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Where in the World is Direct Selling?

Article by: Nancy Tobler
May 9, 2016

Many direct selling companies do business worldwide.  Each company must carefully consider entering a new country. Three areas to consider are how well retail sales are doing in the country, what products and services are needed, and what legal restrictions may be unique to the country.

Retail Sales

The World Federation of Direct Selling Associations (WFDSA) provides a wealth of information about direct selling and multilevel marketing around the world. The WFDSA represents 58 national direct selling associations. The most recent worldwide statistics comes from 2016. From 2015 to 2016, worldwide estimated retail sales increased by 1.9%. The United States and China are now both at 19% of worldwide sales.  Several markets dramatically grew. For example, South Africa, Kazakhstan, Argentina, Venezuela, Romania and Russia  had double digit increases in retail sales. Overall Africa and the Middle Ease retail sales were up by 9.5%.  New Zealand showed a lose of 19.2%.

Products

The type of products most often sold were personal care and cosmetics at 34%, with wellness products at 29% and home goods at 13%. As companies expand into other countries, the products to be sold changes (Hammond, & Prahalad, 2004).

Products need to be designed for the culture and lifestyle of purchasers. Selling to the poor of the world is a challenge. Hammond and Prahalad give examples of direct selling companies making progress in both India and Brazil. For example in India, Hindustan Lever Ltd developed a way to encapsulate iodine. Lack of iodine is one of the leading causes of mental retardation. Many poor people in India do not use iodized salt. Products are not the only consideration in crossing international boundaries (For more information see article on “What do the poor buy?” ).

Direct person-to-person selling makes a lot of sense in places where shipping is limited. The reason direct selling worked so well in the early 1900s in the United States was the distributor served as the distribution method. Avon started with sales women going door to door.

Legal restrictions

Another key consideration is the compensation plan. Laws effecting how many levels a company can pay down and how much of the sales price can be paid  in compensation are regulated differently across the world.

The good news is that direct selling continues to grow around the world. Each culture has varying beliefs about products and about direct selling.  However, the differences can work toward the company’s favor.

Hammond, A.L., & Prahalad, C.K. (2004). Selling to the Poor. Foreign Policy. P. 30-38. http://graduateinstitute.ch/files/live/sites/iheid/files/sites/mia/users/Imene_Ajala/public/Global%20Political%20Economy/Selling%20to%20the%20poor.pdf
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Nancy Tobler

Nancy Tobler has a PhD in communication from the University of Utah. She specializes in research on how organizations change,...

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