The Carlyle Group to Acquire PartyLite Parent Blyth

Photo: GloLite by PartyLite candles on display.


The Carlyle Group has entered a $98 million deal to acquire PartyLite parent Blyth Inc., the New York-based private equity firm said Monday.

Carlyle, which manages $193 billion in assets globally, said it will pay $6 per share of Blyth, more than doubling the stock’s closing price of $2.92 on Friday. The offer has the backing of Blyth’s Chairman, Robert Georgen, and President and CEO, Robert Georgen Jr., who own a combined 38 percent of the company’s stock.

Candle and home décor brand PartyLite generated revenue of $347 million last year, placing it among the industry’s top 50 companies worldwide. Connecticut-based Blyth also markets consumer gifts and household products through Silver Star Brands, sold via catalogs and online.

“This is an important day in Blyth’s 40-year history,” Georgen Jr. said in a statement. “Carlyle understands what our team has accomplished and supports our vision for the future. Building on our strong consumer relationships, Carlyle, with its proven track record of growing companies, is the right partner to take PartyLite and Silver Star Brands to the next level of creativity and global growth.”

Carlyle Managing Director David Stonehill said the firm will focus on product innovation and global growth at Blyth. “We are particularly impressed with PartyLite’s network of 40,000 independent consultants who have remarkable passion for the company’s products. We are excited to support their efforts as we grow the company together.”

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Avon North America Sees Rare Profit in Second Quarter

Sales at Avon Products Inc. (AVP—NYSE) continued to decline in the second quarter, but the beauty company’s lagging North America division posted its first quarterly profit in several years, Avon said Thursday.

Second-quarter revenue fell 17 percent to $1.8 billion, weighed down by currency pressures in several foreign markets. On a constant-dollar basis, overall sales remained flat, with growth in Russia and the Philippines offset by declines in Brazil, China and the U.S.

The New York-based company reported adjusted earnings of 11 cents a share, surpassing the 7 cents predicted by analysts but dropping 20 cents from a year ago.

Heavy cost-cutting initiatives are paying off for the company in North America, where it saw a modest profit for the first time since the first quarter of 2012. Despite an improving bottom line, the number of Avon sellers in North America fell 16 percent from the second quarter of 2014. Overall, the brand’s salesforce shrunk by 2 percent from a year ago.

Avon said its expectations for the full year remain the same. The company forecasted modest constant-dollar revenue growth, with continued negative effects from currency exchange rates.

Former Avon Bidder Scoops up 43 P&G Brands

Photo: P&G Headquarters in Cincinatti.


The beauty industry is undergoing one of its biggest shake-ups in recent history with the announcement of a deal between Procter & Gamble Co. and Coty. Following weeks of speculation, the two beauty conglomerates have confirmed that Coty is buying 43 beauty brands from consumer products giant P&G.

The $13 billion deal—which includes leading brands such as CoverGirl cosmetics, Clairol hair color, and Hugo Boss and Dolce & Gabbana fragrances—is part of P&G’s strategy to streamline its sprawling business and focus on marketing everyday staples like its Tide laundry soap and Crest toothpaste.

P&G said it will transfer the brands into a separate company that will then merge with New York-based Coty, whose beauty and fragrance brands include Calvin Klein, OPI, Sally Hansen and Marc Jacobs. P&G has shed about 15 percent of its portfolio of brands, with the latest round accounting for annual sales of $5.9 billion.

In early 2012, Coty made a similar $10.7 billion offer for Avon’s business as the larger company faced lagging sales that continue to affect its bottom line. After two months of back-and-forth, Coty withdrew its bid, citing a “lack of engagement” on Avon’s part.

The P&G merger will position Coty as a global leader in fragrances and boost its share of the color cosmetics market. In a statement, the company said it is looking to build its presence in major beauty markets like Japan and Brazil, where Coty partnered with Avon last year to sell its fragrances through Avon’s 1.5 million Brazilian representatives.

Mary Kay to Make International Women’s Day a ‘Day of Beauty’

Mary Kay Inc. is celebrating International Women’s Day with a new Global Day of Beauty initiative. On March 8, the iconic beauty brand will kick off a global effort to provide complimentary makeovers to women in need. The multi-month initiative will launch in the U.S., where Mary Kay consultants in Miami, Washington, D.C., New York and Los Angeles will host a day of beauty and pampering for local domestic violence survivors.

The international event is not Dallas-based Mary Kay’s first makeover rodeo. To commemorate its 50th anniversary in 2013, the brand introduced a global Makeover Day and rallied consultants in a world-record bid for the highest number of makeovers in 24 hours. After bringing back Makeover Day in 2014, the company is shifting focus with its Global Day of Beauty. The initiative ties Mary Kay’s celebration of women to the causes of dating abuse and domestic violence, the focus of Mary Kay’s Don’t Look Away campaign.

“For many of the women attending our Global Day of Beauty events, they are living in emergency housing or in transition after surviving unspeakable abuse,” Crayton Webb, Vice President of Corporate Communications and Corporate Social Responsibility, said in the company’s release. “Mary Kay hopes this Day of Beauty serves as a reminder that these survivors are special, beautiful and deserve, like all women, to be treated with respect and dignity.”

Mary Kay’s newest Don’t Look Away Cause Champions, actress and singer Debby Ryan and fashion designer Abi Ferrin, will also take part in Day of Beauty events. Ryan, who most recently starred in the Disney Channel TV show Jessie, shares her story in the campaign’s latest video, 1 in 4.

President Michael Somoroff Steps down from Longaberger

President Michael Somoroff has exited the Longaberger Co. after six months with the CVSL-owned brand. Longaberger did not elaborate on the decision, nor whether it is looking to fill the position.

“Michael Somoroff is no longer in a management position at The Longaberger Company,” spokesman Russell Mack confirmed to DSN in an email. “The company has a fine team at the Home Office, with Tami Longaberger and a very experienced management group. We also have a wonderful and loyal group of sales field leaders, and we have a strong supporting team at CVSL. So the leadership of Longaberger is in good hands.”

Formerly based in New York, Somoroff is also a photographer and filmmaker whose work has appeared in magazines such as Vogue, Elle and Harper’s Bazaar, and in commercials for Olive Garden and Red Lobster restaurants. He first partnered with Longaberger last April to help the brand reinvent its annual catalog, which now features merchandise alongside stories of the brand and its people in a magazine format, titled Storybook.

The Newark, Ohio-based basketmaker has cycled through seven presidents in the past decade, amid several rounds of layoffs that have reduced the company to a fraction of its former size. Somoroff succeeded Mike Trempe, who left Longaberger last June after a 15-month stint as President and COO. The position had remained vacant in the three years leading up to Trempe’s hire.

Dallas-based CVSL Inc. acquired Longaberger in March 2013, setting in motion its strategy to build a family of micro-enterprise brands. With the addition of U.K.-based Kleeneze this month, CVSL’s growing portfolio now includes eight direct selling companies. For the nine months ended Sept. 30, 2014, the parent company reported revenue of $75.3 million, up 53 percent over the prior year period, and a loss of $15 million.

Avon Losses Widen as Quarterly Earnings Drop

An increasingly strong dollar weakened fourth quarter salesat Avon Products Inc., and the beauty company expects to feel continued negative effects in 2015. On Thursday the global brand projected that 2015 revenue will decline by 12 percentage points due to currency rates.

Fourth quarter revenue decreased 12 percent to $2.34 billion; however, Avon reported modest 5 percent growth in constant dollars. Quarterly volume fell 3 percent, while the company’s average order increased 9 percent. Active representatives were down 4 percent.

Quarterly sales fell 14 percent in the Beauty category, with a 5 percent increase in constant dollars. Fashion & Home sales fell 13 percent and rose 1 percent in constant dollars.

North America continues to pose the greatest challenge for Avon. The New York-based company saw regional sales fall 12 percent in the quarter and 17 percent for the full year. Avon posted global revenue of $8.85 billion for 2014, an 11 percent decrease versus the prior year, or relatively unchanged in constant dollars. The company reported a net loss of $331 million, or 75 cents a share, broadening its $69 million loss in 2013. Excluding one-time costs, operating profit totaled $734 million.

“While progress against our financial goals in 2014 was slower than I would have liked, I am pleased with the sequential improvements we made in several key markets and categories in the second half of the year,” said CEO Sheri McCoy. “We have stronger management teams across our key markets and better discipline in executing consistently against Avon’s core processes.”

The company also reported declining sales outside the U.S., where it generates 88 percent of its sales. Revenue fell 7 percent in both EMEA (Europe, Middle East & Africa) and Asia Pacific. Latin America, Avon’s most profitable market, posted revenue of $4.24 billion for the year, a 12 percent decrease versus 2013.

The company says that it is working to mitigate the impact of foreign currency rates. In the meantime Avon has announced plans to pull out of Jamaica and other Caribbean islands, the Jamaica Observer reports. A Jan. 29 email from Pablo Muñoz, President of Avon North America, informed distributors that, effective Monday, they will no longer be able to place orders to the company. Avon’s regional managers were not available to provide comment on the contents of the email.

Stream: A New Face

by Barbara Seale

Photo above: Stream and Ignite’s recent Ignition event.


Company Profile

  • Founded: 2004
  • Headquarters: Dallas, Texas
  • Executive: President and CEO Mark “Bouncer” Schiro
  • Products: Life-essential services, including electricity, natural gas, mobile phone service, identity protection, tech support and credit monitoring services.

Stream Energy
When Stream reinvents itself, it doesn’t fool around. As it approaches its 10th anniversary, Stream settles into a new brand, redefines itself by offering new services, and jumps from seven energy markets to national scope, all in one bold move.

Mark “Bouncer” SchiroMark “Bouncer” Schiro

The change may seem sudden to outsiders, but planning and market trials have been underway for a year and a half at Stream, which direct sellers have known as Ignite since 2005. Its army of about 270,000 independent associates built their businesses switching customers to Stream Energy—electricity and natural gas—starting in the company’s home state of Texas and then expanding as energy deregulation went into effect in Georgia, Pennsylvania, Maryland, New Jersey, Washington, D.C. and New York.

But in 2014, Stream started signaling changes. The slow progression of deregulation gave way to the introduction of a new suite of HomeLife Services, including identity theft protection, computer tech support and credit monitoring, which associates could offer throughout the country. Stream priced the services so that customers got more affordable rates with each additional service. At the same time, it rolled out its Free Energy Program, allowing customers to earn free electricity and natural gas in exchange for referring other customers. And for the last few months, it has used the Stream and Ignite logos together like the biceps on two well-muscled arms. The longest-tenured network marketing energy company in the world was sending a message: Look out. We’re changing.

Associates have been seeing the changes on the horizon for a few months, but at the company’s national convention, which has been named “Unleashed,” it launches the series of changes that will transform almost everything about it.

Building Brawn

The changes are monumental, beginning with the brand. Stream Energy has always owned Ignite, and in January the parent brand will absorb the Ignite brand, which will no longer be used. According to President and CEO Mark “Bouncer” Schiro, the incorporation was done to unite the brands, and by using a single name it strengthens that name, which is important as the company brands all its other products. With the advent of new products, the Stream Energy brand becomes simply Stream. But the most powerful change—the one that will change the face of the company—comes in late January when Stream begins offering mobile phone service nationwide, focusing initially on NFL markets because of their large size. According to Schiro, it’s just the beginning.

“Your mobile handset is the remote control of the future,” he explains. “We are providing you a platform to purchase and control the services you need every day that you’ve already been purchasing. We are giving you a great value proposition so you can be comfortable promoting the services to your family and friends, as well as using them yourself.”

That’s key, because Stream also will expand its Free Energy concept to all its other products. Mobile is a centerpiece because it offers the opportunity to double the number of customers Stream serves within two years.


“I will be a failure as CEO of this company if I don’t have more non-energy customers than energy customers by the end of 2016.”
—Mark “Bouncer” Schiro, President and CEO


“I will be a failure as CEO of this company if I don’t have more non-energy customers than energy customers by the end of 2016,” Schiro states. “On average, there are three mobile phones per household. If I can get just 20 percent of our current customer base to switch their mobile service to Stream, that will increase our customers by 60 percent and double our customer count in the next two years.”

While Schiro prefers to talk in terms of customers rather than revenue, he notes that by the end of 2014, Stream will be knocking on the billion-dollar revenue door. Then when mobile service goes into effect, he anticipates that the company will add about 100,000 subscriptions a month, whether in mobile service, energy, or one of its other product categories.


Stream headquarters, located in the Infomart building in downtown Dallas. Stream headquarters, located in the Infomart building in downtown Dallas.

Stream headquarters, located in the Infomart building in downtown Dallas.


 

Tools and Training

New products aren’t the only fuel Stream is throwing on the growth fire. It has also created “The Stream Way,” an umbrella term for the process that provides associates with step-by-step incentives and training to help and encourage them to advance in their careers. The first incentive is You and Two, which rewards new associates with an e-tablet when they recruit two additional associates whom they mentor to recruit two additional associates. The tablet, which Schiro calls their “electronic tool box,” comes loaded with business-building tools: Stream apps, their back office, a savings calculator and more that help them carry their mobile Stream business with them, ready to present at a moment’s notice. As associates gather customers, they also work their way toward receiving their own Free Energy when they have 15 customers, along with compensation on those customer bills and on recruiting. The compensation plan’s focus is on … Click here to read the full article

Herbalife Ducks Ackman’s ‘Death Blow’ as Shares Skyrocket

Photo above: The Herbalife Ltd. logo is displayed outside of the company’s corporate headquarters in Torrance, California.
(Photographer: Patrick Fallon/Bloomberg)


Herbalife short seller Bill Ackman took to a Manhattan stage for nearly four hours Tuesday morning in his latest round against the global nutrition company. In a Monday interview with CNBC, Ackman claimed he would deliver Herbalife a “death blow” in the planned presentation, but it has had the opposite effect on the company’s stock. With one of its largest daily percentage increases thus far, the direct seller closed out the day at $67.77, up 25 percent.

“Once again, Bill Ackman has over-promised and under-delivered on his $1 billion bet against our company,” Herbalife said Tuesday afternoon in its response to Ackman. “After spending $50 million, two years and tens of thousands of man-hours, Bill Ackman further demonstrated today that the facts are on our side.”

The focus of Ackman’s presentation was Herbalife’s nutrition clubs, run by teams of distributors who rent commercial or industrial space to train and recruit others in a social environment. Ackman described the structured recruiting model as a “mini pyramid scheme” used by the company to target the “poorest of the poor” globally, and particularly U.S. Latinos.

At one point Ackman fought back tears recounting his own family’s American experience, which began when his grandfather emigrated from Germany. He claims Herbalife is “selling the American dream” by promising its salespeople success many will never achieve.

“Mr. Ackman’s claim about the earnings of Herbalife nutrition clubs is completely false and fabricated,” Herbalife included in its response. “In fact, according to a recent study commissioned by the company, 87.5 percent of nutrition club operators feel good about the money they earn, and 92 percent want to continue with their club.”

Ackman also took shots at Herbalife supporters and endorsers, including former Secretary of State Madeleine Albright and soccer stars David Beckham and Lionel Messi, saying they failed to perform due diligence on the company and are cashing in on a fraud. Albright’s connections likely enabled Herbalife to enter difficult markets like China, Ackman claimed.

Explaining how Herbalife has built a thriving multibillion-dollar business over more than 30 years, Ackman invoked the deception of totalitarian regimes, the Nazis and the mafia. “People generally believe big lies, because they’re so bold that how could they possibly be false?” said Ackman.

The Securities and Exchange Commission (SEC) launched a formal investigation of Herbalife in January 2013, but thus far has not made any charges against the company. “I think that’s a failure on the part of the SEC, even though they are hard-working, high-quality people,” Ackman noted.

The Federal Trade Commission (FTC) also opened an investigation into Herbalife in March of this year. In April, the Department of Justice, the FBI, and Attorneys General in New York and Illinois launched their own investigations into the company.

Today Herbalife also released the findings of an economic analysis performed by former FTC economist Dr. Walter Vandaele of Navigant Economics, LLC. Herbalife commissioned Vandaele to assess the company’s standing as a legitimate multi-level marketing (MLM) firm.

The assessment included factors such as end-use consumption of the product, as well as its intrinsic value and market demand. In summary, Vandaele found that “Herbalife’s U.S. business operations are consistent with the socially beneficial MLM model and inconsistent with the socially harmful pyramid scheme model.”

Your Inspiration At Home Collects Prestigious Fine Food Awards

At just 3 years old, Your Inspiration At Home has already earned numerous accolades from people who know a thing or two about food. The company recently picked up four additional medals at the prestigious 2014 RASV Melbourne Fine Food Awards.

Founded in Australia and acquired by CVSL last year, Your Inspiration At Home is on a mission to help people prepare food “Inspired Globally—Enjoyed Locally.” The company incorporates flavors from around the world into its hand-crafted spice blends and gourmet oils and vinegars. Your Inspiration At Home now has a North American headquarters in Newark, Ohio, and a global salesforce of more than 5,000.

The Melbourne awards recognized three of the company’s balsamic vinegars—gourmet vinegar was named one of the top 10 food trends at this year’s Specialty Food Association’s Summer Fancy Food Show in New York. Your Inspiration At Home has collected more than 140 fine food awards since launching in 2011.

The BIG HISTORY of Direct Selling

by J.M. Emmert

Click here to order the June 2014 issue in which this article appeared or click here to download it to your mobile device.

IN THIS ISSUE:

• The BIG HISTORY of Direct Selling • 10 Things to Know • The List 
• Topping the Charts • Profiles • Celebration

BRAVO AWARDS: 
• Leadership • Growth Based on Percentage • Growth Based on Revenue •Humanitarian


DSN Global 100

This past November the History Channel’s sister station H2 aired Big History, a 17-part narrative on the history of Earth. The program culminated with a look at the critical events that shaped life on this planet, from the Big Bang to the social transformations of the modern era. Like the history of the universe, the story of direct selling reveals paradigm-shifting events and thresholds that have fundamentally changed the industry and helped to shape today’s direct seller.

So we wondered: What were those moments? What would be the “Big History” of direct selling? The following are the five thresholds we identified.

Threshold No. 1—The First Direct Selling Companies

There was no Big Bang moment for direct selling, no moment when out of nothing everything began. The industry, the oldest distribution channel in history, began appearing alongside the development of civilizations. As hunter-gatherers settled down to farm and build towns, the first direct sellers began to sell their wares across Europe, Africa and Asia.

The bartering of commodities evolved into a vast network of trade, and by the 18th century the direct-to-consumer channel of distribution had reached the United States in the form of the Yankee peddler, solitary figures who roamed the countryside bringing goods to isolated areas of the population. But it would be another century before the first direct selling company was established. In 1855, Rev. James Robinson Graves developed a business model that had young men going door to door to sell products, forming the basis of the company known today as Southwestern.

Nearly 160 years later, direct selling engages more than 16 million people in the United States and nearly 100 million people around the world, with 22 billion-dollar global markets. Direct selling companies are committed to not only bringing quality products to the global audience, but also a quality of life that can, and does, change lives.

“More than 3 million Independent Beauty Consultants around the world share Mary Kay’s message of hope—‘If you can believe it, you can achieve it!’ ” says Sheryl Adkins-Green, Chief Marketing Officer of Mary Kay. “Through Pink Changing Lives®, Mary Kay has a commitment to changing the lives of women and children around the world, encouraging them to believe in themselves and pursue their dreams to transform, inspire and empower our future.”

The popularity of direct selling continues to grow. In a recent Harris Poll commissioned by Direct Selling News, nearly one-third of U.S. adults have purchased from a direct seller in the past six months, with 42 percent taking advantage of doing so online. That technology has allowed newer companies to reach more customers far quicker than the old days of walking the countryside.

“It Works! is a customer-generating machine,” says Mark Pentecost, CEO of It Works! Global. “We encourage our distributors to gather customers, and we provide a Loyal Customer Program with perks to retain customers. This opportunity forms the foundation for a business that gives everyday people hope that they can change their lives and leave a legacy for their families.”

Threshold No. 2—Women Are Welcomed

In the history of the universe, stars became the building blocks for life. And in the history of direct selling, the points of light that became the building blocks of the industry were women.

David McConnell’s decision to recruit women as sales representatives for his California Perfume Co. might have been a big, bold statement for the times. Yet it just made sense to McConnell when he saw the natural ability of women to network and market to others. Mrs. Persis Foster Eames Albee became the company’s first representative, and today more than 6 million Avon representatives are following in her footsteps, benefiting from McConnell’s belief that women could be the most important component of the direct selling channel.


“[Our Founder David H. McConnell] understood that women were natural salespeople who could easily relate to other women and passionately market beauty products.”
—Sheri McCoy, CEO, Avon Products Inc.


“In 1886, our Founder David H. McConnell recognized that women were rarely offered the opportunity to earn their own income,” says Avon CEO Sheri McCoy. “He also understood that women were natural salespeople who could easily relate to other women and passionately market beauty products. The notion that women deserve the opportunity to support themselves and their families is a cornerstone on which [Avon is] built.”

The role of women in the industry has greatly evolved from the days when the legendary Mrs. Albee traveled the Northeast by horse and buggy. Mary Kay Ash, Brownie Wise, Mary Crowley and Jan Day were strong role models whose business savvy and sincere desire to see their contemporaries succeed empowered 20th-century women and inspired a legion of today’s female leaders.

That group includes Thirty-One Gifts’ Founder and CEO Cindy Monroe, Scentsy’s Co-Founder and President Heidi Thompson, Rodan + Fields President Lori Bush, Isagenix’s Co-Founder Kathy Coover, and The Pampered Chef’s CEO Doris Christopher, who believe that being a woman is an advantage to running a direct selling company.

In fact, if you look at the Global 100 companies, you will find that nine of the 29 U.S. companies in the Top 50—31 percent—are led by women who were either co-founders or who serve as president or CEO. And it is these women who are bringing their opportunities to other women around the globe, especially in developing countries where women are expressing sentiments similar to what Mrs. Albee wrote to David McConnell 130 years ago: “I know of no line of work so lucrative, pleasant and satisfactory as this,” she said.


DSN Global 100 DSN Global 100

Threshold No. 3—The Formation of Direct Selling Associations

In 1910, McConnell’s California Perfume Co. joined with nine other companies from New York, Massachusetts and Michigan to form the Agents Credit Association, which today is known as the U.S. Direct Selling Association. It was the first such association to focus on the needs of direct sellers.

Back then, the Association was charged with collection and credit matters; today, the DSA represents 200 member companies and works to further promote the impact of direct sellers under the guidance of President Joseph Mariano.

“One of the most important accomplishments for DSA has been the mobilization of many different types of companies by recognizing and supporting their mutual interests,” Mariano says. “DSA can act on behalf of companies and individual sellers to ensure a fair and open marketplace. Because we determine our course of action based on the merits instead of special interests, we have a virtually unblemished record of defeating legislation that would be harmful to direct sellers, and have worked constructively with many states in passing anti-pyramid legislation that helps lawmakers identify and prosecute scams while protecting legitimate companies.”


“We will continue to help policymakers, prospective sellers and others gain a fuller understanding and appreciation of direct selling.”
—Joseph Mariano, President, U.S. DSA


According to Mariano, the DSA will continue to work collaboratively with companies to maintain unity of message and purpose in all its activities. “We will continue to enhance the high standards of marketplace behavior the public should expect from direct sellers, and we will continue to help policymakers, prospective sellers and others gain a fuller understanding and appreciation of direct selling,” he says.

Today more than 60 countries have direct selling associations. Seldia—the European Direct Selling Association—represents 27 DSAs, including those from the U.K., Germany, France, Belgium and Italy, which were the first European countries to establish national associations. Since 1968, Seldia has been an authoritative voice for direct selling in European government affairs.

“New laws and regulations are now made with input from Seldia, and a growing number of policymakers have a favorable and supportive view on direct selling,” says Maurits Bruggink, Executive Director of Seldia. “With the increasing appreciation of entrepreneurship in Europe, Seldia wants to grow the importance of direct selling in the coming years and ensure that our sector is known for the opportunities it creates for individuals of every walk of life, the wealth it generates to society, and the high level of ethics in trading.”

A decade after the formation of Seldia, which at the time was known as the Fédération de la Vente et du Service à Domicile (FEVSD), the World Federation of Direct Selling Associations was established. The WFDSA is a non-governmental entity that represents national direct selling associations around the globe and works to promote the highest global standards for responsible and ethical conduct. Alessandro Carlucci, CEO of Brazil-based Natura, is the current Chairman of the WFDSA, and has diligently worked to build the reputation of the industry.

“The WFDSA was born to reinforce ethical standards and to disseminate the positive social impact of the direct selling model,” says Carlucci. “The Federation aims to promote an ethical debate in the sector considering the significant changes happening in an increasingly connected world. In other words, we seek to be every day more in sync with the aspirations of contemporary society—more connected, more active, more social. Since the energy of our people is what moves our business model, we pursue to deeply understand them and to focus on their needs. That is what makes our advocacy efforts relevant to governments and key influencers.”

Threshold No. 4—Compensation Structure

For decades, direct sellers had been compensated on a performance-based model where earnings were tied to personal sales. Then, in the mid-1900s, a revolutionary approach for compensation was developed that would allow representatives to benefit beyond their personal selling efforts. Amway was one of the first companies to adopt the new structure.

According to Amway, many people assume that the Amway business model was introduced in 1959, when Jay Van Andel and Rich DeVos founded the company. However, the company’s roots go deeper than that. Nutrilite Founder Carl Rehnborg is often credited as the father of both plant-based food supplements and the sales plan that served as the model for Amway.

This new compensation plan was actually the invention of William Casselberry, whom Rehnborg had met in a Dale Carnegie course, and Casselberry’s friend Lee Mytinger. In 1949, Jay and Rich became two of the top Nutrilite distributors and were introduced to that compensation plan, which allowed them to earn based on their own efforts and those of others they trained as Nutrilite sales reps. Without Rehnborg, Mytinger and Casselberry, Amway might not have been guided by the business plan that has served it well for 55 years.

Today, nearly 90 percent of the 2013 DSN Global 100 companies utilize this compensation structure.

DSN Global 100

Consumer Goods and Services Offered through Direct Selling

PRODUCTS

  • Arts & Crafts
  • Beauty
  • Fashion & Accessories
  • Cosmetics
  • Educational
  • Food & Beverage
  • Food Storage
  • Home Care
  • Home Décor & Fragrances
  • Jewelry
  • Kitchenware & Cookware
  • Nutritional Supplements
  • Personal Care
  • Relationship Enhancements
  • Travel
  • Weight Management
  • Wellness

SERVICES

  • Energy
  • Financial Planning & Investing
  • Health Insurance
  • Home Security
  • Legal Representation
  • Life Insurance
  • Natural Gas
  • Telecommunications

 

Threshold No. 5—Evolution of the Sales Method

The direct selling model has evolved because the world has evolved. The industry has adapted to changes because it can, as life itself can, store information, reproduce itself, pass information along and multiply.

One of the greatest changes in the industry was the party plan model, believed to have been created by Brownie Wise when she was with Tupperware. But perhaps no event in the history of direct selling has caused more of a paradigm shift than the emergence of technology. And here’s why. As Big History explained, during the era of the steam engine, it took 150 years for man’s collective knowledge to double. Today, it takes two years. By 2020, it will take 72 hours.

“We not only embrace, but innovate with the tools and technology now so abundantly available,” says Rick Stambaugh, Chief Information Officer of USANA. “The world is shifting. Mobility will prove to be the game changer, especially when it comes to prospecting. Everyone has a smartphone, which gives us a much broader reach. Apps will become a preferred means of engagement, and we are actively updating and developing several to stay ahead of the curve. In fact, for over 20 years, our focus has been on personalization. Some may say technology is contradictory to that, but it’s not. Being able to profile yourself and get answers specific to you is not only cool, but is the wave of the future.”

Stambaugh adds that as for transaction technology, the method of spending is rapidly shifting from a storefront platform to a greater web-based structure, as e-commerce becomes widely accepted and trusted. “It has certainly moved the needle on our ROI,” he says. “Then there is social media, which is less than 10 years old, but look what it has done already in the realm of awareness. These days you can’t run a successful business without being social media savvy. Even social commerce is catching on, although still in its infancy. And though the direct sales industry is becoming more high-tech, it’s still important to remain ‘high-touch’ in keeping customers satisfied and the salesforce motivated. You have to stay connected to those you serve and develop an interpersonal presence in a high-tech world.”


“Though the direct sales industry is becoming more high-tech, it’s still important to remain ‘high-touch’ in keeping customers satisfied and the salesforce motivated.”
—Rick Stambaugh, Chief Information Officer, USANA


Avon’s McCoy agrees to a certain degree. “While the biggest game changer is technology and how we use it, the backbone of our business hasn’t changed,” she says. “Our representatives continue to build relationships and have a passion for products, and our business is still high-touch, even though it’s now high-tech too. Customers can connect with their representatives in person, over the phone, via email or through social media. While the world is a different place today than when Avon started, it is the personal touch that connects our customers to our representatives.”

Adds Douglas Franco, General Manager for Belcorp USA, “I believe technology just changes the way our relationships work, but does not change their nature. It’s a trust-based purchase, which only becomes more transparent and democratic with technology.”


“I believe technology just changes the way our relationships work, but does not change their nature. It’s a trust-based purchase, which only becomes more transparent and democratic with technology.”
—Douglas Franco, General Manager, Belcorp USA


The Future

History teaches us that we have the ability to seize our evolution, and that the triumph of our collective learning is the ability to adapt. We learn to survive in the most challenging conditions. We seize the opportunities to continually move forward.

What will be the next threshold for direct selling? That remains to be seen. In the next century this industry may not even be known as “direct selling.” As new technologies and forms of communication are developed, a new term may come to apply to what it is direct sellers do, just as the term “social selling” is gaining traction today.

This year, the DSN Global 100 list revealed that 18 companies increased their 2013 revenue by more than $100 million, clear evidence that the business model can thrive in a time of economic uncertainty.

Additionally, new companies such as Origami Owl, Nerium International, Plexus Worldwide and Solavei, along with a host of others, continue to bring fresh ideas and methodologies to the marketplace. These new ideas, combined with advanced technology, placed alongside a highly successful and long-standing business model, will open up possibilities that we can only guess at today. The future is promising!