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.”

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Elken Gears Up for Opening of Philippines Market

Photo: Manila, Philippines.


Leading Malaysian direct selling company Elken is tapping into growth in the Asia Pacific region with its forthcoming entry into the Philippines.

The company coordinated a soft launch in the Philippines in December 2015, hosting public events to introduce its business model and extensive range of products, which number more than 500 across the categories of cosmetics, personal care, wellness, food and beverage, and home care. An organic spirulina supplement and water purification system are among the company’s top-selling products.

The Philippines is one of the fastest-growing direct selling markets in the world, according to research by the World Federation of Direct Selling Associations. From 2011 to 2014, constant dollar revenue from direct sales increased at a compound annual growth rate (CAGR) of 17.6 percent, outpaced only by growth in China and Vietnam.

With the official opening of the Philippines, Elken’s operations will extend to 11 markets, including Malaysia, Singapore, Indonesia, Thailand, Brunei, Hong Kong, India, Vietnam, Cambodia and Taiwan. The company, which has been in business for 20 years, has offices in 30 cities. Elken reported revenue of $233 million in 2013, earning the No. 50 spot on the 2014 DSN Global 100, before declining to participate in the 2015 ranking.

ForeverGreen Announces COO Promotion, New President of Europe

ForeverGreen Worldwide Corp. is laying a foundation for future growth in Europe with the appointment of a new regional president, Tomasz Stanislawski. The health firm has promoted former President of Europe, Blake Schroeder, to the position of Chief Operating Officer.

“Blake’s experience and knowledge have been a tremendous factor to the growth in Europe. We are looking forward to his expertise contributing to the organization as a whole after seeing his success in the European region,” company CEO Ron Williams said in a statement.

The trilingual Stanislawski—he speaks English and Russian in addition to his mother tongue, Polish—hails from another direct selling health company, where he headed up operations for 29 markets across Europe. His 21-year direct selling career has focused on the areas of operations, sales, marketing and international expansion.

“I am delighted to join ForeverGreen in the given time, ahead of the November Europe Launch in Munich,” said Stanislawski, referring to the company’s upcoming European convention. “We are ready to bring our vision, products and business opportunity across all countries in Europe.”

Utah-based ForeverGreen markets nutrition supplements, weight management products and, most recently, a line of press-on strips applied directly to the skin to provide pain relief, an energy boost or anti-aging benefits. This week the company also entered its pre-launch phase in Taiwan and received official approval to operate in Thailand.

Strategic Synergy: Creating Qivana’s Sustainable Future

by Beth Douglass Silcox

Company Profile

  • Founded: 2009
  • Headquarters: Provo, Utah
  • Founders: Derek Hall, Founder and CEO; Devin Glazier, Founder and Chief Financial Officer; Justin Banner, Founder and Chief Strategy Officer; Craig Johanson, Founder and Chief Marketing Officer
  • Products: Skincare and health and wellness

Qivana

In the decade after the millennium, the exploding market for an ever-healthier beverage sent network marketing companies clamoring for exotic, antioxidant rich fruits, most often found in remote island paradises. The most successful companies—marketing a large variety of antioxidant packed juices, health and wellness, and beauty products—invested millions in researchers trudging through remote jungles, in controlled labs, and in scientists who became jacks-of-all-trades and in-house product formulation teams.

It was within this space that a group of men, those who would eventually form Qivana, decided that they would not be in the product development business at all.

It seemed unlikely to this group of network marketing professionals that breakthrough products would emerge from an in-house team focused on a variety of formulations. So they opted for different path—one that has led Qivana to market four cutting-edge product lines, currently consisting of 21 products within the direct selling spaces of health and nutrition, as well as beauty and anti-aging.


Qivana owners (L to R): Justin Banner, Founder & CSO; Craig Johanson, Founder & CMO; Derek Hall, Founder & CEO; Devin Glazier, Founder & CFO

Qivana owners (L to R): Justin Banner, Founder & CSO; Craig Johanson, Founder & CMO; Derek Hall, Founder & CEO; Devin Glazier, Founder & CFO

 


Everyone Doing What They Do Best

Qivana’s product strategy focused on partnerships with published scientists and university researchers with 10, 20, maybe 30 years invested in health and wellness solutions. They reckoned that true breakthrough products were born in these labs and saw no need to put their own scientific “fingerprints” on any product. “Let the scientists and the universities and the researchers do what they do best, which is develop, formulate and research. Then allow us to do what we do best,” says Founder and Chief Marketing Officer Craig Johanson.Qivana products

Qivana would bring products into the direct selling channel, giving these scientists, researchers and formulators an effective avenue to reach consumers with their breakthrough products. Then, Johanson says, the company would “turn that product over to our field. Then we let them do what they do so well, which is put that product in front of people and share that message.”

Derek Hall, Devin Glazier, Justin Banner and Johanson sat around that planning table in 2008. Hall, once president and CEO for another nutritional company, found synergy with a former director of finance, Glazier, as well as other industry alums Banner and Johanson. Strategy and development was Banner’s forte, while marketing was Johanson’s focus.

By 2009 they had launched a new company they called Qivana.

Built to Last

“We have a really strong corporate team, made up of great leaders in the industry and some of the best athletes in the world,” says Banner, Founder and Chief Strategy Officer. “We brought on a top-notch scientist as our Chief Science Officer [Dr. Donald Layman] and brought product lines that we believe are some of the best in the world in their categories. We are confident in our products and our team, and we believe it’s a winning combination that plays out perfectly.”

But, perhaps, Qivana’s founders drafted their own success story when they methodically planned for long-term sustainability. Qivana’s focus is not on next month or next year, but rather decision-making to build a … Click here to read the full story at Direct Selling News.

90 Days of Direct Selling – Day 46

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Market America Inc.

2013 Net Sales: $547 million

Country: USA

Market America is a product brokerage and Internet marketing company that specializes in one-to-one marketing. The company has generated over $4.3 billion in accumulated retail sales through its international operations in the United States, Canada, Taiwan, Hong Kong, Australia, the United Kingdom and Mexico.

 

2012 Rank: 27
2012 Net Sales: $505 million
Sales Method: Person-to-person
Compensation Structure: Single-level
Products: Cosmetics, personal care, food and beverage, home care, leisure and educational, services, wellness
Markets: 7
Salespeople: 180,000
Employees: 725
Headquarters: Greensboro, North Carolina
Executive: JR Ridinger
Year Founded: 1992
Website: www.marketamerica.com

Dubai to Host Monumental Nu Skin Trip

Nu Skin Greater China is taking more than 16,000 of its sales leaders from mainland China, Taiwan, Hong Kong and Macao to Dubai for a training and recognition trip. Zawya, a Middle East business and finance online news site, reports the trip will be one of the largest tourist groups to ever visit the city. According to Zawya, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, was so excited about the upcoming visit that he posted the news on his Twitter page.

The events run from April 6 to April 17, and participants will come in seven waves with each wave averaging slightly over 2,000 people. More than 200 flights have been booked, including two chartered Emirates flights. The Nu Skin participants will stay in 38 different hotels and have booked approximately 8,000 rooms.

Nu Skin will use 400 buses to transport guests to a variety of locations including: Sharjah, Burj Khalifa, Sheikh Zayed Grand Mosque, Ferrari World, Dubai Maydan City and Yas Marina Circuit.

Andrew Fan, President of Nu Skin Greater China, told Direct Selling News, “Nu Skin Success Trips recognize the hard work and achievements of our sales representatives, and we believe the United Arab Emirates represents a fitting destination for this event given the country’s commitment to becoming a world-class tourist destination.”

Read the story here.

The Road to $1 Billion

by J.M. Emmert

DSN Cover, April 2014

When Inc. magazine named Ambit Energy America’s fastest-growing private company in 2010, the then 4-year-old company’s annual revenue already had reached $325 million, making it one of the 40 largest direct selling companies in the world.

A year after the Inc. article appeared, the revenue number had doubled to $664 million. And 24 months later, Ambit did what very few direct selling companies have been able to do: break the billion-dollar barrier.

Hitting $1 billion in revenue is a milestone for any business, and to do so in seven years puts Ambit’s growth on a trajectory in line with some of the most recognizable brands of the past few decades: Apple (six years), Facebook (six years), Amazon (four years), eBay (seven years) and Google (five years).

Technology certainly helped. Co-Founders Jere Thompson Jr. and Chris Chambless have pointed to the company’s data processing technology as a key factor in Ambit’s rapid expansion. And Ambit, like all modern direct sales companies, leverages the connectivity afforded by the Internet as well as social media platforms in its sales strategies.

Yet despite the ubiquitous nature of technology, the billion-dollar milestone remains elusive for many direct sellers. In order to better understand what it takes to break through that barrier, we decided to study some of the members of direct selling’s Billion Dollar Club: six from the United States—Ambit, Amway, Avon, Herbalife, Mary Kay and Nu Skin, as well as Germany’s Vorwerk, Brazil’s Natura and Peru’s Belcorp.

What is it that makes them billion-dollar companies? What do they have that other companies are still trying to learn and to possess? In our review, we identified four key drivers behind the members of the Billion Dollar Club.


Growth Comparison ($0-$1 Billion)


1. They were founded by outstanding leaders.

Which one would you invite to dinner: the visionary, the revolutionary, the dream-builder, the groundbreaker, the risk-taker, the mover, the shaker or the history-maker? In the Billion Dollar Club, you’ll find them all sitting at the table.

Take Amway’s Jay Van Andel and Rich DeVos, for example. Van Andel was a firm believer in and fierce advocate for free enterprise, and DeVos was among the first proponents of teaching distributors to start with believing in themselves.

“We were just two guys from Ada, Michigan, USA, who wanted to have a business of our own,” DeVos says on the company’s website. “We were two kids (it still feels like that sometimes) who were hungry for success and who wanted to give others the chance to be in business for themselves, too.”

The current generation at Amway is building upon that foundation. Co-CEOs Steve Van Andel and Doug DeVos have led the company to record sales growth marked by continued global expansion to more than 100 countries and territories.

Avon offers a similar lesson in the power of strong foundational leadership. As a salesman in the 19th century, David McConnell was far ahead of his time in recognizing that women could be successful sales professionals. Beginning in 1886 with Mrs. P.F.E. Albee, he tapped the power of a female salesforce to go door-to-door extolling the virtues of products from the California Perfume Company, the forerunner of Avon. By 1920, he had built a $1 million business, which adjusted for inflation would be nearly $12 million now.

Today, CEO Sheri McCoy, whom Fortune magazine ranks as among the 50 most powerful women in business, exemplifies McConnell’s vision of building the company for women. She joined the Avon team in April 2012, bringing with her 30 years of experience with Johnson & Johnson, and now leads a $10 billion business with more than 6 million independent sales representatives.

2. They offer distinctive, high-quality products or services.

Having bold, visionary leaders is critical to building a billion-dollar company. So, too, is creating products that bring true value to the marketplace. The club members reviewed here have done just that.

The United States has the largest cosmetics industry in the world, with estimated revenue of nearly $55 billion. Amway, Avon, Mary Kay and Nu Skin are all able to thrive because they continue to be at the forefront of scientific research, developing new products designed to enhance the lives of customers.

Nu Skin, for example, spent more than $46 million on research from 2011 to 2013 and has made several key acquisitions that brought new technology into the company. Its Pharmanex health supplements product line comes from the acquisition of Simi Valley, Calif.-based Generation Health Holdings Inc. in 1998. Since then, Nu Skin has gone on to purchase substantially all of the assets of Madison, Wis.-based LifeGen Technologies LLC in 2011 and Malvern, Pa.-based Nox Technologies Inc. in 2012, which added more anti-aging technology to the Nu Skin portfolio.

Avon significantly upped its research and development game in 2002, announcing plans for a state-of-the-art R&D center and a $100 million increase in research spending from 2002 to 2005. The company has continued that commitment, spending $67.2 million on research and development in 2013 and launching more than a dozen new products.

Unlike its personal consumer product peers, Ambit is using direct sales to introduce customers to a relatively new product category: energy. Deregulation in many utility markets is giving consumers a choice when it comes to purchasing their retail electric and gas services.

Since its launch in Texas in 2006, Ambit has used direct selling to spread the word. Co-Founder Jere Thompson Jr.’s mother and father were the company’s first customers, and received the first bill. Today, Ambit has more than 1 million active customers.

3. They target growing markets.

In order to hit the $1 billion mark, choosing where to sell can be just as critical as choosing what to sell. Of the nine companies in our report, six of them have a presence in more than 35 markets around the globe. Only Belcorp (16), Natura (seven) and Ambit (one) have managed to make the Billion Dollar Club with less.

According to a September 2013 DSN report, advanced markets—the United States, Japan, Korea, France, Germany, the U.K., Taiwan, Italy, Canada and Australia—accounted for $89 billion in retail sales in 2012. Emerging markets such as China, Brazil, Mexico, Malaysia, Russia, Colombia, Thailand, Venezuela, Argentina, Peru, Indonesia, India and the Philippines accounted for $65 billion. Those markets, however, are home to 85 percent of the world’s population; gaining a foothold there now establishes a foundation for future growth.

Take Brazil, for example. Natura has established itself as the biggest cosmetics company in its home country. The No. 2 cosmetics name in Brazil? That was U.S.-based Avon, which counts Brazil as one of its largest markets and where it keeps some research and development operations.

4. They invest in their people.

In the end, while leadership can create a desired path, quality products can help establish a business, and new markets can help bring a company’s story to a worldwide audience, it all comes down to the people who say yes to the opportunity to represent the brand.

The nine companies in this report have more than 20 million salespeople combined across the globe. Those salespeople are of every age and ethnicity, with diverse educational backgrounds and diverse reasons for wanting to be an entrepreneur. In fact, according to the U.S. Direct Selling Association, most people who join direct selling come for one of five things: supplemental income, recognition, rewards, social connections or product discounts.

Six of the nine companies currently have more than 1 million salespeople who, for the most part, are compensated on a multi-level structure. The most-frequently used sales method is person-to-person, which accounted for 80 percent of sales in 2012. Vorwerk, Mary Kay and Belcorp employ the party plan method as well.

The founders and leaders of the Billion Dollar Club companies recognize and value the diversity among their salesforces. Family men like Belcorp’s Eduardo Belmont and the brothers Carl and Adolf Vorwerk have shown that fostering a culture of love and respect brings in the greatest returns on investment. Motivators like Herbalife’s Mark Hughes and Natura’s Luis Seabra set out to help people change themselves so they could, in turn, change more lives for the better. And Nu Skin’s Blake Roney, Sandie Tillotson and Steve Lund are among the many philanthropists in direct selling who have reached out a helping hand to those in need.

A key to becoming a billion-dollar company is to have people talking about it. So whether the talk comes from the standpoint of a 150-year-old legacy or a new, spirited startup that has re-energized the industry, happy salespeople translates to happy customers; and happy customers is always a winning formula.


The Great Potential: Unlocking the Power of Emerging Markets

by Beth Douglass Silcox

 

Click here to order the September 2013 issue in which this article appeared or click here to download it to your mobile device.

DSN September 2013
Editor’s Note:

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

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


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

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

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

Unlocking The Great Potential

Chart1To unlock these emerging markets it is necessary to understand the compelling reasons direct selling is flourishing.

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

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

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


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


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

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

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

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

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


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


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

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

Embracing The Great Potential

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

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

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

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

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

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


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


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

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

The Great Bounce-Back Potential

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

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

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


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


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

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

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

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

Billion Dollar Markets

Click to enlarge

1. United States—$31.6 Billion

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

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

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


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


2. Japan—$22.7 Billion

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

3. China—$20.0 Billion

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

Click to enlarge

4. Brazil—$14.6 Billion

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

5. Korea—$13.3 Billion

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

6. Mexico—$7.3 Billion

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

7. France—$4.9 Billion

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

8. Malaysia—$4.7 Billion

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

Click to enlarge

9. Russia—$4.3 Billion

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

10. Germany—$3.8 Billion

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

11. United Kingdom—$3.2 Billion

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

12. Colombia—$3.0 Billion

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

13. Taiwan—$3.0 Billion

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

14. Italy—$3.0 Billion

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

15. Thailand—$2.9 Billion

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

16. Venezuela—$2.3 Billion

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

17. Canada—$2.2 Billion

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

18. Argentina—$1.7 Billion

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

19. Australia—$1.5 Billion

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

20. Peru—$1.4 Billion

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

21. Indonesia—$1.1 Billion

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

22. India—$1.1 Billion

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

23. Philippines—$1.0 Billion

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



Regional Profiles

Asia Pacific

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

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

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

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

The Americas

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

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

Europe

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

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

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

Africa and Middle East

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

China Leads Nu Skin’s Asian Growth

Nu Skin

Provo, Utah-based Nu Skin Enterprises has seen Greater China, including Hong Kong and Taiwan, surpass Japan as the company’s top market. Operations in 53 countries netted the company $2.2 billion in sales in 2012, with 78 percent of revenue coming from Asia. Nu Skin CFO Ritch Wood projects that 2013 revenue will total just over $2.5 billion.

The popularity of Nu Skin’s personal-care and nutritional products has benefitted from the one-on-one, word-of-mouth marketing possible through direct sales; however, the company’s China market—where multilevel marketing is prohibited—is unique. Nu Skin employs a single tier of distributors who operate through retail outlets.

“We’ve enjoyed a great growth cycle in Asia,” said Nu Skin CEO Truman Hunt. “There’s a very strong entrepreneurial spirit there. People are hungry for opportunity.”

Hunt also addressed recent questions concerning the validity of the multilevel marketing model used by companies like Nu Skin and Herbalife. “More than 70 percent of the revenue we generate is generated by purchasers who are not participating in Nu Skin sales networks,” said Hunt. With only 15 percent of customers expressing interest in developing their own business, the company’s core profit comes from product users rather than resellers.

Read more on Nu Skin’s rapid growth in China.

Focus on Isagenix International: For Family by Family

by Kassandra Hayes

Isagenix

Company Profile:

Launched: 2002
Headquarters: Chandler, Ariz.
Co-Founders: John Anderson, Master Formulator; Jim Coover, Chairman and President; and Kathy Coover, Executive Vice President
Products: Solutions for transforming lives that include weight management, energy and performance, healthy aging, and wealth creation


Just 11 short years ago, John Anderson, a master formulator of nutritional supplements, along with Jim and Kathy Coover, who had more than 20 years of experience in the direct selling industry, cast a vision to impact world health by freeing people from physical and financial pain. These three co-founding partners joined forces to create what has become health and wellness company Isagenix International. Based on what the company has achieved in this short time, Isagenix is truly fulfilling that vision and making a difference in the lives of those being touched by their products and opportunity.


Last year Isagenix reported revenues of approximately $335 million, up 28 percent over prior year.


In 2005, Jim and Kathy Coover acquired the company from John, which gave them majority ownership, but John remains an important contributor as “Master Formulator” of Nutritional Supplements and still has a very passionate presence within the growing organization. It was his creation of the Isagenix Cleansing and Fat Burning System—teamed with the Coovers’ focus on field leadership development—that helped sales skyrocket up an astonishing 1,300 percent in only five years. And just last year Isagenix reported revenues of approximately $335 million, up 28 percent over the prior year. According to Kathy, the success of the Isagenix business is based on real product consumption producing real results. There are currently 190,000 active associates in Isagenix. The products, referred to as “solutions,” include weight loss, energy and performance, healthy aging, and of course, wealth creation. The company has even been featured in leading health and wellness journals such as Journal of Nutrition and Metabolism and theNutrition Journal.

When Kathy talks about her company, she exudes pride with every word. Last October she was selected and recognized by Direct Selling News as one of the 20 Most Influential Women in Direct Selling. She is very active with Isagenix’s sales associates and spends much of her time traveling to visit and encourage them. Her personal and hands-on approach to building relationships has resulted in a culture that she feels to be the company’s primary asset.

“It’s all about the people! Our events are like a big family reunion,” Kathy says. “It’s really important to us to maintain our culture as we expand. That’s why we travel so much! We have built an amazing company and we offer solutions to transform people’s lives. We equate success with the number of lives we transform, and that is what we are most proud of.”

Time to Change

Jim, Kathy and Erik CooverJim, Kathy and Erik Coover

“There are a lot of stay-at-home moms and dads who just wanted an opportunity and to be with a company that they thought would be long term.”
—Kathy Coover, Co-Founder and Executive Vice President


Isagenix experienced steady growth in its first few years. It wasn’t until 2008 that the company plateaued a bit and reexamined its approach to building the business. The U.S. economy was clearly uncertain at that time and many businesses were beginning to deal with the great recession and the ramifications and implications to corporate strategy. The Isagenix executive team focused on their most important asset, their independent associates, who were both their consumers and their business leaders. The team decided to introduce promotional incentives that they believed would provide associates with a pragmatic approach to building their businesses by offering them quick wins to build on.

Isagenix invests over $15 million annually into these promotions, which feature an opportunity for associates to earn daily pay, weekly pay, monthly pay and yearly pay. These changes, along with the simplification of company messaging and the training/development process, reignited the sales field, resulting in solid and continued growth. These promotional incentives have yielded a business model that allows people to earn income immediately and also is developing field leadership that will help sustain the company for years to come. Kathy says that associates feel a real sense of accomplishment and the ability to build their businesses. It has also allowed them to better set personal targets, resulting in more highly motivated associates.

A Culture of Family

Isagenix is a family-owned business but also a business created for family, which not only includes Jim and Kathy Coover, but now also their son, Erik, who was Kathy’s original inspiration to start the business. When Erik was a baby, Kathy knew she wanted to be with him and desired to be in control of how she worked. This desire brought about the idea of providing parents with the ability to take care of their children yet still have the flexibility to earn a healthy income. Erik is now Director of Field Development and responsible for enhancing the effectiveness of the field.

As Kathy describes the Isagenix sales organization, she says, “There are a lot of stay-at-home moms and dads who just wanted an opportunity and to be with a company that they thought would be long term.” This caring attitude and concern for family and control of personal and work time has been the foundation of the Isagenix culture. The mission and culture of the company have remained unchanged since the business started in 2002. Kathy adds, “You have to attract the right quality of people to your company. If it’s not right for our associates, it’s not right for our company. And we have very strong relationships with our field. They are our best friends with a common goal to change this planet and make a difference in this world.”

CEO Kevin Adams agrees that maintaining the culture at Isagenix is a huge priority and that the relationship between the field and the corporate office is excellent and very beneficial to the company. He joined the team in 2007 after spending 20 years holding multiple senior financial positions with companies such as ConAgra Foods—one of the world’s largest packaged food companies. Kevin says that, by including the field as much as possible through listening, involvement and solicited feedback, Isagenix is gaining in key performance indicators. In the past year, he adds that recruitment was up 30 percent and fewer associates left the field as retention rates increased more than 10 percent in 2012 alone.



Technology and Social Media

One way Isagenix is keeping this momentum while doing business in an ever-changing world is through evolving its social media capabilities. The company is very focused on this and considers it key to future growth. In fact, it currently employs 70 people in the IT Department alone. The IT specialists support an extensive array of member solutions to help their associates take control of their destiny. One example is a new “Social Entrepreneurs” program where Isagenix fully embraces many social media platforms—YouTube, Twitter, Facebook and more. According to Kathy, this ensures the company is constantly communicating with their associates but also helping them build their business while sharing the opportunity for better health and income with others.

Associates have access to free tools such as Isageeks, a social entrepreneur site offering solutions and support for establishing an online business as more and more people learn about the company through social media. Here they can share content on selling strategies and programs, as well as view and create their own videos and blogs. All of these channels are being leveraged for two-way communication with current associates and new ones as well. For example, Isagenix-to-go provides mobile apps for people on the run as well as iPad and iPhone apps.

Kathy says, “We are very much an Internet-driven company. Ninety-five percent of our orders come online. Applications can be completed via smartphones where they also have access to all presentations and training. All of our training is based on a systems approach inclusive of the associates’ product site, which explains everything about all products, as well as their business site, which provides guidance on everything pertaining to building a business.” Kathy adds that this includes a focus on personal growth with a dedicated personal-development coach, as well as an extensive array of product videos and online chats, videos and blogs led by doctors and experts in the health and wellness industry.


Having been in business for only 11 years, online is not new for Isagenix—they actually started that way.


Having been in business for only 11 years, online is not new for Isagenix—they actually started that way. Through their use of social technology and functionality, the stories of those who are benefitting from Isagenix solutions become excellent business-building tools.

Online strategies are growing in significance and contributing to the company’s success even though live events and personal interaction continue to play a huge role in the corporate strategy to build and maintain relationships and trust with the field. Using the web has become a natural way for Isagenix to conduct their business because its vast capabilities enable associates with a direct line of communication at all times. They don’t have to wait for personal help because there are always opportunities to gain instant access to a solution through online tools.

Generous Nature

While technology continues to bring people closer together, personal interaction is still vital to the Isagenix culture and this extends beyond its employees and field. It also includes giving back to the community. The company has donated $3 million to Childhelp, an organization that exists to meet the physical, emotional, educational and spiritual needs of abused and neglected children. Additionally, more than 1 million meals have been delivered to families in Haiti and 50,000 meals were sent to victims of Hurricane Sandy. Isagenix has most recently pledged over $500,000 to the Make-A-Wish Foundation.

This generosity all began with the founding family, as Jim and Kathy Coover, along with their son, Erik, strive to be strong role models for how a family business can be started and built upon basic ideals that can expand into solutions for hundreds of thousands of people. Women, in particular, have built several iconic direct selling companies upon these same principles of creating an environment for families, and today they represent brand names that are recognized throughout the world.

“Women bring a whole new life, heart and spirit into the industry,” Kathy says. “There’s a huge opportunity for women to be part of the corporate world in network marketing when they come to us with that experience of the field and have built successful businesses. They bring a brilliance of information.”

Through creating this nurturing family environment, the sky is the limit for Isagenix and its associates. In 2013, Isagenix looks forward to sharing health and wealth as it focuses on regional and international expansion. The company already has a presence in Hong Kong, Taiwan, Australia, New Zealand and Mexico and is set to expand in Singapore, Malaysia and China over the next year. Isagenix also plans to increase the number of African Americans, Hispanics, Asians and young people in the company.


“We as a company are focused on numbers, but our numbers are a reflection of the number of lives being changed.”
—Kathy Coover


“We have over 300 people who lost 100 pounds through the IsaBody Challenge, five people lost 200 pounds, and two people lost 300 pounds,” Kathy says. “We are not only changing lives, we are saving lives! We as a company are focused on numbers, but our numbers are a reflection of the number of lives being changed. That’s why I love what I do!”


Isagenix Market Trends