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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The Future of Direct Selling in the U.S.

by Andrea Tortora

Click here to order the October 2015 issue in which this article appeared or click here to download it to your mobile device.


Direct selling in the United States is undergoing a transformation fueled by innovative approaches rooted in classic business practices. The power generators leading the way for direct selling as a channel of distribution can be found in what Direct Selling News has identified as the upper middle market: those companies with annual sales roughly between $300 million and $1 billion.

Because most direct selling companies are privately held and many decline to disclose their financial results, it is difficult to create a definitive list. Our research honed in on a group of more than 30 U.S.-based companies, most of which are experiencing significant growth. Some of them are on the cusp of reaching $300 million, and some likely have recently passed the $1 billion mark. But together they are critical to direct selling’s competitiveness and future. They tend to be among the fastest growing when it comes to revenue, and they account for a large slice of the job creation pie.

An in-depth analysis of this group reveals a high level of consistency when it comes to executing on key common strengths. The ability of these companies to focus in on products, customers, serving their salesforce and creating a culture that reinforces a sense of family put them on track to shape the future of direct selling in the U.S.

Companies emphasize each area in different ways, but in general these leaders:

  • Harness data. The upper middle market knows how to mine the data it has to gain insights that lead to more and better sales. Executives train leaders and consultants to use data to open doors that might otherwise remain closed.
  • Stay true to classic business practices. Technology and social media do not replace person-to-person interactions, they complement them. Upper mid-market firms build relationships with customers that maintain the consultant-client affiliation but also allow the customer to have a connection with the company itself.
  • Use compensation plans that span all levels of engagement. To cultivate trust and long-term relationships, comp plans are created to appeal to new customers, product enthusiasts, fierce advocates and influencers—all the way up to the entrepreneur who is all in. Payments also follow a more modern schedule.
  • Foster an entrepreneurial spirit. Consultants are allowed and encouraged to go far with personal marketing (think YouTube videos) while maintaining brand identity. Companies deliver superior and frequent training and messaging to make this happen.
  • Maintain a laser-focus on selling. The sale of a product, a group experience or an opportunity all lead to more sales, which generate positive results.

No matter the specific approach, one thing all upper middle market companies excel at is …

Click here to read the full article at Direct Selling News.

 

 

Direct Selling’s Strength in the World’s Billion Dollar Markets

by Andrea Tortora

Direct selling continues to gain ground worldwide, with global retail sales and the total salesforce both reaching record highs in 2014.

The World Federation of Direct Selling Associations (WFDSA) estimates that retail sales rose 6.4 percent to $182.8 billion in 2014, up from $171.8 billion in 2013, with all regions and three-quarters of direct selling countries posting gains. The total salesforce grew by 3.4 percent in 2014 to 99.7 million people, up from 96.5 million in 2013. All of which lights the stage for coming geographic shifts in market dominance.

“The most recent figures highlight the increasing opportunities that direct selling offers,” says WFDSA Chairman Doug DeVos. “Customers seek personalized service and quality products, and direct sellers are able to meet those needs in a way that is convenient and enjoyable. At the same time, people who aspire to earn a little extra or launch a full-time business venture are drawn to direct selling due to its flexibility and pay-for-performance structure.  It’s exciting to see more people, both customers and distributors, enjoying the benefits of direct selling.”

As part of WFDSA’s annual global statistics gathering, data is collected in local currency figures, which are then converted to U.S. dollars using 2014 exchange rates for all years. When comparisons are made to determine year-over-year change, this practice eliminates the impact of currency fluctuation, explains Judy Jones, Market Research Insights Leader at Amway and Chair of the WFDSA Global Research Committee. The 2015 report comes with an expiration date of May 2016, when the next year’s data will be published. For some markets, sales are estimated until the respective country reports its official figures to the WFDSA. At that time, actual data is restated and accounted for the next year.

These most recent figures confirm direct selling’s strength and its ability to keep reaching more people—as sellers and consumers—in all corners of the globe. The industry’s 6.5 percent three-year compound annual growth rate (CAGR) from 2011 to 2014 is evidence of that power.

The Top 5 countries account for 61 percent of all global sales. All but one report a positive CAGR (2011-2014):

  1. United States, 4.9 percent
  2. China, 18.7 percent
  3. Japan, -2.3 percent
  4. Korea, 8.1 percent
  5. Brazil, 6.7 percent

In all, 23 countries posted retail sales from direct selling of $1 billion or more in 2014. That group accounts for 93 percent of global sales from direct selling.

Leading the pack of the Top 5 countries once again is the United States, where the 2014 sales of $34.5 billion set a record and grew by 5.5 percent from the prior year. The U.S. CAGR for 2011 to 2014 is 4.9 percent. There are 18.2 million people who distribute products, up 8.3 percent from 2013. Nearly 75 percent are women, which means 14 million females are building their own businesses.


Overall estimated retail sales rose 6.4 percent to $182.8 billion in 2014, up from $171.8 billion in 2013.


Companies that are members of the U.S. Direct Selling Association (U.S. DSA) employ 55,300 people who are highly trained experts in their field. For example: 3,000 employees are science professionals, including chemists, biologists and engineers.

“Robust salesforce and revenue figures only tell part of the story behind direct selling’s success in the United States and around the world,” says Joseph N. Mariano, President of the U.S. DSA. “Our channel also provides …

Click here to read the full article in Direct Selling News.

LifeVantage: Adding Sizzle to the Steak

by Barbara Seale

Photo above: LifeVantage President and CEO Doug Robinson addresses the crowd at a recent company event.


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


Company Profile

Founded: 2003
Headquarters: Salt Lake City, Utah
Executives: President and CEO Doug Robinson
Products: Wellness, anti-aging and energy products that use Nrf2 science to reduce oxidative stress at the cellular level


Doug Robinson

Doug Robinson

David Phelps

David Phelps

Shawn Talbott

Shawn Talbott

Many executives have had the experience. They launch or join a young company that is growing quickly, but over time the momentum slows. That was the story at LifeVantage Corp., and its experience has made it a believer in the necessity to embrace change. Its first major change was relaunching as a direct selling company. And within the last year the company has taken numerous steps to re-energize its brand, product line and distributors.

LifeVantage launched in retail stores in 2003 with a single, innovative nutritional supplement, Protandim. The science behind the product is still compelling today. Its natural, indirect antioxidants actually signal the body’s genes to increase production of antioxidant enzymes that work together as the body’s first line of defense against free radicals. In 2005, ABC’s television news magazine Primetime featured an overwhelmingly positive segment on a human clinical study of Protandim. They reported the results of the study, which showed that the product decreases oxidative stress by more than 40 percent.

What happened next was every company’s dream. Sales skyrocketed. So did the price of the company’s OTC stock. But there was a hitch. The young company was still small and wasn’t set up for the surge. They didn’t have the infrastructure to keep up with orders, and quickly its sudden multimillion-dollar monthly sales volume trickled down to about $250,000. Its income statement was never in the black, and the dream quickly became more of a nightmare. But it was also a turning point. Executives who were already sold on the product’s potential for health had seen its massive commercial possibilities. But what could they do about it?

The answer: direct selling. In 2009, its first year as a direct seller—and with a single product—LifeVantage saw revenue almost triple and then continue to grow. In 2011 it hired new President and CEO Doug Robinson, who had joined the LifeVantage board of directors about six months after it became a direct seller, bringing his 25 years of health care business management expertise. He injected the company with the operational discipline he had learned over the years.

“The next year we were at $39 million in topline revenues,” he recalls, “but more important to me, we turned the operations of the company around and were finally $4 million in the black.”

Sustaining Success

A growth chart like that one is hard to sustain, but Robinson was determined to nurture it and ensure that LifeVantage had a vibrant future. He believed that an injection of new ideas, expertise and energy was needed in the management team. Robinson started bringing in solid leadership in key roles and moved the stock to the NASDAQ (symbol LFVN) in 2012.

Two of those new executives, Chief Sales Officer Dave Phelps and Chief Science Officer Shawn Talbott, Ph.D., joined the company within the last year. They have introduced additional products and sales initiatives that are infusing new enthusiasm into distributors and opening new markets that weren’t available in the past.

Talbott’s first step was to crystallize the company’s product strategy. He was familiar—and impressed—with the science behind Protandim even before he joined LifeVantage. He believed that Protandim alone could be the foundation for a billion-dollar company. But he foresaw that the science behind it could do even more. Infused into other products that help people feel, look or perform better—the company’s product strategy—Protandim could drive the creation of other effective products that worked synergistically and also opened new demographic doors.

Talbott explains, “If you want to help people feel better, perhaps by increasing their energy, you could give them caffeine or sugar. But the problem is that if you haven’t gone upstream biochemically and their oxidative stress is out of balance, they’ll always be out of balance.”

So how does that knowledge suggest new products? Talbott notes that there’s no demand in the market for a product that addresses oxidative stress, at least not in those words. But people do want other things: youthful-looking skin, more energy, better mood, a thinner body and improved sports nutrition. Products can deliver those by reducing oxidative stress, using the same Nrf2 science contained in Protandim. Within the last few months LifeVantage introduced products that address some of the conditions that arise from oxidative stress, but which people identify by other names.


LifeVantage has introduced products that address some of the conditions that arise from oxidative stress, but which people identify by other names, such as aging skin, lower energy and depressed mood.


Product Prowess

First, it introduced TrueScience™, a beauty system proven in a clinical study to visibly address the signs of aging by combating oxidative stress in the skin. Then it went a step further with the introduction of AXIO, the company’s brand of two energy drink powders that deliver better mood and improved mental focus. By entering the energy drink market, LifeVantage expanded the marketplace for its products to millennials, but the drink’s promise for improved mood and mental focus as well as quick and sustained energy gave it baby boomer appeal.

Talbott notes that AXIO fits into LifeVantage’s product portfolio strategy by helping users both feel and perform better. He adds that the company’s original focus in developing the product was to attract millennials, but his experience since then has shown him that AXIO’s promise of multidimensional energy resonates with every age.

Recognizing that AXIO would attract a younger demographic than Protandim or even anti-aging skincare line TrueScience, LifeVantage prepared by developing and offering a three-day seminar it calls “Rules of Engagement.” The new seminar is designed to teach, train and mentor young distributors, a group it calls Young Entrepreneurs for Success, or YES. It was offered first in September with presentations done by eight of the company’s top distributors in the millennial age group. Chief Sales Officer Dave Phelps describes it as “monumentally successful. We’re already getting requests to do it every three months.”


The strategic reinvention of LifeVantage includes simplified messaging, a greater emphasis on recruiting distributors, an infusion of leadership development, and finally, a big dose of excitement.


The seminar is just one element of a four-point reinvention strategy designed to reinterpret the company’s solid science by injecting sizzle and energy.

“Any company that isn’t able to reinvent itself doesn’t have as much success as when it is able to adapt and to love change,” Phelps says. His strategic reinvention of LifeVantage includes simplified messaging, a greater emphasis on recruiting distributors, an infusion of leadership development, and finally, a big dose of excitement. In many areas, such as training for millennials, the areas overlap. As young leaders learn, they can also invite prospects, helping them to develop a knowledgeable and excited team.

Phelps describes the company under reconstruction as LifeVantage 2.0. He says that for too long the company’s messaging was too complex, relying on scientific information and results from clinical studies—topics that, unless they are simplified for the average listener, can be hard to understand and then relay to others. Both sales presentations and science education are being simplified and presented in a language anyone can understand.

The Duplication Dynamic

“One of the great hallmarks of achievement of LifeVantage 1.0 was …” Click here to read the full story.

 

 

 

Lia Sophia Says It Will Shut Down in February

Photo above: Celebrities Jessica Alba, Camilla Belle and Ali Larter step out in lia sophia jewels.


Jewelry seller lia sophia will close its doors in February, according to an announcement on the company’s website and social media pages. The family company said a “challenging business environment” is driving its decision to end operations in the U.S. and Canada.

The Chicago-based brand launched in 1986 as the jewelry division of Remington Products Company, a personal-care product empire. Tory Kiam has led the jewelry business since the death of his father, Remington owner Victor Kiam, in 2001. He and his wife, Elena, relaunched the company in 2004 under the lia sophia brand, named after their two daughters.

“We are so proud of building lia sophia over the past 28 years into an outstanding company that has empowered women, and whose jewelry has been a favorite of so many,” Elena Kiam, the creative director behind lia sophia’s designs, wrote Monday on her company blog. “However, given the challenging business environment, we made the painful decision to wind down lia sophia in the United States and Canada by December 31, and cease operations by the end of February.”

90 Days of Direct Selling – Day 46

DSN_90Days_Email_Signature

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

Zurvita: Successful Simplicity

by Courtney Roush


Company Profile

Founded: 2008
Headquarters: Houston, Texas
Executives: Mark and Tracy Jarvis
Products: Health and wellness


Mark and Tracy Jarvis

Mark and Tracy Jarvis

After a rocky start, Zurvita chose the road less traveled—and built a salesforce determined to make the world a healthier place.

Though Houston-based direct seller Zurvita originally launched in 2008 as a service business with everything from cell and video phones to tech support, electricity and gas, the company arrived on the wellness scene in 2011. It was then that Zurvita introduced a suite of powerhouse products that, above all, were designed to simplify the pursuit of wellness. The company’s growth since then has been nothing short of spectacular. Annual revenue grew from $3.6 million in 2011 to $15 million in 2012 and $63 million in 2013. Revenue for 2014 is expected to fall between $80 million and $90 million. The company of 55 employees, with manufacturing operations in Dallas and Phoenix, has spent the last year greatly enhancing its information technology infrastructure to be able to support that incredible growth, and better serve the 30,000-plus independent consultants who represent the Zurvita brand.

Currently, the Zurvita independent salesforce is concentrated in the United States and Canada, primarily in small towns. According to Zurvita leadership, that surprising phenomenon is likely due to the fact that word-of-mouth travels faster in places like McAllister, Oklahoma, one of the most successful Zurvita towns, where you’ll hear the stories of farmers-turned-ambassadors (currently the highest level of the independent salesforce). And while Zurvita is working to spread the word of those powerful testimonials into larger North American cities, the company also just celebrated its expansion into five new international markets on July 1, 2014. For a direct seller that’s still a relatively new kid on the block, these milestones are impressive, indeed.


“When you give people something that changes their lives in a tangible way, they’re going to stick with you.”
—Mark Jarvis, Co-Founder, Co-CEO and President


During the early years, however, the company’s own journey to wellness was challenged with more than a few hurdles and a major detour, all of which make its present success perhaps that much more remarkable. This company is unrecognizable from where it was just six years ago.

When Zurvita launched in 2008, the company’s co-founders, Mark and Tracy Jarvis, were already power players in direct selling, having achieved seven-figure success as distributors with another direct seller. They’d taken an enormous leap of faith to walk away and attempt to build a company from the ground up, but they considered it a calling to start a direct selling business based on philosophical principles they shared: faith, humble leadership and plenty of opportunities for “wins” at every level.

But the maiden voyage wasn’t smooth sailing. Serving as an online shopping mall of sorts, “we were an unfocused, struggling company,” says Mark Jarvis, who also serves as Co-CEO and President. After losing an average of $300,000 a month during its first 42 months, it was time for the fledgling direct seller to make a radical change; the “all things to all people” approach simply wasn’t working. “By 2011, we were looking for an identity,” Mark says. “We made the decision to regroup and start over again with a single focus.”

Why wellness? Mark’s wife, Tracy, had always had a passion for the subject, but the choice was based more on the profound and tangible impact the couple knew that good health could have on people’s lives—and the power that such transformations have to influence others. “When you give people something that changes their lives in a tangible way, they’re going to stick with you,” Mark says.

Make no mistake: The transition from 11 products to one was anything but easy. “It was a courageous move on our part,” says Co-CEO Jay Shafer. Inspired by the book Good to Great by Jim Collins—who stated that behind every successful company was the pivotal decision to take a bold risk—the company reinvented itself. Quite telling was the fact that “our consultants in the field respected our decision to streamline and stayed with us,” Jay says.


One of the most interesting aspects of this company’s story is that its fastest-growing demographic comes from small-town America.


With that in mind, after extensive collaboration with scientists, physicians and researchers, the company launched Zeal Wellness, its flagship product, in 2011. Designed as an all-in-one formula of whole-food concentrates in a powder to be mixed with water or juice, Zeal is intended to deliver the body’s daily nutritional needs, promoting optimal health, a strong immune system and enhanced energy stores. Calling those days back in 2011 “a combination of faith and chaos,” though it wasn’t developed as a weight-loss product per se, Zeal Wellness was providing just that result for some, along with increased energy and, quite simply, a zest for life. Corporate leadership believed not just in the integrity of the product but also in the bang for the buck. “Above all, we wanted value for the customer,” Jay adds. “I don’t believe you can find a product that delivers what we do for less than twice the price.”

Zurvita’s leadership team, co-founders Tracy and Mark Jarvis and co-CEO Jay Shafer, shifted the company’s focus from services to wellness products because of the tangible impact good health could have on people’s lives.

Zurvita later added three additional products: Zeal Advanced Formula Protein Shakes; the herbal and probiotic Zeal Cleanse for digestion; and a thermogenic fat burner, Zeal Burn. Consumers may purchase all four products bundled as the Zeal Weight Management Program. Those who want an extra shot of motivation during the program have the option to participate in the Zeal for Life Challenge. This support group of sorts includes regular conference calls on a variety of topics that, collectively, promote a holistic approach to wellness—one that extends far beyond mere numbers on the scale.

Product convenience is of paramount importance to the company. Every Zurvita product was designed to offer no-hassle, easy-to-take-and-share nutrition. Having witnessed the company’s exponential growth after streamlining its product line from 11 to just one, the Jarvises and Jay Shafer were committed to promoting a simple message everyone could understand: simple, convenient, economical.

One of the most interesting aspects of this company’s story is that its fastest-growing demographic comes from small-town America. “Zeal Wellness has had almost an immediate impact in these smaller towns,” Jay says. “I would love to say that was our strategy, but it wasn’t—it just happened.”


Annual revenue grew from $3.6 million in 2011 to $15 million in 2012 and $63 million in 2013. Revenue for 2014 is expected to fall between $80 million and $90 million.


Even while Zurvita embraces its small-town growth, however, company leadership is thinking beyond borders. Effective July 1, Zurvita entered the Dominican Republic, United Kingdom, Hong Kong, Australia and Singapore. Corporate team members have partnered with Zurvita ambassadors (independent distributors who have achieved the highest level of success in the salesforce) to gain traction in each of these markets.

A new representative can start her Zurvita business as a sales consultant for a minimal amount, then move up to the managing consultant level after adding her first three new team members. From there, a managing consultant can progress to the senior, regional and executive consultant levels, then national and presidential director levels, followed by ambassador. The pinnacle of success is the level of crown ambassador, which takes five ambassador organizations to reach. Although nobody’s reached it yet, Mark estimates it to be just a matter of time.

Zurvita has embraced a grassroots approach to its growth strategy, entering each market slowly, deliberately, and with one product—Zeal Wellness. Then the company introduces additional products after it has established a loyal following in that market. “There’s no fanfare at the beginning,” Mark says. “We just get people on the product. It’s a conservative approach.”


Based on the philosophy “The higher you climb, the more you serve,” the company maintains an eye on succession within the independent salesforce, teaching Zurvita ambassadors to raise up their replacements.


‘Now’ Money

The company’s training and educational initiatives are based on helping new consultants to hit the ground running, before the dust can settle, so to speak.

The Zurvita Success System is designed to teach consultants how to achieve a quick win—earning a bonus during their first 30 days in business. During their second month in business, they’re shown how to repeat those earnings—and establish a success story as early as possible that they can share confidently and enthusiastically with others. Monthly promotions and contests are designed to encourage the maintenance of that early momentum. One such promotion is “Destination Success,” in which all consultants who move up in rank qualify for a cruise.

Zurvita’s high performers also may qualify to earn the use of cars; the company’s options include Mercedes, Cadillac and BMW, giving prospective and new team members a glimpse of the potential of this business opportunity.

Zurvita ranked No. 100 on the 2014 DSN Global 100 list.

Technology Boost

To better serve its consultants and support the company’s growth, Zurvita began developing a new IT infrastructure last year. Now equipped with more data and flexibility, plans are underway for the company to introduce additional technological tools that will help develop consultants’ business acumen and product knowledge and, ultimately, drive additional recruitment. In the meantime, consultants take advantage of company-provided, personalized websites, where their customers can shop around the clock. Some 50,000 people have liked the company’s Facebook page, where the news feed contains pointers for health and wellness and consultants relay their personal success stories.

Zurvita utilizes SMS technology to send a quick and easy offer that consultants can share with potential team members. After texting “Do you have a minute?” to their prospects, consultants text an informational video link to those who agree. The video includes the opportunity for prospects to try a Zurvita product sample pack. The intent is to blend the convenience of technology and the personal, grassroots approach for which Zurvita has become known. No matter how many technological offerings it rolls out, the company remains mindful of the fact that in many of its most successful markets, parties, personal testimonials and individualized service will never go out of style.


Celebrating Wins at Every Level

The spotlight is big enough for everyone at Zurvita events. “You don’t see the same people on stage at all of our events. We showcase the next man up, so to speak,” Mark says. When you consider that Zurvita’s typical consultant has had no prior experience in direct selling before starting a Zurvita business, each win is justifiably reason to celebrate. The company strives to help new consultants realize their first win right out of the starting gate—and that tangible success can empower them toward a succession of more wins.

“Our job is really to build relationships with up-and-comers,” says Tracy. “We pull them in and make them feel totally connected to the company. We just love on these people and make them feel appreciated. It keeps people engaged and moving forward.” In fact, corporate leadership is so committed to empowering “the next man up,” they join Zurvita sales support staff to work the phones until midnight during every month-end close, reaching out to representatives who are on the cusp of promotion and offering that extra shot of encouragement.

Based on the philosophy “The higher you climb, the more you serve,” the company maintains an eye on succession within the independent salesforce, teaching Zurvita ambassadors to raise up their replacements. “We’re replacing our army, so to speak,” Jay says.


Zurvita employees and consultants volunteer to build water wells in Nicaragua.

 


Giving to Others


Zurvita’s corporate social responsibility initiatives are relatively recent, having spent its first few years as a struggling company in search of an identity. Now beginning to reap the rewards of its hard-fought success, Zurvita is in a place to share with others. In January 2014, employees and independent salesforce members ventured on a mission trip to Nicaragua to build two water wells—an experience they’ll repeat in Nicaragua in January 2015 under the name of “Zeal for Life.” On Aug. 23, 2014, Zurvita kicked off its “Feed 500” program, which challenges employees and independent salesforce members to feed at least 500 hungry people in 24 hours. During the inaugural event in Houston, volunteers packed lunches and delivered them everywhere they identified need, whether it was a homeless man on the street or an inner-city homeless shelter. It’s an experience Zurvita plans to replicate each month in various locations throughout the United States.

Three years after relaunching on a platform of wellness, the company is reaping the rewards of its deliberate, strategic approach to market expansion and brand marketing. Whether the results are seen in Zurvita’s revenue—potentially reaching $90 million for 2014—growth of its 30,000-plus independent consultants through a small-town network, or expansion already into five new international markets, the company plans to stay around for the long term, bringing wealth and wellness to an eager audience.

Billion Dollar Markets

by Andrea Tortora

Direct selling is an industry proving its mettle as it prepares to take advantage of major growth opportunities fueled by technology, increased entrepreneurial support and the new emerging market consumer.

Global estimated retail sales topped US$178 billion in 2013, up 8.1 percent from 2012, according to the most recent data from the World Federation of Direct Selling Associations (WFDSA). The worldwide salesforce also grew, up 7.2 percent to 96 million independent contractors. Both are record numbers.

In 2013 there were 23 countries with annual retail sales above $1 billion. That group accounts for 93 percent of global sales. Of special note is the industry’s 6.8 percent three-year cumulative growth rate (CAGR). The figures reinforce direct selling’s strength and show its potential, says Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA. “The opportunity this industry has to really be even more powerful is in taking advantage of the fact that we are living in a moment in our society when technology is reinforcing relationships and allowing us to do more and better business,” Carlucci says.

STRONG SUSTAINABLE GROWTH

This most recent data clearly illustrates direct selling’s sustainable growth—especially in times of economic recovery and improved governmental policies to support entrepreneurship. Among the direct selling associations reporting their data to the WFDSA Research Committee, about three-fourths of the markets show solid, sustained growth in the three-year compound annual growth rate.

Here’s why that is important: “If the year-over-year percent change represents the snapshot, then the three-year CAGR represents the video and shows the long-term change or the trend. The sustained growth of direct selling is shown in a positive CAGR,” says Amway’s Judy Jones, Chairman of the WFDSA Global Research Committee.

Data is reported using constant 2013 dollars, to remove currency fluctuations from the equation. As more companies participate in sharing sales data with each country’s direct selling association (DSA), the entire industry begins to gain actionable knowledge it can use to enable sellers to better serve customers.


Global estimated retail sales topped US$178 billion in 2013, up 8.1 percent from 2012, according to the most recent data from the World Federation of Direct Selling Associations (WFDSA).


The sales of the 23 billion-dollar markets in 2013 are familiar to those who follow this annual ranking. The top five countries account for 60 percent of direct selling’s global sales. All but one report a positive CAGR:

1.  United States, 4.6 percent
2.  China, 23.3 percent
3.  Japan, -4.4 percent
4.  Korea, 8.0 percent
5.  Brazil, 8.6 percent

China moved into the No. 2 spot for 2013. If the current rates of growth in the United States and China remain steady, China could become the No. 1 direct selling market in the next year or two.

Interestingly, the billion-dollar markets that make up the bottom five show tremendous cumulative growth, particularly in emerging markets:

19.  Australia, 2.3 percent
20.  Venezuela, 15.7 percent
21.  India, 20.0 percent
22.  Philippines, 17.8 percent
23.  Indonesia, 12.0 percent


This most recent data clearly illustrates direct selling’s sustainable growth—especially in times of economic recovery and improved governmental policies to support entrepreneurship.


The numbers reinforce trends seen in the past two years. Direct selling is growing rapidly in the Asia Pacific region and Africa—dubbed the “new frontier” by Carlucci. Africa posted just over 9 percent year-over-year sales change for 2013, trailing only Asia Pacific at 12.6 percent.

“Africa is a place where everyone should put a seat now, because in 15 years it will be very relevant,” Carlucci says.

Following closely is the Central and South American region, which also posted just over a 9 percent year-over-year sales change. Six Latin American countries—Brazil, Mexico, Colombia, Argentina, Peru and Venezuela—are billion-dollar markets. More multinational companies are starting to do business in Central and South America, where consumers embrace direct selling.

POWERFUL NEW MARKETS

The desire to improve one’s socioeconomic standing remains strong in emerging markets, which translates to excellent growth potential for direct selling. In fact, seven of the billion-dollar markets with double-digit cumulative growth rates are emerging markets, according to the WFDSA data:

  • Argentina, 28.1 percent
  • China, 23.3 percent
  • India, 20.0 percent
  • Philippines, 17.8 percent
  • Venezuela, 15.7 percent
  • Indonesia, 12.0 percent
  • Colombia, 11.6 percent

Direct selling is a very relevant marketing and sales model for emerging markets, says Derrick Irwin, Portfolio Manager for the Wells Fargo Advantage Emerging Markets Equity Fund. In many of these countries, the retail industry is not fully developed and companies cannot put products on a Wal-Mart shelf. “There is also skepticism among consumers about counterfeiting and quality products,” Irwin says. “If items are being sold by someone they trust, it is powerful. The opportunities are very, very good.”

Companies like Avon know how important international markets are for growth. The global beauty direct seller derives 85 percent of its business outside the U.S., and 75 percent of revenues come from emerging markets, says CEO Sheri McCoy. Avon’s priority? Growing its top markets, which include: Brazil, United States, Mexico, Russia, Central Europe, Venezuela, Argentina, Colombia, United Kingdom, Philippines, Turkey and South Africa.

China is also a huge market with infinite business opportunities. Leo Zhou, Deputy Director of Media Affairs at Mary Kay China, believes direct selling is a perfect match for China’s huge population, and that the interpersonal interaction at the industry’s core is quite effective in low-tier cities. He says, “It ensures that the direct selling industry could get into contact with female consumers in a faster and more precise way, thus promoting sales growth.”

Despite being a more mature market for the industry, Latin America is still a developing region with an entrepreneurial middle class that is seeking ways to maximize individual and household incomes, as demonstrated by the number of countries represented on the list, and growing activities in even more. Miguel Francisco Arismendi, Amway’s Director General for the Andean area, based in Bogota, Colombia, says, “There is no doubt that direct selling provides opportunity.”


“Africa is a place where everyone should put a seat now, because in 15 years it will be very relevant.”
—Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA


EMERGING MARKET CONSUMERS

The world’s new consumers are a diverse group. Some are affluent and ready to spend their newly robust income on fulfilling their dreams and ensuring a better life for their children. Others are just beginning to realize their buying potential as they are exposed to the wealth of available products. The new middle class in Indonesia, India, Nigeria, Ghana and Kenya are confident consumers who plan to buy more, save more and invest in education, according to research from Standard Chartered, a London-based international bank.

These emerging consumers have a wide range of incomes and a wide range of desires to follow, including such things as an appetite to travel and willingness to invest in a new car, and some can even consider buying luxury goods. In less developed markets, currency fluctuations and commodity prices impact the consumer spend. Wells Fargo’s Irwin says, “The problem in core countries is that so much of the family budget goes to food, so if those prices fluctuate that squeezes the budget for other things.”

Whereas an American will generally buy shampoo no matter what, in countries like India it may not be a regular purchase. To get around this hard economic truth, companies like Hindustan Unilever Limited offer single-use package sizes for the price of a rupee or two (2-4 US cents). “It takes creative marketing and strategies to really access these markets,” Irwin says.

Another example: In China, direct selling successfully advances the development of consumers’ personal-care habits in low-tier cities and stimulates their willingness to spend more on premium products. Consumers in fourth-tier cities spend an average of 220 yuan (about US$38) each year per capita at cosmetics stores, whereas in the direct selling channel, consumers spend 540 yuan (about US$88) each year. Mary Kay’s Zhou says, “This fully demonstrates the consumption potential of third-tier and below cities.”


The new middle class in Indonesia, India, Nigeria, Ghana and Kenya are confident consumers who plan to buy more, save more and invest in education, according to research from Standard Chartered.


As emerging market consumers flex their collective spending muscles, a preference for local or domestically based brands is becoming evident. In the past 20 years, multinational brands dominated consumer brand preferences. As locally based companies achieve scale and develop their own brand strength, they are beginning to compete with multinationals. Irwin says, “Consumers are more open to buying local brands to support local businesses and show their pride in the local market.”

In China, where consumers have long aspired to acquire products with names like Gucci, Nike and other big Western brands, local brands are gaining market share as they fill a niche in the middle ground between the luxury and inexpensive brands. China-based Belle International is one of them. The company makes mid-range women’s shoes and is like the Nine West of China, according to Irwin.

In India, the domestic Godrej Consumer Products now claims more than $1 billion in revenue, taking a stab at the more established Hindustan Unilever. “They are getting to scale, and they are creating disruptions,” says Irwin. This bodes well for direct sellers, who build their business on micro-local enterprises and interpersonal connections.

EMPOWERING ENTREPRENEURS

At the heart of direct selling is the ability to offer people the chance to feel empowered, to take control of their lives and to add value to society. This fuels entrepreneurship, self-employment and microenterprises. Research shows that such ventures strengthen a country’s economy.

Alan Finkelstein Shapiro, a researcher at the Universidad de los Andes in Colombia, finds that “economies with larger self- employment shares exhibit faster recoveries following a negative economy-wide productivity shock.”

The entrepreneurial aspects of direct selling empower women and can be attractive to those under age 35 who more often want to be their own boss while also helping others. Sandra Whittle, Managing Director for Partylite U.K. & Ireland, says a favorite quote she shares with those new to direct selling is, “If at first you do succeed—try to cover your amazement.”

Whittle says consultants must be willing to put in the work because experience cannot be bought, and it is particularly important to earn the respect of colleagues and of the field.

Just as important is harnessing the excitement of those who want to be sales leaders, says Andrea Slater, with Avon U.K. “We need to ensure that we capture that enthusiasm within a specific timeframe,” she says. “Then, we need to fan the flames and keep them motivated, engaged and rewarded.”

Mary Kay’s Zhou says that in countries like China, business startups and entrepreneurship are becoming easier to navigate on the policy front, as well as becoming more accepted forms of livelihood for the younger generation. He continues, “Direct selling can help them to fulfill their dream of initiating businesses, and to gain earning opportunities and freedom with the thinking approach and behavioral model of their own characteristics, which constitutes a career development mode catering to the ideal of modern youths.”

For women, in particular, direct selling is an opportunity to contribute money to the household and develop a degree of independence. This is especially true in rural areas and farming communities. Irwin cites Hindustan Unilever Limited as an example. The Mumbai, India-based consumer goods firm employs 65,000 women through its Shakti direct selling initiative. These women sell products in their villages, giving Hindustan Unilever and the women themselves a huge economic opportunity they wouldn’t have otherwise.


Alan Finkelstein Shapiro, a researcher at the Universidad de los Andes in Colombia, finds that “economies with larger self-employment shares exhibit faster recoveries following a negative economy-wide productivity shock.”


THE YOUNGER GENERATION

As an industry, direct selling companies recognize the importance of recruiting young people under age 35 to become consultants as well as consumers of its products. Doing this means using a technology-rich approach and being socially responsible, says Amway’s Arismendi.

In Latin America, direct selling is equipping consultants with social media tools that enhance day-to-day communications. Amway is aggressive in studying tools that promote the use of technology in the field. “This will not replace the personal touch, but it will complement it,” Arismendi says. “Direct communication and social networking can be much more effective than conventional sales and retail.”

SPOTLIGHT ON REGIONAL MARKETS

UNITED STATES

The No. 1 market for direct selling saw 2013 retail sales of $32.7 billion, up 3.3 percent from 2012. Between 2010 and 2013, the compound annual growth rate was 4.6 percent in the country. The U.S. accounts for 18 percent of worldwide direct selling sales, generating about $1 for every $6 retail dollars globally.

The U.S. salesforce also grew 5.7 percent, to 16.8 million people, which is a record high. The most prevalent sales method is face-to-face, with 70 percent of consultants using this avenue, according to the U.S. DSA.

The product groups with the strongest percent of market share are wellness and services, making up 28.5 percent and 22.9 percent of sales, respectively. New segments are also using direct selling, such as energy, says U.S. DSA President Joseph Mariano. “Direct selling is a smart, go-to-market strategy for many products, especially those that benefit from explanation or demonstration. In the case of utilities, most Americans aren’t used to having a choice in their provider, so they benefit from guidance to make an informed decision.”


“Direct selling is a smart, go-to-market strategy for many products, especially those that benefit from explanation or demonstration.”
—Joseph Mariano, President, U.S. DSA


CHINA

Given current rates of growth, China will most likely surpass the U.S. in market size for direct selling, becoming the industry’s No. 1 market. Its 2013 retail sales were $27.3 billion, up an astounding 41 percent from 2012. China also enjoys the industry’s highest cumulative growth rate at 23.3 percent.

“With the acceleration of the global economic integration progress, China promises tremendous market potential as the second largest economy worldwide today,” says Mary Kay’s Zhou. U.S. direct selling giants Amway, Mary Kay and Nu Skin are among the largest companies operating in China. Several domestic Chinese direct selling enterprises also are a noticeable force. Competition across the country is moderate, with 44 licensed enterprises.

Cosmetics consumption keeps growing at an average annual growth rate of 15 percent, despite an overall economic slowdown. China trailed only the U.S. and Japan in consumer cosmetics spending in 2012. Women play a key role in those numbers and are increasingly active in economic consumerism. “As the number of employed women increases and their status in social and economic development rises steadily, their role in consumption is also becoming more prominent,” Zhou says.

Chinese women now control 60 percent of domestic consumption and make 77.5 percent of household purchase decisions. This far exceeds the purchasing power of men and children.

As China grows and becomes a more relevant market, the WFDSA’s Carlucci believes that the industry must put more energy into “understanding how we communicate and maintain the fundamentals of the industry” in a way that can be understood regardless of the country.


“…The recent statement from Esther McVey, Minister for Employment, saying, ‘Being your own boss is as impressive as a degree,’ appears to give more credibility to self-employment than ever before.”
—Lynda Mills, Director General, U.K. DSA


EUROPE

Direct selling continues to grow at a steady pace in Europe. Retail sales topped $31.6 billion in 2013, and 12.7 million people work as independent consultants across Western, Central and Eastern Europe. “Europeans have embraced the entrepreneurial spirit and increasingly recognize direct selling as an appealing (and sometimes preferable) alternative to a traditional job,” says Marinda Chaplin, Vice President at SUCCESS Partners Europe.

As recovery continues from the economic recession, the U.K. is seeing more encouraging trends, especially in the area of self-employment. Lynda Mills, Director General of the U.K. DSA, shares that recent information from the Office for National Statistics reveals self-employment is at its highest level in 40 years with 4.5 million people. “This, coupled with the recent statement from Esther McVey, Minister for Employment, saying, ‘Being your own boss is as impressive as a degree,’ appears to give more credibility to self-employment than ever before,” Mills says.

Mills reports that during the recent recessionary years, direct selling in the U.K. has seen year-on-year growth in a variety of demographics, and some direct sales companies are enjoying double-digit growth. With young people being notoriously risk adverse, direct selling is an ideal option for people in many age ranges and from varied backgrounds.

“We have seen more young people between 18 and 25 working in direct selling with 29 percent (75,000) of U.K. direct sellers under age 25,” Mills says. On average, 38 percent of direct sellers are over age 50, representing a rise of more than 32,000 people since 2011.

Direct selling is also increasingly appealing to a multi-cultural audience. In a recent survey of its members, the U.K. DSA discovered that 30 percent of direct sellers (120,000 people) in the U.K. are non-British. DSA member companies attribute this to a rise in interest of people from places like Asia and Eastern Europe, according to Mills.

People in the U.K. are turning to direct selling as a real alternative to traditional employment, with 68,000 direct sellers (17 percent) working full-time hours (more than 30 hours a week). This is up 20,000 from 12 percent in 2011. “Direct selling here in the U.K. really has entered the mainstream,” Mills says.

One factor in the sustainability of the industry is the increasingly digital nature of the world economy. Technology enhances the core aspect of direct selling. Embracing the digital age can ignite new growth in mature markets like the United Kingdom, which enjoys a 10.4 percent three-year compound annual growth rate and reported $3.3 billion in 2013 retail sales.

Germany posted a three-year CAGR of 5.8 percent. The direct selling model enjoys a positive image in the country, says Guido Amendt, Mary Kay Germany’s Director of Marketing. He adds that a sustainable increase in purchasing power per capita offers opportunities for consumers to buy high-quality products through direct selling.

In France, direct selling continues to grow regardless of the economic climate. When it comes to increasingly competitive markets such as cosmetics and jewelry, direct selling leverages innovation as a growth solution, says Jean-Laurent Rodriguez, Director of Communication and Training for the Federation de la Vente Directe, France’s DSA. In 2013, France recorded sales of $5.3 billion. The country’s cumulative annual growth rate between 2010 and 2013 was 3.4 percent.

Continued expansion in the industry is driven by several factors. France is enjoying a growing number of new companies with new brands and new products, such as textiles, shoes, home decoration, gastronomy and health care, Rodriguez says. These companies are international and national industrial groups, medium-sized companies and startup firms. Agreements between the Federation de la Vente Directe and government ministries (higher education, national defense and public institutions) ensure that direct selling is a viable option.

AFRICA

The WFDSA’s Carlucci sees Africa as an interesting continent right now for direct selling although, currently, the only DSA exists in South Africa. South Africa’s 2013 retail sales were $720 million, and its three-year cumulative growth rate is 6.8 percent. “Direct selling is very relevant here because it is a way to be an entrepreneur, and other retail channels are not developed,” Carlucci says.

Multinational companies are taking interest in the continent, says Wells Fargo’s Irwin. That’s because it is a huge market. Irwin cites Nigeria as an example. The country is home to 180 million people and just 10 supermarkets. “The rest are local markets and product distribution via trusted networks,” Irwin says.

LATIN AMERICA

Central and South America are comprised of fast-growing countries known for their entrepreneurship culture. Ernst & Young, in its G20 Entrepreneurship Barometer 2013, ranks Argentina, Brazil and Mexico as some of the best world economies for entrepreneurs. The same can be said for the region’s direct selling prospects. The industry is well established in Latin America, where customers like to buy from people they know. Additionally, it is a market with potential because retail is not well developed in many regions.

Latin America’s direct selling billion-dollar markets are:

  • Brazil, $14.2 billion
  • Mexico, $8.1 billion
  • Colombia, $3.3 billion
  • Argentina, $1.9 billion
  • Peru, $1.9 billion
  • Venezuela, $1.4 billion

In Latin America, the “family factor” is very important and makes direct selling attractive as a self-employment option. Unlike in the U.S., children look to go to college close to home and remain with their families. Many career decisions center on one’s family, which makes direct selling attractive as a source of income in addition to traditional employment.


“Direct selling is an opportunity to work but remain close to the family and to have additional income for the needs of the family. So this makes a difference. There is flexibility and management of their own time.”
— Miguel Francisco Arismendi, Director General for the Andean area (of South America), Amway


“Direct selling is an opportunity to work but remain close to the family and to have additional income for the needs of the family,” Arismendi says. “So this makes a difference. There is flexibility and management of their own time.”

Direct selling is also becoming a full-time work option, says Pio del Castillo, Mary Kay’s Manager of Corporate Communications. Brazil ranks No. 5 among the industry’s billion-dollar markets. Direct selling retail growth in the country is related to the economic recuperation of international markets, del Castillo says. The country posted year-over-year retail sales growth of 7.2 percent, making for a three-year CAGR of 8.6 percent. The number of sellers grew as well, reaching 1.3 percent, to 4.5 million.

Brazil also boasts a diverse market with access to information. One important factor boosting direct selling in the region includes traditional retailers such as O Boticario adding direct selling to their marketing efforts. Del Castillo says, “The Brazilian economy grew only 2.3 percent in 2012, but Brazil still remains one of the most important players in the direct sales market.”

 

TECHNOLOGY, DATA WILL FUEL FUTURE GROWTH

Technology in all its forms is an essential ingredient to the future growth of direct selling, according to industry executives and economists. “The Internet and digital technologies, mobile devices, social media and access to more robust data will allow direct selling companies to dramatically increase the level of service they offer to their salesforce and customer base,” says Alessandro Carlucci, CEO of Natura Cosméticos and Chairman of the WFDSA.

“We will be able to (and some companies now can) know who the final customer is, what their preference is, who the distributors are and how can we help them with good CRM systems and analytics,” Carlucci says.

Better information lets consultants individualize their service and marketing approach for each customer. Instead of a mass-appeal catalog, direct sellers could offer targeted online videos in an effort to deliver the right thing for the right customer. “We can skip the segmentation phase and leap frog from a mass approach to an individual approach, thanks to technology,” Carlucci says. “To me this is a revolution.”

The ability to harness technology’s benefits leverages relationships, according to Carlucci, who adds, “These efforts should also boost direct sales in mature markets because it will present newly available services.” The consumer’s direct selling buying experience could be even better than the Internet because of the product and experience support the personal connection offers.
 
The importance of the Internet, data and mobile Internet to emerging markets cannot be overstated, according to Derrick Irwin, Portfolio Manager for the Wells Fargo Advantage Emerging Markets Equity Fund. He says, “In many places it provides the only access to media and outside data that many people have.”

Consumer company models being developed in India, China and Brazil show a massive portion of advertising spend being allocated for mobile campaigns. And the marketing method is about to explode. Smart phones and 3G networks are established in China and are just beginning to take off in Brazil and India. In Africa, says Irwin, “there is no other way to talk to people. You can go to these countries where there are the poorest of the poor, and they are using mobile phones in ways that are so creative.”

In China, mobile technology is opening new markets and acting as a catalyst for the development of logistics networks into the far corners of the country’s low-tier cities, according to Leo Zhou, Deputy Director of Media Affairs at Mary Kay China. He says, “Consumers are becoming increasingly smart and are unprecedentedly connected with multiple media, being surrounded by a diversified web of information.”

The proliferation of information across the Internet, as well as easy access to it, makes it simple for any consumer to get the information and products they need and want. The rapid expansion of China’s e-commerce network into low-tier cities caught the attention of logistics companies, who brought their services to the same areas. According to Zhou, this increases product delivery speed and lowers operational costs.

All of these technology changes amount to a modernizing of the direct selling industry in the digital age. Companies should be looking at how much they are investing now to leverage the relationships they have and how they understand consumer behavior. “There are a lot of good questions we should be able to answer, and this is the time,” Carlucci says. “In 10 to 15 years we will live in a very different world. We need to take advantage of the technological opportunities now.”

Stella & Dot Foundation Now Partnering with Every Mother Counts

This week, social seller Stella & Dot re-launched its Stella & Dot Foundation in partnership with Every Mother Counts, a campaign dedicated to making pregnancy and childbirth safe for every mother. The foundation was created in 2010 to further the fashion and accessories brand’s mission of helping women style their own lives.

“We are committed to making a difference in women’s lives,” Stella & Dot Founder Jessica Herrin shared in a statement. “It’s important for us to extend that mission to impact the lives of women and their families, at home and around the world through the Stella & Dot Foundation.”

Every Mother Counts currently operates in Indonesia, Haiti, Uganda, Malawi and the United States. The organization was founded by Christy Turlington Burns, a model, entrepreneur and activist named one of Time‘s 100 Most Influential People of 2014. Burns directed the documentary No Woman, No Cry to raise awareness of the women dying—287,000 every year—due to largely avoidable complications during pregnancy.

“Every Mother Counts is excited to partner with Stella & Dot’s mission-driven community to help us achieve our goal to make pregnancy and childbirth safe for every mother,” said Burns. “We know we can’t do this work alone and are always reassured that there are others who want to contribute in meaningful ways.”

To kick off the new partnership, all net proceeds of the Stella & Dot Foundation’s new Enlighten Bracelet will benefit Every Mother Counts. At Every Mother Counts, 100 percent of every donation goes to programs supporting its mission around the world.

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.