Vietnam. Some 94 percent of their business comes from three categories that have always been a consistent focus (NUTRILITE , 46 percent; Beauty, 26 percent; and Home, 22 percent).

What we will remember most from the interview with Doug DeVos was the humility inherent in what he shared, his pride in what Amway has become, and most importantly, what Amway remains yet to become. Through all of his responses, Doug often expressed his gratitude for the people of Amway (the staff and of course the millions of Independent Business Owners who actually make it happen), a servant attitude, and the enormous honor he felt in being a part of the direct selling industry.

It is apparent that the industry will be served well by the positive results that are being reported for 2012. The timing could not be better! The best way to address those who do not understand the direct selling business model and those who seek to better understand it is to simply refer to the millions of success stories created by the companies that provide the opportunities. Women and families remain the primary beneficiaries as they represent over 80 percent of the salesforce. What a powerful industry… what a powerful force for good!

Early results indicate that we will have much to talk about relative to 2012. I mentioned one story in this message because it is a big one. However, there are many more! Certainly there are differences amongst companies but there is also a huge common denominator, a belief in engaging people in a free enterprise system that serves to extend a great value proposition to both consumers of goods and services and the people who represent those goods and services.

We also bring to you in this issue, a focus on the Direct Selling Association and its value in support of the entire industry.
Until next month… enjoy the issue!

John Fleming
Publisher and Editor in Chief

 

Filed Under: From the Publisher

Financial News, March 2013

March 1, 2013 by DSN Staff Leave a Comment

Herbalife Ltd.

Herbalife Ltd. (HLF—NYSE), a global nutrition company, provided an update on anticipated results for the fiscal year ended Dec. 31, 2012. The company reported preliminary, unaudited results.

Net sales for full-year and fourth quarter 2012 are expected to increase approximately 17.9 percent and 19.9 percent, compared to the prior year periods, respectively.

Fourth quarter EPS is expected to be in a range of $1.02 to $1.05, compared to prior year reported EPS of 86 cents. Fully diluted EPS for the full-year 2012 is expected to be in a range of $4.02 to $4.05, compared to prior year reported EPS of $3.30.

Herbalife also announced that the company expected to report full-year, audited results on Feb. 19, 2013, and expected to begin repurchasing shares of Herbalife stock, pursuant to its existing share repurchase authorization.

Herbalife Ltd. 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.


USANA Health Sciences Inc.

USANA Health Sciences Inc. (USNA—NYSE) announced record financial results for its fiscal fourth quarter and full-year ended Dec. 29, 2012.

Fourth Quarter 2012 Results

Net sales for the fourth quarter of 2012 increased by 15.5 percent to $168.5 million, compared with $145.9 million in the prior-year period.

The growth in net sales was driven by increases in both the company’s Asia Pacific and North America/Europe regions. Favorable changes in currency exchange rates contributed approximately $3.0 million to the top line for the quarter.

Net earnings for the fourth quarter increased to $18.4 million, an improvement of 40.2 percent, compared with the prior-year period.

Earnings per share for the quarter increased by 46.0 percent to $1.27, compared with 87 cents in the fourth quarter of the prior year.

Net sales in the Asia Pacific region increased by 21.3 percent to $107.8 million, compared with $88.9 million for the fourth quarter of the prior year.

During the fourth quarter of 2012, net sales in the North America/Europe region increased by 6.4 percent to $60.7 million, compared with $57.1 million in the prior-year period.

The company ended the quarter with $71 million in cash and cash equivalents. Cash generated from operations totaled $29.2 million for the quarter.

2012 Annual Results

For the year ended Dec. 29, 2012, net sales increased by 11.5 percent to $648.7 million, compared with $581.9 million in the prior year. Net sales growth was driven by increases in both Asia Pacific and North America/ Europe regions.

Net earnings for the year ended Dec. 29, 2012, increased by 30.9 percent to $66.4 million, or $4.45 per share, compared with $3.26 per share in the prior year. The increase in net earnings was due primarily to higher net sales, lower relative associate incentive expense, and a lower effective tax rate of 32.5 percent for the full year.

Cash generated from operations totaled $92.8 million for the year ended Dec. 29, 2012. The company repurchased 1.6 million shares in 2012 for a total investment of $68.3 million. The company ended the year debt free with a remaining share repurchase authorization of approximately $32 million.

Founded in 1992, USANA Health Sciences is a nutritional company that manufactures high-quality supplements and personal care, energy and weight-management products in their FDA-registered facility in Salt Lake City. USANA’s products are sold directly to preferred customers and associates in 18 international markets.


Tupperware Brands Corp.

Tupperware Brands Corp. (TUP—NYSE) reported sales and profit for the fourth quarter 2012 ended Dec. 29, 2012, with sales of $711 million, up 5 percent in dollars and up 6 percent in local currency.

Fourth Quarter 2012 Results

GAAP net income for the quarter was $74.5 million, or $1.34 per diluted share, compared with 2011 fourth quarter GAAP net income and diluted EPS of $86.9 million and $1.50 per share, respectively. Adjusted diluted earnings per share of $1.71 in the quarter was 21 cents, or 14 percent, better than 2011 in U.S. dollars, including a negative foreign currency impact of 3 cents. Excluding the impact of foreign exchange on the comparison, adjusted diluted earnings per share was up 24 cents, or 16 percent.

2012 Annual Results

For the year ended Dec. 29, 2012, the company reported sales of $2.6 billion, in line with 2011 in dollars and up 5 percent in local currency. For the year, the company’s GAAP net income of $193.0 million decreased 12 percent, and diluted earnings per share of $3.42, was down 4 percent versus prior year. Excluding certain adjustment items, diluted earnings per share of $4.99 improved 12 percent in dollars compared with 2011, and excluding an unfavorable 36 cent impact on the comparison from foreign exchange rates, improved 22 percent.

The company repurchased in the open market 1.57 million shares for $100 million in the fourth quarter of 2012. Since 2007, the company has repurchased 15.5 million shares for $828 million. The company’s open market repurchase authorization was increased from $1.2 billion to $2.0 billion, and extended two years until Feb. 1, 2017. The company expects to repurchase $100 million worth of shares in the first quarter of 2013 and has included $400 million of repurchases in its full year 2013 outlook.

The company’s board of directors declared the company’s regular quarterly dividend. The dividend declared was 62 cents per share, up 72 percent from the previous quarterly dividend of 36 cents per share. It is payable on April 5, 2013, to shareholders of record as of March 20, 2013. The company also increased its target payout ratio from approximately one-third to 50 percent of trailing diluted earnings per share, excluding items, and continues to expect that its board will consider increasing the quarterly dividend with its declaration in the first quarter of each year.

Tupperware Brands Corp. is a portfolio of global direct selling companies, selling innovative, premium products across multiple brands and categories through an independent salesforce of 2.8 million.


Nu Skin Enterprises Inc.

Nu Skin Enterprises Inc. (NUS—NYSE) announced record fourth quarter results with revenue of $588.2 million, a 19 percent improvement over the prior-year period. Revenue was not materially impacted by foreign currency fluctuations. Earnings per share for the quarter were 97 cents, a 27 percent year-over-year improvement.

Fourth Quarter 2012 Results

Fourth quarter revenue in North Asia was $250.2 million, compared to $204.3 million for the same period in 2011. In Greater China, fourth quarter revenue increased 28 percent to $141.7 million, compared to $110.6 million in the prior-year period. Revenue in South Asia/Pacific was $63.5 million, a 3 percent decline compared to the prior year. Revenue in the Americas improved 4 percent to $80.1 million, compared to $76.9 million in the prior-year period. Sales in the U.S. increased 18 percent when excluding $12.5 million of convention sales to non-U.S. distributors in the fourth quarter of 2011. Revenue in Europe was $52.8 million, a 38 percent improvement over the prior-year period.

The company’s operating margin was 15.1 percent for the quarter, compared to 15.3 percent in the prior year. Operating margin for the year was 15.7 percent, compared to 13.4 percent in 2011, or 15.3 percent when excluding charges related to a Japan customs case in the prior year. Gross margin during the quarter was 83.8 percent, consistent with the prior year.

The company’s cash and short-term investment position at the end of the quarter was $333.4 million. Dividend payments during the quarter were $11.7 million, and the company repurchased $21.9 million of its outstanding shares. During 2012 the company repurchased approximately $200 million of its outstanding shares.

2012 Annual Results

The company reported full year 2012 revenue of $2.17 billion, a 24 percent year-over-year improvement. Annual revenue was negatively impacted 1 percent by foreign currency fluctuations. Earnings per share for the year were $3.52, a 48 percent increase over 2011, or 31 percent when excluding charges related to a Japan customs case in the prior year.

Nu Skin Enterprises Inc. has a comprehensive anti-aging product portfolio and operates in 53 markets worldwide with more than 900,000 active distributors and preferred customers.


Primerica Inc.

Primerica Inc. (PRI—NYSE) announced financial results for the fourth quarter and full year ended Dec. 31, 2012. Total revenues were $304.5 million in the fourth quarter of 2012 and net income was $40.3 million, or 67 cents per diluted share. For the full year 2012, total revenues were $1.19 billion and net income was $173.8 million or $2.71 net income per diluted share.

Fourth Quarter 2012 Results

Operating revenues increased by 12 percent to $303.4 million in the fourth quarter of 2012, compared with $271.6 million in the fourth quarter of 2011. Net operating income per diluted share grew 36 percent to 69 cents from 51 cents in the prior year period, with net operating income growing 14 percent to $41.6 million in the fourth quarter of 2012 from $36.7 million in the fourth quarter of 2011.

The company repurchased $98.2 million of common stock in the fourth quarter of 2012. For the full year, 9.5 million shares of common stock were repurchased for $257.3 million, enabling the company to retire 15 percent of the common stock outstanding as of Dec. 31, 2011.

As of Dec. 31, 2012, investments and cash totaled $2.07 billion, compared with $2.18 billion as of Sept. 30, 2012.

2012 Annual Results

For the full year 2012, net operating income increased 12 percent to $174.5 million, compared with $156.0 million for 2011, which when combined with active capital management, resulted in a 32 percent year-over-year increase in diluted operating EPS to $2.72. Results reflect lower invested assets due to $257.3 million of share repurchases during the year and increased interest expense largely related to the redundant reserve financing executed in 2012.

Primerica Inc., headquartered in Duluth, Ga., is a distributor of financial products to middle-income families in North America. In addition, Primerica provides an entrepreneurial full- or part-time business opportunity for individuals seeking to earn income by distributing the company’s financial products.


Avon Products Inc.

Avon Products Inc. (AVP—NYSE) reported fourth quarter and full-year 2012 results.

Fourth Quarter 2012 Results

For the fourth quarter 2012 ended Dec. 31, 2012, total revenue of $3.0 billion decreased 1 percent, compared with fourth quarter 2011, but increased 1 percent in constant dollars.

Fourth quarter 2012 gross margin was 59.8 percent. Adjusted Non-GAAP gross margin was 59.9 percent, 130 basis points lower than the prior-year quarter, primarily due to unfavorable mix reflecting actions to flow inventory, mainly in Brazil as well as flowing more unit-driving offers in several key markets.

Operating profit was $11 million in the fourth quarter of 2012 and operating margin was 0.4 percent. Adjusted Non-GAAP operating profit was $277 million and adjusted Non-GAAP operating margin was 9.2 percent, down 20 bps from the fourth quarter of 2011.

Loss from continuing operations in the fourth quarter of 2012 was $161 million, or 37 cents per share. Adjusted Non-GAAP net income from continuing operations was $162 million, or 37 cents per share.

Latin America’s fourth quarter 2012 revenue was $1.33 billion, up 2 percent year over year or up 7 percent in constant dollars. Q4 revenue in Europe, Middle East & Africa was $905.8 million, up 1 percent, or up 2 percent in constant dollars. North America’s fourth quarter revenue was $516.2 million, down 12 percent on both a reported and constant-dollar basis, and Asia Pacific’s revenue was $246.6 million, down 3 percent year over year, or down 6 percent in constant dollars.

During the fourth quarter of 2012, the following items had a significant impact on the financial results: As a result of the weaker-than-expected performance in the fourth quarter of 2012 in the Silpada business and the corresponding lowering of long-term growth estimates for this business, annual impairment assessment of the fair value of goodwill and intangible assets related to the business resulted in a Q4 non-cash pre-tax impairment charge, within operating profit, of $209 million, or 31 cents per share.

In the fourth quarter of 2012, Avon also recorded costs to implement (CTI) restructuring charges, within operating profit, of $58 million pre-tax, or 9 cents per share, most of which relate to the previously announced cost savings initiative.

2012 Annual Results

Total revenue of $10.7 billion decreased 5 percent, or was flat in constant dollars. Operating profit of $315 million decreased 63 percent and operating margin was 2.9 percent, down 470 basis points. Adjusted Non-GAAP operating profit was $693 million, down 40 percent, and adjusted Non-GAAP operating margin was 6.5 percent, down 380 basis points from a year ago.

Full-year loss from continuing operations was $38 million, or 10 cents per share, compared with income of $526 million, or $1.20 per share, last year. Adjusted Non-GAAP income from continuing operations was $373 million, or 85 cents per share, compared with $719 million, or $1.64 per share.

Cash flow from operations was $556 million for the 12 months ended Dec. 31, 2012, $100 million lower than in the same period in 2011, due to lower net income and higher payments associated with CTI restructuring initiatives, which were partially offset by improvements in working capital, lower contributions to the U.S. pension plan, and a payment in 2011 associated with a long-term incentive compensation plan of $36 million.

Avon’s net debt (total debt less cash) as of Dec. 31, 2012, was $2.0 billion, down $77 million from Dec. 31, 2011.

Avon, the company for women, is a leading global beauty company, with nearly $11 billion in annual revenue. Avon is sold through more than 6 million active independent Avon sales representatives and is available in more than 100 countries.


LifeVantage Corp.

LifeVantage Corp. (LFVN—NASDAQ), a company dedicated to helping people achieve healthy living through a combination of a business opportunity and science supported products, including its patented dietary supplement Protandim®, the Nrf2 Synergizer®, reported financial results for the fiscal 2013 second quarter ended Dec. 31, 2012.

For the fiscal quarter ended Dec. 31, 2012, the company reported record net revenue of $53.4 million, compared to $25.3 million for the same period in fiscal 2012, an increase of 111 percent. On a sequential quarter basis, net revenue increased from $52.9 million reported for the company’s 2013 first fiscal quarter ended Sept. 30, 2012.

Gross profit for the second fiscal quarter increased to $38.8 million, compared to $21.6 million for the same period last year, delivering a gross margin of 72.5 percent, compared to 85.4 percent in the prior-year period. Adjusted gross profit, excluding one-time product recall costs, for the quarter ended Dec. 31, 2012, was $44.6 million, delivering an adjusted gross margin of 83.6 percent, compared to $21.6 million and 85.4 percent for the prior-year quarter.

Operating income was $487,000 for the second fiscal quarter, compared to $4.3 million in the same period last year. Adjusted operating income, excluding one-time recall related costs, was $6.4 million for the second fiscal quarter, compared to $4.3 million in the same period last year. Adjusted operating income margin was 12.0 percent in the second fiscal quarter, compared to 16.9 percent in the same period last year and 13.1 percent in the first fiscal quarter of 2013. The company expects its operating income margin to improve during the second half of fiscal 2013.

Net income for the second quarter of fiscal year 2013 was $209,000, or zero cents per diluted share, which includes $5.9 million of one-time costs related to the voluntary product recall. This compares to net income in the second quarter of fiscal year 2012 of $8.8 million, or 5 cents per diluted share, which included a tax benefit of $1.3 million and a favorable change in fair value of derivative warrant liabilities of $3.1 million. Adjusted net income, excluding one-time costs, for the quarter ended Dec. 31, 2012, was $3.8 million, or 3 cents per diluted share.

The company’s cash and cash equivalents at Dec. 31, 2012, were $28.5 million, compared to $24.6 million at the end of fiscal 2012. The company generated $5.4 million of cash flow from operations in the second quarter of fiscal year 2013, compared to $4.7 million for the same period last year.

LifeVantage is a leader in Nrf2 science and sells anti-aging products to reduce oxidative stress at the cellular level. The company was founded in 2003 and is headquartered in Salt Lake City.


Immunotec Inc.

Immunotec Inc. (IMM—TORONTO-V), a Canadian based company in the wellness industry, released its year end 2012 financial results for the period ended Oct. 31, 2012.

Total revenue reached CAN$49.2 million, an increase of 15 percent as compared to the previous year. Network sales reached CAN$44.2 million, an increase of 18 percent as compared to the same period in the previous year.

Selected expenses, defined as administrative, marketing and selling, quality and development expenses amounted to CAN$11.9 million and measured favorably, as a percentage of total revenues, by improving to 24 percent, compared to 28 percent of total revenues last year.

Adjusted EBITDA improved to CAN$1.9 million or 3.8 percent of total revenues, compared to CAN$600,000 or 1.4 percent of total revenues over last year, a major improvement.

Net profit of CAN$125,000 was a significant improvement over last year (net loss of CAN$1.4 million).

The board of directors has also approved a modification to the company’s stock option plan, whereby it removed the two-month hold period, which applied to shares issued following the exercise of options under such a plan.

Immunotec is a business opportunity supported by unique scientifically proven products that improve wellness. Headquartered with manufacturing facilities near Montreal, the company also has distribution capacities to support its commercial activities in Canada and internationally to the United States, Europe, Mexico and the Caribbean.


Natural Health Trends Corp.

Natural Health Trends Corp. (NHTC—OTC.BB) provided a preliminary outlook for its fourth quarter financial results, the period ended Dec. 31, 2012. The company expects to announce final, audited results this month.

The company estimates revenue for the quarter to be $8.2 million. The company also estimates that its deferred revenue, consisting of unshipped product and unamortized enrollment fees, at Dec. 31, 2012, was roughly unchanged from Sept. 30, 2012. In the fourth quarter of 2011, revenue was $8.2 million, with deferred revenue of $967,000 at Dec. 31, 2011, and $1.5 million at Sept. 30, 2011.

For the year ended Dec. 31, 2012, estimated revenue is $37.6 million, a 20 percent increase over the comparable period in the prior year.

These results are preliminary and have not been reviewed by the company’s independent accountants.

Natural Health Trends Corp. is an international direct selling and e-commerce company marketing premium-quality personal-care products through its subsidiaries throughout Asia, North America and Europe.


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.

Filed Under: Financial

The Changing e-Commerce Landscape

March 1, 2013 by DSN Staff Leave a Comment


Click here to order the Direct Selling News issue in which this article appeared.


The stage was set in the early e-commerce days with eBay and Amazon paving the way in the digital shopping experience. More recently, we were introduced to flash sales and daily deals from companies like Living Social, Gilt Groupe, Woot and of course Groupon. Electronic commerce has now come of age. Nothing has surpassed the power of eBay or Amazon and few innovative e-commerce startups have proved to be as successful.

What we are witnessing today is a metamorphosis of e-commerce into a variation of online commerce that requires adaptability and flexibility.

What is driving the evolution of e-commerce today is how people are accessing the Internet. While the PC was wildly successful and reached hundreds of millions of people over several decades, the smartphone has developed an enormous following in only a few years. The Apple iPhone was introduced in mid-2007 and in less than five years there are more than a billion smartphone users around the globe, with projections to double by 2015. Smartphone users are inseparable from their devices, and even during the Great Recession users refused to cut back on smartphone costs. But it didn’t stop there—the tablet has since been introduced and users are spending more time online than ever before. Users browse, compare and research before they buy, and boy do they buy.


What we are witnessing today is a metamorphosis of e-commerce into a variation of online commerce that requires adaptability and flexibility.


Marc Andreessen, Founder of Netscape and a brilliant Internet entrepreneur, made a bold prediction in January: “Retail guys are going to go out of business and e-commerce will become the place everyone buys. You are not going to have a choice,” he said. “Retail chains are a fundamentally implausible economic structure. There is fundamentally a better model.”

Not everyone will agree with Andreessen’s prediction as to the absolute death of retail, but it should be obvious that software has made online commerce a reality and has disrupted traditional retail models. E-commerce is competing with brick-and-mortar retail, and in many cases, winning. In the last few years we’ve seen Netflix triumph over Blockbuster and Amazon trump Borders.

But it’s not just retail. LinkedIn is now the fastest-growing recruiting company, and Craigslist has all but killed classified ads. The changeover continues across all segments of the market, including finance, automobile sales, telecommunications and television, not to mention that manufacturing too has been given a glimpse of a changing future since the introduction of 3D printing. The common denominator to all this disruption is software. So the question should be asked: What is your company doing about this changing landscape?

Direct selling has a leg up on traditional retailing in that it has, by its nature, capitalized on the one-to-one relationship, something that has remained elusive to traditional retail. But some ground has been gained by retailers in recent years with one-to-one interaction using social tools like Twitter and Facebook.

Our industry, as a whole, is being impacted by new behaviors. While direct selling may have the advantage of one-to-one relationship selling while not being shackled like brick-and-mortar businesses, our industry is being challenged by these newly developing shopping habits. Who can refute referral and affiliate marketing? What about the impact of preferred customers and the occasional buyer who wants a great product but appreciates a little incentive for referring others?

Here are some things to look for in a well-designed e-commerce platform:

Personalization and the User Experience

Today, a user’s online experience is dramatically different than even just a couple of years ago. Social and sharing sites are compiling “big data” that captures information oftentimes hidden from the consumer. This data is beginning to offer personalization like never before, and everything from age, purchasing and browsing habits to geography and social profiles will play a part in offering a more relevant, more pleasing and beneficial shopping experience.


It’s no longer about just completing an order; savvy shoppers want self-service options that offer immediate product information and results.


It’s no longer about just completing an order; savvy shoppers want self-service options that offer immediate product information and results. Can a shopper view a short product video? Can all the ingredients and formulations be viewed online? Does it offer a user review and a rating system? These are core e-commerce features today and they appeal to consumers, offering a better online experience.

Connected Devices

PCs rule the workday. Tablets are used in the evening and smartphones are constant companions. How people visit your site is beyond your control, which means your e-commerce software needs to work on multiple connected devices. Consumers are adapting their lives to tablets, smartphones and PCs, and they are expecting that the various devices used will offer experiences, personalization, geo-specific content and relevant offers. Responsive design is critical going forward for optimizing the online experience regardless of the device.

Affiliate and Referral Marketing

Affiliate marketing relies purely on financial motivations to drive sales, while referral marketing relies on trust and personal relationships to drive sales. In direct selling we are proud of our one-to-one marketing method but affiliate marketing is a powerful channel. An e-commerce platform ought to be able to manage affiliates and referrals. Would your company’s sales culture benefit from casual buyers who get rewarded for referrals? Imagine your preferred or retail customers referring a friend and receiving an incentive that encourages future purchases. Look for a platform that builds bridges, not barriers.

Loyalty, Promotions and Incentives

Loyalty programs are not just for frequent travelers anymore. They have been wildly successful because they work. Also look for promotion and incentive capabilities. As you know, compensation plans reward behaviors but sometimes you need quick or specifically targeted results. Maybe you want to launch a new product or stimulate sales on products that are slow movers, or perhaps you have short-term objectives such as an upcoming national conference or you want to increase your Preferred Customer base. The possibilities are endless. You’ll want an e-commerce platform that is agile and allows you to easily create your own promotions and incentives without making a project out of it. You’ll get the near-term results you’re looking for without added costs, and you won’t have to modify your company’s compensation plan.

Virtual (or Alternate) Currency

Has your company considered the many possibilities of using virtual currencies? Maybe a representative recruits a new customer and maybe a customer refers a friend—should they both receive the same reward? Or what about a virtual currency that can be used for future purchases or may accrue toward marketing materials or national conference registration fees? Virtual currency can be a point-based system (e.g., airline mile programs) or cash-on-account or credit-on-account. The bottom line is that sometimes money is not the only motivator for the behaviors you seek.

Content

In a digital world the ink is never dry. Content should be dynamic, fresh and informative for the viewer and frequently updated so that it is relevant. A content management system allows the creation, management and publishing of content that is relevant to the audience, presenting specials, incentives and promotions that are time sensitive. Whether offering simple promotional messages or uploading a video announcing a new loyalty program, content management systems offer robust capabilities that facilitate complete management of digital assets.

Enrollment and Membership

Working Smart


Enrollment should be more than just collecting information—it is the first impression moment.


Just as critical to the e-commerce shopping, browsing and buying experiences is the process supporting new customer or sales representative enrollment. Enrollment should be more than just collecting information—it is the first impression moment. It should be simple and easy, guiding the user through each step, such as launching a personal marketing website, uploading contacts and initiating an online branded marketing campaign within minutes. Results have shown that by accelerating this user experience chances of retention will significantly increase for both customers and sales representatives.

In Summary

Direct sellers are well-positioned to start profiting from the latest in innovations that are transforming e-commerce and ultimately the way consumers and sales representatives behave both off and online. Direct sellers are in a unique place, offering “white glove service” and hands-on support to consumers and sales representatives, and when combined with the latest in e-commerce innovations the “user experience” becomes the best it can be. Direct sellers and their customers expect more, and the new era of e-commerce is upon us with technologies that can support the traditional direct sales business model while embracing the future.


Greg Fink Greg Fink Gregg Corella Gregg Corella Greg Fink is Vice President of Sales and Gregg Corella is Senior Sales Executive, both at Next Wave Logistics.

 

Filed Under: Working Smart

One Decision to $100 Million… and Then Some

March 1, 2013 by DSN Staff Leave a Comment


Click here to order the Direct Selling News issue in which this article appeared.


Looking back over the last 20 years, it’s extraordinary how one decision has now led to over 50,000 independent contractors earning their income from It Works! Global each and every month. Many are now working toward their personal goals of complete debt freedom. I never thought debt free would be the new sexy; I just knew it was a sound philosophy for business and for life.

Before starting our company, being a math teacher and a coach gave me an edge whenever people pitched me on moneymaking opportunities. I turned most of them down on the spot, but finally, reluctantly, I gave one man a few minutes to share the direct selling profession with me. All it took was the math and I was hooked. I knew my teaching salary and even the extra coaching money I earned would never really allow me to get ahead. Heck, my wife couldn’t even go to the grocery store and actually buy what she wanted—only what she needed. After telling this man “No” time after time, I finally said, “Yes” and signed up with my dad in network marketing.

Little did I know that this one moment—this one decision—would not only change my family’s legacy but also the family tree of tens of thousands of others around the world.

Less than two years later after saying yes to network marketing so my wife and I could make an extra $500 a month and buy whatever we wanted at the grocery store, we became financially independent through network marketing. It became very clear to me that a quote I loved was very true: “Nothing is impossible. The word itself says ‘I’m Possible.’ ”

Years after that one decision brought us into this profession, one more decision has led us to where we are today with It Works! Global. Deciding to start a company of our own was not an easy decision. Some said it wasn’t a smart decision at the time, but we knew then, and we know now, that it was the right decision.

Over the last 10 years there have been many products and companies that came and went. I credit our focus on what we do best for not only keeping us around, but also keeping us relevant for well over a decade now.


I credit our focus on what we do best for not only keeping us around, but also keeping us relevant for well over a decade now.


All those years ago we decided to stay true to ourselves, our debt-free philosophy, and our 45-minute tightening, toning and firming Crazy Wrap Thing.

Since the beginning of It Works! Global, we have seen consistent growth but never experienced true momentum—or anything resembling it—for many of the first years we were in business. Nevertheless, we stayed focused, kept refining our message, and stayed true to our people and our culture. With my math teaching background always in the back of my mind, I knew the compounding effect of consistency would start showing at some point and the momentum we had personally experienced in our first company would take hold in It Works!.

I’ll never forget that day near the end of 2011 when I met with members of our team—both corporate and in the field—and we made one decision that will forever be a milestone in our company history. We set a goal to double the company in 2012. That was a big goal. That means we would create over $100 million in sales in the next 12 months. Our team was committed. We created a vision and a mission for our company: One Team. One Mission. $100 Million.


We set a goal to double the company in 2012. We created a vision and a mission for our company: One Team. One Mission. $100 Million.


It caught on like wildfire. People want to be a part of something big, something with passion, something they can believe in. It was obvious we had a big goal and accomplishing it would take everyone coming together around that goal and keeping our core philosophy of debt freedom at the forefront.

More importantly, reaching that team goal meant everyone involved increased their businesses.

We didn’t achieve our $100 million goal in 12 months; we achieved it in seven! The unifying force of a group of likeminded people believing in something sparked something big. We sparked a culture that was our own. A culture that was passionate, driven, unified. A culture that, apparently, was indeed cool. A culture that generated and achieved more success for everyone, corporate and in the field.

After ending 2012 with over $200 million in sales, and more than doubling our initial goal, we continue to stay focused and unified. We continue to make one decision—and stick to it.

Staying focused on our goal empowered and unified the field and corporate team. We diligently wanted to avoid having a copycat mentality of seeing something work somewhere else, and thinking it will work for us. Sometimes it does, but more often than not it doesn’t.

Why? Because it’s not something that you’re truly passionate about. It’s not something you can “sell” to your field as innovative, unique and yours.

Knowing that your company depends on decisions you make as an executive, why not make that one decision right now that can take your business to the next level?


We believe that in today’s marketplace people want to feel uniqueness and innovation in a company. That’s empowering.


We believe that in today’s marketplace people want to feel uniqueness and innovation in a company. That’s empowering. It gives them an edge that they have something to offer their customers and prospects that is only available through them. Having a unique selling proposition sometimes is all your field needs to accomplish 10 times more than they could have without it. Couple that with a unified message that you engrain into the culture of your entire company and you have a powerful force that is unstoppable: a culture that is unbreakable and sales that follow.

Be true to yourself, your field and corporate teams. Get behind something that you all believe in. When people told us that debt free wasn’t sexy, that didn’t stop us; it empowered us even more to prove that it was.

We knew freedom was sleeping in a house that was paid for. We knew that getting a zero balance each month on your credit card statement created relief. We knew that driving a car that was paid for was sexy, and so did our people.

If you are reading this right now and thinking that imitating what someone else is doing is the best—and maybe safest—way to go, I would challenge you to ask yourself if you can really get behind it. Can you truly rally your field and corporate team to the goals you want to achieve by only doing what everyone else is doing? Leaders don’t follow the masses. They lead them.

Start out simple. Make one decision for this year. Make it personal. Share your vision with your corporate team. You will see that, with that decision, your vision, your passion and your direction will light a fire in them to carry that flag all year. Then share it with your field. Shout it from the rooftops! Make the decision to say “no” to all the other “cool” things that may come your way. They may sound good at first, but they can derail your goals, your team, your culture, and, ultimately, your sales.


Knowing that your company depends on decisions you make as an executive, why not make that one decision right now that can take your business to the next level?


Let that one focused decision lead to another, then another, then another until you reach your goals. If you are like us, there’s no stopping you. Even after achieving $100 million in sales five months early, we didn’t stop making goals or focused decisions—we just started making bigger ones.

Knowing that your company, your culture, and, ultimately, your cash flow depend on decisions you make as an executive, as the leader of your company, why not make that one decision right now that can take your business to the next level?

My one decision to write this article was based on one thing: the hope that it would impact one executive, one company, one owner to make the one decision that will make you unique—the one decision that will rally your team behind your mission and put you on the map as an innovative company in direct sales.


Mark PentecostMark Pentecost is Founder and CEO of It Works! Global.

Filed Under: Feature Articles

A Message from the DSA

March 1, 2013 by DSN Staff Leave a Comment


Click here to order the Direct Selling News issue in which this article appeared.


DSA

Editor’s Note: The following is an example of the types of responses the DSA formulates to head off misinformation about our industry. Taken from a press release generated by the DSA, this short explanation provides a clear definition of direct selling. More information can be found on www.dsa.org and www.directselling411.com.


Nearly 16 million Americans engaged in direct selling in 2012, some as full-time entrepreneurs seeking to build a business and some as part-time representatives hoping to earn a little extra money. Others sign up as representatives simply to purchase products or services for their own use at a discount and never sell to anyone else. Regardless of their income expectations, almost all direct sellers use the products themselves.

These direct sellers generally fall into three categories:

  1. Distributors as customers;
  2. Small retailers with no downline distributors; and
  3. Business builders or retailers in the process of developing a downline.

Earning a profit is not the intent of all distributors. The main economic objective of many who join a direct selling company is simply to qualify for purchasing product for their own consumption at a significant discount.

The DSA is working closely with its member companies to standardize these distributor categories across the industry. It is committed to ensuring that its member companies market their products and/or their direct sales opportunities with the highest level of business ethics and service to consumers. Every member company pledges to abide by the DSA’s Code of Ethics as a condition of admission and continuing membership in the Association. The Code of Ethics is enforced by an independent code administrator.

Unfortunately, direct sellers have been targeted in the past by short sellers who have deliberately injected inaccurate information or rumors into the marketplace with the goal of driving down stock prices for financial gain.

In the end, it is the millions of hardworking American direct sellers who suffer the results of these attacks while the perpetrators walk away with millions in profit. The DSA exists to protect and promote the direct selling industry by educating policymakers, the business community and the general public about the nature of the industry and how it works; and ensuring DSA member companies behave ethically in all aspects of their businesses through enforcement of the DSA Code of Ethics.


About the Direct Selling Association

The Direct Selling Association (DSA) is a 102-year-old national trade association that represents companies who distribute products to customers through or with the assistance of independent salespersons who personally demonstrate and explain those products to the consumer, usually in the home or workplace. Direct sellers are perhaps best known to the public as person-to-person, door-to-door, or home party plan sellers. Through the efforts of direct salespersons that provide personal demonstration, home delivery, and a variety of other sales-related services, direct selling companies can offer quality products to consumers without substantial advertising or other barriers to entry found in other distribution systems, like brick-and-mortar stores.

 

Filed Under: Daily News

Direct Sellers Lead Beauty Market

February 27, 2013 by DSN Staff Leave a Comment

Euromarket International has released a new report identifying the top five beauty trends in North and South America. The market research company documents the strength of the direct selling model in the Americas, where it accounts for over a quarter of all beauty and personal-care sales. Latin America represents a particularly dynamic market for direct sellers, as well as store-based retailers. The report highlights the expanding directs selling markets in Argentina and in Bolivia, where direct sales leads the market.

Read more on developing trends in the beauty market here.

Filed Under: Daily News

Trump, ACN Partnership Continues

February 19, 2013 by DSN Staff Leave a Comment

ACN

Over the weekend, a capacity crowd packed out Charlotte, North Carolina’s Time Warner Cable Arena for the ACN International Convention, where the direct seller of telecom and home services once again welcomed entrepreneur Donald Trump to the stage. Along with moderator Darren Hardy, Publisher of SUCCESS magazine, Trump addressed a crowd of approximately 20,000 independent representatives. The business mogul, who personally endorsed ACN and its home-based business opportunity in 2006, appeared with the company in SUCCESS magazine in 2008. In March 2009, ACN became the only network marketing company to appear on an episode of Trump’s “The Celebrity Apprentice.” The show welcomed ACN back for a second episode in March 2011.

Check out the photos of Trump’s ACN presentation here.

Filed Under: Daily News

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