Editor’s Note: This article appears in our latest supplement to The Wall Street Journal, and was included in 1.2 million copies for subscribers. More information about the supplement and reprints can be found at dsnsite.wpengine.com. Contact Jerry Reagan (firstname.lastname@example.org) for ordering information.
Direct selling in the 21st century has become a sophisticated distribution channel that serves consumers in the most personal manner possible. Companies that use this channel are supported by state-of-the-art technology that brings catalog presentations, order entry and processing up to the gold standard of Amazon and Zappos, perhaps even better.
The DSN Global 100 list provides a glimpse at the direct selling companies that are the driving force behind the growth and expansion of the channel of distribution worldwide. The basics of the business model have remained rather consistent for over 100 years. Direct selling has always been about a personal presentation, personalized customer service and the importance of building relationships and building them in a social manner. Today, the word social is now on steroids. When we talk to the executives of any direct selling company about the role social plays in their business model, we find some of the most innovative ways of using the new social tools. Just go to Facebook and search for one of the companies in which you might be interested and join the conversation.
Chances are that many customers of today’s direct selling representatives would never imagine that they are dealing with an individual business owner, who no longer has the boundaries associated with having to travel to reach new customers, communicate with them or service them.
Around the world, direct selling is becoming the choice, the preferred way to purchase products and services. The more than 1.5 million sales consultants for Brazil’s Natura Cosméticos, for example, each have an individual web page and the technology to accept orders any time of day using a credit or debit card. Data mining and customer relationship management technology are playing an increasingly important role, says CEO Alessandro Carlucci. “Natura has invested in a CRM system that crosses different kinds of electronic information and gives us a better understanding of profile and behavioral patterns of our sales consultants and customers,” says Carlucci, who also serves as Chairman of the World Federation of Direct Selling Associations. “This enabled us to design a more personalized, targeted relationship strategy, with high performance and results.”
The same is true for Oriflame Cosmetics, a billion dollar direct selling company out of Sweden that markets a high-end beauty line through its independent consultants. The Oriflame website is spectacular and appealing; consequently Oriflame consultants are gaining the attention of prospective customers in other parts of the world. This could make international expansion far easier.
“In all of my travels across the globe, one thing has resonated: Everyone has a smartphone, regardless of their nation’s economy. I see direct sales going into an entirely mobile platform, and that gets me excited because our industry will have a much broader reach and appeal within that scope.”
— Dave Wentz, CEO, USANA
A direct seller today who joins any number of reputable direct selling companies gains the sophistication of franchise-type business support without the risk of losing tens or hundreds of thousands of dollars. Entry is reasonable, and often less than a hundred dollars. Member companies of the Direct Selling Association offer money-back guarantees designed to protect a new direct seller from any loss for a minimum of one year.
Truman Hunt, President and CEO of Nu Skin Enterprises, says, “I am passionate about our product categories and the innovation we can put into the marketplace from a product perspective, but we’re really about improving people’s lives. Frankly it’s the thing I love the most about our business. We are changing lives when we give entrepreneurs the opportunity to start a business with very, very little capital at risk, that provides them with a significant upside and the ability to control their economic future. I just don’t see a better platform anywhere for entrepreneurs to do that.”
Direct selling has evolved into a contemporary format embracing new labels and new value propositions that are gaining attention, and rightfully so!
Direct selling companies are nimble, innovative and not stuck in their traditions because they are fueled by the very people that all companies are attempting to attract: customers. Every direct seller has to first be a convinced consumer of the product or service before they can ethically and convincingly represent and share the product or service. Though it sounds simple, this is the essence of referral marketing, which is something every brand desires to have active in the sales/marketing mix.
As an observer of the business landscape from the publisher’s chair at Direct Selling News, I’ve watched the job opportunities in America fluctuate for more than a few years. Training and retraining is important, and the role entrepreneurship will play in providing more opportunities is also important. However, the average person—the wife, the mother, the recent college grad with no job prospects, the young couple trying to earn more than they spend to remain debt free, or the challenged executive who finds himself or herself being replaced or displaced—cannot afford the investments required of traditional entrepreneurial opportunities.
As for the millennials, well, they are not looking to work in the traditional manner. They are predicted to be more entrepreneurial than previous generations, but most of them are not going to invest thousands or hundreds of thousands in a business opportunity.
“Current students don’t have a lot of trust in business and their ability to succeed in traditional routes; they are far more interested in entrepreneurial opportunities,” says Linda Ferrell, Ph.D., Bill Daniels Professor of Business Ethics at the University of New Mexico and President of the Academy of Marketing Science.
And direct selling opportunities offer an excellent avenue, Ferrell says, for students and for companies in search of a distribution model. “Direct selling is a much more efficient model than traditional business. The independent business owner takes on more of the marketing and communications responsibilities, as well as customer service.”
Online businesses are growing at a rate far beyond traditional retail. Brick-and-mortar shopping malls are closing in some areas as a result. Though we can get everything we need via the Internet from our tablets or our smartphones, most of us still prefer dealing with a person who wants to know us by name. Most of us don’t buy until we have compared or asked a friend.
That’s where the new direct sellers come in. Women are predicted to remain the majority when looking at direct selling organizations, but men are now gravitating toward this model in larger numbers. Direct sellers fill the role of that caring person who knows what we want to know or at least provides us with an honest and informed opinion, not just another advertisement. And today, they are found to be representing just about any and every product or service we need.
More than 500,000 people each month say yes to a direct selling opportunity.
Those who do not understand this channel of distribution often get stuck in their past perceptions of it. We believe, based on all of the evidence we sift through 365 days per year, that direct selling is on the threshold of its greatest breakthrough.
We are a nation built upon the creative genius and brilliance of entrepreneurship. This industry is well primed. It is time-tested, entrepreneurial and truly the very first social business model.
Therefore, our position on this industry?