ACN Targets Asia in First Market Expansion in Two Years

Essential services and health products firm ACN is expanding internationally for the first time in two years with the launch of operations in Japan.

Initially, the company is making its Benevita health and wellness line available to Japanese consumers. ACN introduced Benevita three years ago in select international markets, diversifying a longstanding portfolio of essential services such as wireless, Internet, and gas and electricity. ACN plans to roll out some of those services in Japan in the future.

The move into Japan puts the company in 26 markets worldwide. The island country is the first market ACN has added since July 2014, when operations commenced in Mexico. The North Carolina company branched into Asia in 2010 with the launch of its South Korea business.

“As the fifth-largest direct selling market worldwide, Japan was incredibly appealing to us,” said Greg Provenzano, President and Co-Founder of ACN. “But it was the people that sealed the deal when selecting Japan to continue our Asian expansion.”

The market will be served by a new regional headquarters located in Tokyo. In addition to corporate offices, the facility houses meeting spaces, a call center and a retail storefront. ACN’s Vice President of Sales, Danny Bae, will oversee operations in the country. Bae, who initially joined ACN as an Independent Business Owner, has been key to the company’s expansion into Asia.

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Nerium Product Development Summit Unites Western Science, Eastern Medicine

Photo: Nerium South Korea independent sellers, known as Brand Partners


As part of its strategy to offer exclusive anti-aging products and expand in Asia, Nerium International recently hosted a Global Product Development Summit in South Korea.

In attendance were representatives from biotechnology companies, universities and R&D teams, who work with Nerium to develop its skincare and nutrition products. The two-day summit was held at COSMAX, a South Korea-based cosmetics manufacturer and R&D lab that works with Nerium and a number of other luxury skincare brands.

“I believe Nerium to be the best company in the world, and COSMAX will support it with all of our best resources for a great cause, combining Western technologies with Eastern know-how,” said Kyung-Soo Lee, COSMAX Founder and CEO.

Nerium aims to build its core product line while adhering to its strict formulation philosophy and criteria, said Founder and Co-CEO Jeff Olson. Since launching with a single skincare product in 2011, the company has introduced just two additional anti-aging creams, an eye serum, and a supplement intended to boost brain health.

“Looking into the future, we plan to continue this pattern of expanding our product line by watching innovative and global trends in retail and science and creating superior anti-aging products for the face, body and mind,” said Olson.

The company also has plans to expand geographically, with openings in Japan and Hong Kong scheduled for later this year. To serve consumers in the region, Nerium plans to develop Asia-specific offerings that potentially will include anti-aging supplements and luxury beauty oils.

Nu Skin Reports Lower Annual Sales, Provides Soft Outlook

In the fourth quarter, a series of new product launches was not enough to counter the effects of a stronger dollar and lackluster sales at Nu Skin Enterprises Inc. (NUS—NYSE).

The maker of anti-aging products and nutritional supplements reported fourth-quarter revenue of $572.2 million, cut 7 percent by currency fluctuations. Though up on a sequential basis, sales fell 6 percent year over year. Earnings were down 20 percent to 62 cents a share. Analysts had expected a better performance on both counts.

The company ran three of its signature limited-time offers in the quarter, featuring its anti-aging ageLOC Youth and ageLOC Me products. In the Americas and Japan, the results were positive, while a new promotion in South Korea fell flat, largely due to a 12-month product subscription commitment bundled into the offer.

On a regional basis quarterly results were mixed. Constant-dollar revenue improved 26 percent in the Americas. Besides breakeven results in North Asia, sales in all other regions were down from the prior year. In the company’s largest segment, Greater China, revenue dipped 5 percent on a constant-dollar basis.

For the full year, revenue totaled $2.25 billion, compared to $2.57 billion a year ago. Earnings fell 28 percent to $2.25 per share. The company continued its share buyback program, repurchasing more than 5 percent of outstanding shares in 2015.

“We enter 2016 with a calendar filled with significant product launches,” said President and CEO Truman Hunt. “In the Americas, Japan and South Asia, where we have executed well, these product launches have generated positive results. In South Korea and China, we are moderating our expectations based on the December launch of ageLOC Me in South Korea and economic uncertainty in China.”

In 2016, the company expects revenue in the range of $2.10 billion to $2.15 billion. Management said its operating margin for the year likely will be 10.5 percent to 11.0 percent, with earnings of $2.40 to $2.60 per share, coming in well below analysts’ forecasts of $3.09 per share.

Amway Reports Sales of $9.5 Billion in 2015

Photo above: Amway World Headquarters in Ada, Michigan.


Amway Corp. on Wednesday released its 2015 financial results, announcing annual sales of $9.5 billion.

Despite constant-dollar sales growth in 70 percent of Amway’s top 20 markets, revenue fell 12 percent from a year ago, hurt by currency fluctuations and soft sales in China, where the economy experienced its slowest growth in 25 years. The company reported similar trends in 2014, when revenue dropped 8 percent to $10.8 billion—a performance that nevertheless secured Amway the No. 1 spot on the 2015 DSN Global 100, a list of the top direct selling companies in the world.

In 2015, the company’s top 10 markets were China, South Korea, United States, Japan, Thailand, Russia, Taiwan, Malaysia, India and Ukraine. Management also singled out Brazil and Mexico as emerging markets that recorded considerable gains.

“We experienced growth in seven of our top 10 markets, and emerging markets in Latin America and elsewhere continue to perform well,” Chairman Steve Van Andel noted in Amway’s report. “Several markets achieved record sales levels in 2015 with others producing their best performance in some time. An increasingly competitive environment in China and unfavorable currency exchange rates mask a positive year overall for Amway globally.”

Nutrition remains a powerhouse category for the company, accounting for 46 percent of 2015 sales. Amway Nutrilite is the world’s leading brand of vitamin, mineral and dietary supplements, according to research by Euromonitor International, and the company last year expanded the line with BodyKey by Nutrilite, a personalized weight-management program. BodyKey utilizes a genetic test or comprehensive, scientific assessment to provide a tailored plan for managing weight.

Beauty and personal care products accounted for 25 percent of sales, and durable products, such as the company’s eSpring water treatment system and Atmosphere air treatment system, made up another 16 percent. The remaining 13 percent was split between home care products and assorted other offerings.

Last year also marked the culmination of Amway’s three-year manufacturing and R&D expansion. The company has poured $335 million into strengthening its global infrastructure, opening five manufacturing facilities and a major R&D site in 2015 alone. Other investments included new digital tools to help Amway Business Owners showcase products and manage their businesses.

In 2016 and beyond, Amway leadership sees plenty of cause for optimism, particularly in light of its 2015 Global Entrepreneurship Report. The report, based on a survey of 50,000 people in 44 countries, quantifies attitudes about business ownership and the entrepreneurial spirit.  All told, 75 percent of respondents were positive about starting a business, and that number increased to 81 percent among those 35 and younger.

“Globally, more and more people are seeking an opportunity to do something on their own—whether it’s to earn a little extra or for a bigger commitment to earn more,” said Doug DeVos, Amway President and Chairman of the World Federation of Direct Selling Associations. “We’re well positioned to meet that demand with a low-cost, low-risk business opportunity selling world-class products.”

Nerium Sets Sights on Asia Pacific with Upcoming Expansion

Nerium International is targeting an up-and-coming anti-aging market for its next international expansion. The fast-growing skincare company has announced plans to launch its business in South Korea this June.

The 4-year-old brand first ventured beyond the U.S. last year with expansions into Canada and Mexico. In the same year, revenue increased 80 percent to $403 million, making Nerium the No. 40 direct selling company in the world and the No. 21 company in North America.

With its South Korea launch Nerium will introduce a patented new ingredient into its Optimera skincare line, which consists of just three anti-aging products.

“While every international expansion is significant, this launch is especially unique as we are introducing Optimera with the new SIG-1273 ingredient, offering advanced scientifically based products to our South Korean customers,” Nerium Founder and CEO Jeff Olson said of the company’s revamped formula. The patented SIG-1273 molecule, an antioxidant that mimics the skin’s natural age-fighting mechanism, is the product of 20 years of research by Princeton University biochemist Dr. Jeffry Stock.

Nerium President Roy Truett said that a receptive culture and high demand for anti-aging products influenced the company’s decision to enter South Korea. According to a recent report by Transparency Market Research, the global anti-aging market is poised to grow at a compound annual rate of 7.8 percent through 2019. The report indicates that South Korea and a handful of other markets in the Asia Pacific region will soon lead the world in sales of anti-aging products and devices.

Industry veteran BJ Choi will head up Nerium’s key new market as Country Manager of South Korea. Choi has accumulated more than 20 years of experience with various direct selling companies in the region.

Amway Plucks Asia Pacific CMO to Head up Global Marketing

Amway has selected one of its Asia Pacific executives to serve as the brand’s new Chief Marketing Officer. South Korea native Su Jung (SJ) Bae is transitioning from the role of Asia Pacific CMO to oversee Amway’s global brand, corporate social responsibility and public relations efforts. Former CMO Candace Matthews vacated the position to serve as Amway’s Regional President for the Americas.

Bae’s Amway career began in Korea, where a recent independent survey found that 58 percent of households own at least one Amway product. She came on board at Amway Korea in 1995 to market the company’s Nutrilite supplements.

As Asia Pacific CMO, Bae led the Artistry brand sponsorship of the Busan International Film Festival and helped establish Amway’s Asia Beauty Innovation Center. Her team also worked with local companies to launch new technologies and product ideas across Amway’s global networks. Amway has built a strong presence in the Asia Pacific region, where direct selling is experiencing rapid growth. China, Japan and Korea trailed only the U.S. in 2013 retail sales, according to a World Federation of Direct Selling Associations report.

Heading up Amway’s global marketing efforts, Bae will oversee strategy and execution of category marketing for the company’s nutrition, beauty and home brands. In a statement on Amway’s blog, she expressed her intent to create “an environment where global marketing teams embrace the creative friction and trial and error needed for true innovation.”

In other company news, Amway announced Wednesday that 2014 sales dipped to $10.8 billion, down 8 percent from the company’s record in 2013. Though it does not release sales figures by country, Amway cited foreign currency fluctuations and lower revenue in China. The company noted strong growth in neighboring South Korea and Taiwan, as well as several of its South American markets.

“Looking ahead to 2015 and beyond, we are optimistic and feel we are well positioned for growth,” Amway President Doug DeVos shared in a statement. “We will be opening five new manufacturing facilities and many new Amway Experience Centers to support our ABOs, and improving virtual experiences online. Additionally, attitudes toward, and interest in, entrepreneurship remain at all-time highs.”

90 Days of Direct Selling – Day 41

DSN_90Days_Email_Signature

KOYO-SHA

2013 Net Sales: $141 million

Country: Japan

KOYO-SHA is part of the Goyang Company. Its products include cosmetics, bath products, nutritional supplements, medical devices, detergents and personal care.

 

2012 Rank: 62
2012 Net Sales: $186 million
Sales Method: Person-to-person
Compensation Structure: Multi-level
Products: Nutritional supplements, cosmetics, personal care
Markets: 1
Salespeople: 300,000
Employees: 150
Headquarters: Gife, Japan
Executive: Not available
Year Founded: 1975
Website: Not available


 

LG Household & Health Care

2013 Net Sales: $215 million

Country: South Korea

LG Household & Health Care began in 1947 with domestically manufactured cosmetics and toothpastes. It has expanded to become Korea’s foremost household goods and cosmetics company.

 

2012 Rank: 35
2012 Net Sales: $350 million
Sales Method: Not available
Compensation Structure: Not available
Products: Personal care, home care, cosmetics
Markets: 5
Salespeople: Not available
Employees: 2,745
Headquarters: Seoul, South Korea
Executive: Suk Cha
Year Founded: 1947
Stock Symbol: 051900—SEO
Website: www.lgcare.com

90 Days of Direct Selling – Day 6

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AmorePacific

AmorePacific

2012 Net Sales: $520 million

Country: South Korea

AmorePacific was founded by Sung-Whan Suh, who believed Jeju Island off the coast of Korea was an optimal environment for growing the most powerful and potent green tea. AmorePacific is the only cosmetics company in the world to grow and harvest its own green tea, which is then used in its skin-care formulas. The company holds over 140 global patents in green tea and skin-related technology, fusing cutting-edge formulations with the age-old tradition of Asian botanicals.

 

2012 Rank: 26
2012 Net Sales: $520 million
Sales Method: Person-to-person
Compensation Structure: Not available
Products: Cosmetics, personal care, health and wellness
Markets: 3
Salespeople: Not available
Employees: Not available
Headquarters: Seoul, South Korea
Executive: Kyung-Bae Suh
Year Founded: 1945
Stock Symbol: 090430—Korea
Website: http://www.amorepacific.com

SEACRET: Built on Community

by Jennifer Workman Pitcock

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

The Dead Sea, which lies on the border of Jordan and Israel, provides some of the most concentrated, natural mineral salts and mineral-rich mud in the world.

SEACRET

Company Profile

  • Founded: 2011
  • Headquarters: Phoenix
  • Founders: Izhak Ben Shabat, President and CEO; Moty Ben Shabat, Managing Partner; and Betty Perez, Co-Founder and Vice President of Sales and Training.
  • Products: Dead Sea mineral skincare

Izhak Ben Shabat says coming to the United States and building a multimillion-dollar company began as an accident. That accident has turned out to be fortuitous for thousands of people around the globe. With his brother Moty, his family, and a close-knit community of friends and partners, he founded SEACRET in 2005. The company manufactures and sells high-end skincare products that combine Dead Sea minerals and other nutrients with new technologies and scientific breakthroughs.

The Sudden Entrepreneur

Izhak Ben Shabat

Moty Ben Shabat

Betty Perez

The Ben Shabat brothers’ story begins before SEACRET, in 2000. Moty had come from Israel to the United States to save money for medical school. But he caught the entrepreneurial bug and ended up staying. He bought his own ice cream truck and dreamed of having his own company. When Izhak came to visit, Moty mistakenly thought he had come to join the business. “The first night when I landed, my brother called my parents and told them we were going to do the business together,” Izhak says. “He didn’t have enough money, so he told them we needed some support from them.”

By the time the two brothers cleared up the confusion, their parents had sold all their possessions and put the entire family on a plane to the U.S. Izhak was in a bind. He had recommitted to the Israeli military, but now his whole family was here with less than $60,000 in assets. His brother’s ice cream truck wasn’t going to support them all. His goal was to make enough money to get his family back to Israel. So he called his friends, begging them to come and help—even though he couldn’t buy their plane tickets or pay them.

They struck upon the idea of selling toys in kiosks during the Christmas season—and over the next four months they made $4 million in revenue. They then split the profits evenly among the group. But by that time, none of them wanted to return to Israel. “We were able to create a culture of people and friends coming together, standing behind one mission, and achieving success,” Izhak says. So they pooled their resources again. “By that time, 120 more people had heard of our success and showed up to be part of it,” Izhak says. “That’s how we got started.”


Seacret products
Spotlight on Recover
One of SEACRET’s most exciting products is Recover. Using nanotechnology, it actually unfolds the skin in the wrinkled areas and keeps it that way for several hours each day. Over a period of several months it triggers skin restoration. But it doesn’t take that long to see results—Recover has an amazing wow factor. In clinical studies, both fine lines and wrinkles were visibly reduced by as much as 66 percent after one 15-minute treatment.


A Unique Product

The Dead Sea, which lies on the border of Jordan and Israel, provides some of the most concentrated, natural mineral salts and mineral-rich mud in the world, according to SEACRET’s website. Dead Sea cosmetics have gained an international reputation for their many beneficial qualities for maintenance of the skin’s youthful appearance and protection of the cell nucleus against early aging.

So when Izhak and Moty realized that there were no Dead Sea products for sale in the United States, they began selling a variety of Israeli brands out of kiosks in malls. By 2005 they had saved enough money to formulate their own products. They wanted to create something that would deliver immediate results. They had Israel’s best formulators create products so effective that people could see results on the spot. That was the beginning of SEACRET.

Manufactured in Israel, SEACRET products offer mineral combinations found only in the Dead Sea. The Dead Sea boasts 26 minerals, and the unique combination of 12 of these is exclusive to these waters. SEACRET products also include other natural elements, such as essential oils and plant extracts. These elements are combined with some of the latest technologies in skincare, such as peptide technology, nanotechnology and biomagnetism.

A New Distribution Model

Over the next five years, SEACRET continued to grow. Izhak took on the role of company President and CEO. Moty became Managing Partner. The company had retailers in 30 countries. By 2010 SEACRET was a $100 million business. The year before, SEACRET had struck a deal with the world’s largest manufacturer of cosmetics to make their products. SEACRET’s partners were making plans to move out of kiosks and open 500 stores worldwide. “We wanted to be the Apple of skincare,” Izhak says.

Then Betty Perez arrived on the scene. She had been brought on by a SEACRET Vice President to help spearhead the development of a local salesforce. To understand the products and the business, she went to work in a kiosk. At 19, she had already been successful in two direct sales companies. Her first day, she could see the quality of the products. “SEACRET is known for its wow factor,” she says. “With virtually every one of our products, you’ll see and feel a difference on the spot. We call it turbo cosmetics.”

She soon realized that SEACRET could find the right fit within direct sales. It had all the elements: a high-quality product, the story of the Dead Sea, an already-established customer base, and credibility as a company.


SEACRET grew from $12 million in direct sales in 2012 to $71 million in 2013. This year, SEACRET has continued to prosper and has grown to more than 40,000 Agents and customers worldwide.


She set up a meeting with the company’s partners. They were eager to meet her because, unbeknownst to Betty, she was breaking all of SEACRET’s sales records. They were going to offer her the position of Global Sales Manager. But instead, she told them, “You need to change your business model.” At first, Izhak wasn’t convinced, but Betty’s passion inspired him to look into it further. After a series of meetings, the partners gave her the green light to run a small pilot program in Phoenix, where the company was based. That was at the end of 2010. In a few short months they had developed nearly 1,000 distributors, or SEACRET Agents. SEACRET officially launched in 2011. In 2012 SEACRET did $12 million in direct sales. By 2013 that figure had grown to $71 million. This year, SEACRET has continued to prosper, and has grown to more than 40,000 Agents and customers worldwide.

“I believe Betty saved us by showing us network marketing,” Izhak says. Betty is now a partner in the business and SEACRET’s Vice President of Sales and Training.

Culture of Community

SEACRET’s transition from kiosks to direct sales has been gradual. When considering changing business models, the Ben Shabat brothers’ first concern was the impact of the change on the SEACRET community. “This company doesn’t belong to me,” Izhak says. More than 600 families had invested in the company, and the final decision rested with the community, not just Izhak.

“The entire drive of our business is our community activity,” Izhak says. That’s perhaps best illustrated through the weekly meal that Izhak and Moty’s parents host each Friday night at their home, spending several days each week preparing the food themselves. It’s been a tradition since the first group of friends came over to help the Ben Shabats 15 years ago. “No fewer than 60 people are there each week,” Betty says. “It’s not a time that we talk about business, but it’s a time of getting to know each other.” SEACRET Agents fly in to be part of the dinners. Even people who pack the products at the warehouse show up. These dinners help create strong bonds among all members of the SEACRET community.

The Agency and the Cabinet

SEACRET employs all the training tools typical of a direct sales company. Along with printed materials and webinars and simulcasts, they have weekly vision calls open to the entire company. Additionally, Betty and Izhak spend much of their time on the road, doing everything from WOW! parties to regional events. They feel it’s important to be in the field as much as possible. “That’s essential for us to truly understand how well everything is working, and it allows us to make better decisions,” Betty says.

To make sure the field has a voice in every decision, SEACRET has created two leadership groups. At the highest level are the Cabinet Ambassadors. Selected annually, this group is made up of five members. Membership is not based solely on production, but requires development in many different sponsorship legs. “If you develop leaders you have influence, so the five cabinet members have the deepest level of influence in the company,” Betty says. Cabinet members meet with the executives in a weekly conference call and twice annually in person. They are part of every important decision that the company makes.

At the next tier is the Agency, which currently has over 20 members and is open to all Agents who reach a certain level of production. They participate in monthly conference calls with the executives.

Additionally, both leadership groups are highly involved in companywide training. “Our videos are not only done by me or the other executives,” Betty says. “We do all types of training with the Cabinet and the Agency. They are just as much the face of SEACRET as our founders.”

Direct Sales in the Digital Age

SEACRET believes in utilizing all tools at the company’s disposal to help people grow their organizations. When they join, Agents receive a website that serves as their storefront where they can send family and friends to see the products or become Agents. Agents can track their sales and watch helpful videos using the back office.

SEACRET uses social media channels to communicate with Agents as well as to help them market using Facebook, Twitter and other social media platforms. The company recently developed a calendar that allows Agents to easily search events by location or person. When they sign up for an event, Agents can have the event automatically post to their social media sites if they choose.

At the same time, Izhak is careful to emphasize that social media cannot replace face-to-face contact. He believes that to build a community, physical interaction is critical. “Our business is built on home parties,” he says. “In an era where people are detached from one another because of technology, they want to connect more, to touch more.”


“We’re looking to expand our product offerings, but skincare will always be the pillar.”
—Betty Perez, Vice President of Sales and Training


Black Friday

Before becoming a direct selling company, Black Friday was SEACRET’s biggest sales weekend of the year. So the partners decided to continue the tradition as a direct seller. “In order to build your customer loyalty, you have to treat your customers and give them incentives to buy your products,” Izhak says. On Black Friday, SEACRET offers its biggest sales of the year, slashing prices on products by as much as 60 percent. The results have been phenomenal. In 2011 the company made $160,000 in sales on Black Friday. By this year, Black Friday sales reached a whopping $3.1 million.

Not only does the Black Friday sale bring in new customers and make existing customers happy, but it also raises morale among the Agents, who often make thousands of dollars in a single day. “It comes right before Christmas. We hear stories of Agents who didn’t know how they were going to have a holiday season, and all of a sudden it’s taken care of because of our one day of huge sales,” Betty says.

The Future of SEACRET


“Our business is built on home parties. In an era when people are detached from one another because of technology, they want to connect more, to touch more.”
—Izhak Ben Shabat, President and CEO


Because SEACRET products were already being sold in so many countries before the company adopted the direct selling business model, the company is in prime position for international expansion. Moty leads this effort, traveling extensively to do so. SEACRET is open for direct sales in Canada and the Dominican Republic. Already this year, SEACRET has opened in Australia and South Korea, with plans to open in Mexico and two to three more countries over the next few months.

With over 40 products and 26 more in the product development pipeline, SEACRET has every intention of continuing to grow. “We’re always enhancing our products and looking for new technologies,” Betty says. The partners envision new lines, such as hair products. “We’re looking to expand our product offerings,” she says, “but skin care will always be the pillar.”

First and foremost, SEACRET is about building a wealthy community. “By that, we don’t just mean monetary success,” Izhak says. “I’ve fallen in love with what the industry has to offer: personal development, positive attitude, and the ability to change people’s lives,” he says. “To me, making an impact is the best part of it. I want to do this for the rest of my life.”

Amway Develops Asia Beauty Innovation Center

Artistry

Amway is working to further the appeal of its leading ARTISTRY™ beauty brand with the development of an Asia Beauty Innovation Center in Seoul, South Korea. The new center will represent an extension of Amway’s ongoing Growth Through Innovation strategy, which has driven other unique initiatives such as the Amway Business Center at New York’s Citi Field.

Based in Amway Korea Ltd.’s headquarters, the Beauty Innovation Center’s team of cross-functional experts will glean insights from the region to ultimately guide Amway in new product development. The team’s expertise will range from technical and clinical research to product packaging, affording the company a holistic perspective on market trends.

In last month’s issue of DSN, Sandy Spielmaker, Vice President of Sales for Amway U.S., shared how the company is Using Analytics to Improve the Business. Amway is bringing that philosophy to bear across international markets with its increased investment in R&D and marketing in China and Southeast Asia.

“The R&D and marketing teams are united in our efforts to better understand and communicate Asian trends—from innovative technology and packaging down to the subtleties of ingredient fragrances and textures,” said Catherine Ehrenberger, Vice President of Amway R&D. “We understand how critical it is to our success and look forward to gathering data that will inspire fresh, new thinking.”

Read the full press release from Amway.