Seventh Academic Symposium on Direct Selling

1
Seventh Academic Symposium onDirect Selling

• Direct Selling Research Center
• National Sun Yat-Sen University
• By Neil H. Offen
• Secretary, World Federation of Direct Selling
  Associations
• President CEO, USDSA
• November 14, 2002
• Taipei, Taiwan, Republic of China

2
Direct Selling A Definition

• The sale of a consumer product or service, in a
  person-to-person manner, away from a fixed retail
  location, where the company offers opportunities
  to an independent contractor salesforce.

Source Direct Selling Association
3
Multilevel Marketing/Network Marketing

• A compensation system within direct selling,
  where a distributor/salesperson can earn money
  not only on their own personal sales, and not
  only on the sales of a person personally
  recruited by them, but also on sales of persons
  recruited by their personal recruits.

Source Direct Selling Association
4
How to Identify a Pyramid Scheme

• Ask two questions
• Do you risk financial loss by joining the
  company?
• (If yes, be careful. Most direct sales firms do
  not require or encourage any substantial
  investments.)

Source Direct Selling Association
5
How to Identify a Pyramid Scheme

• Ask two questions
• Is the money you will earn primarily coming from
  the sale of the product to the ultimate consumer
  of those products?
• (If no, stay away. It is most likely a fraud.)

Source Direct Selling Association
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One Additional Question

• Would you buy the companys product or service if
  you werent a member of the salesforce?
• (If not, why not?)

Source Direct Selling Association
7
Seven Types of Salespeople

• Wholesale/Discount Buyers
• Short-term, Specific Objectives
• Part-time/Quality of Life Improvement
• Career
• Social Contacts
• Recognition
• Sharing the Benefits

Source Direct Selling Association
8
Statistical Overview of North America
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Statistical Overview of Asia
Retail Sales Figures Include DSA and Non-Member
Companies
10
Statistical Overview of Latin America
Retail Sales Figures Include DSA and Non-Member
Companies
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Statistical Overview of Europe
Retail Sales Figures Include DSA and Non-Member
Companies
12
Statistical Overview of Africa
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Estimated Global Retail Sales 1992-2001in
billions of US dollars
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Estimated Global Salesforce 1992-2001in millions
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Salesforce Recruiting

• Over 400,000 per week
• 200,000,000 more by 2012

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10 Largest Markets by Retail Sales (in US )

• Germany 2.6 billion
• Brazil 2.5 billion
• UK 2.0 billion
• Italy 1.7 billion
• Argentina 1.40 billion

• USA 26.7 billion
• Japan 22.8 billion
• France 2.9 billion
• Korea 2.9 billion
• Mexico 2.7 billion

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10 Largest Markets by Salesforce Size

• Taiwan 2,900,000
• Japan 2,000,000
• Philippines 2,000,000
• Mexico 1,765,500
• Brazil 1,211,000

• USA 12,200,000
• Indonesia 4,277,000
• Thailand 3,200,000
• Korea 3,050,000
• Malaysia 3,000,000

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Trends in Direct Selling

• Multilevel/Network Marketing Growth
• Companies
• Sales
• Distributors
• Direct Order
• Direct Shipment
• Direct Compensation
• Party Plan Resurgence
• Auto-Ships
• Web site Usage

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Trends in Direct Selling

• International Expansion
• Cross-Border/International Sponsoring
• Seamless Compensation Plans
• Internet Usage
• 80 of DSA Members

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Trends in Direct Selling

• Self-Consumption/Family Consumption
• Buying Clubs
• No Retail Sales Outside of Sales Organizations
• Special Collectors Clubs
• Preferred Customers

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Trends in Direct Selling

• Internet Applications
• Ordering
• Sales
• Recruiting (Domestic/International)
• Zip Code Lotteries
• Customer Service

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Trends in Direct Selling

• Mergers and Acquisitions
• Going Public
• Conglomerates

23
U.S. Salesforce Earnings

• 59 under US 10,000
• 33 under US 1,000
• 29 between US 1,000 and US 10,000

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U.S. Salesforce Earnings

• Full-timers (9.8)
• 47 over US 50,000
• 35 over US 75,000
• 25 over US 100,000

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Problems

• Inventory Loading, Including Sales Aids
• High Fees, Including Training
• Outrageous Earnings Claims
• Mandatory/High Cost Auto-Ships
• Multiple, High Cost Web Site Sales to
  Distributors
• Outrageous/Unconscionable Pricing
• Old Consumer Abuses in Emerging Markets