The World Federation of Direct Selling Associations (WFDSA) recently released its Global Statistical Report after compiling the data for the year 2010. Although a comparison with the prior year shows several significant changes, it’s to be noted that a portion of the increases reported from 2009 to 2010 is due to changes in the collection of data. However, there are still some wonderful growth stories in the direct selling industry to tell.
GLOBAL DIRECT SALES BREAKDOWN BY REGION
Judy Jones, who serves as Chair of the WFDSA Global Research Sub-Committee and of the United States DSA Industry Research Committee and is Insights Lead, Consumer & Market Insights for Amway, prepared the following global highlights for DSN:
In all, the global direct selling industry is sized at over US$132 billion in estimated retail sales, generated by over 87 million individual direct sellers around the world. Asia Pacific is by far the largest region for direct selling in the world, followed by North America. Latin America and Europe/Africa make up the final regions accounted for in the report.
Recent research shows that individual direct sellers in 21 countries in the world generate 90 percent of the world’s direct retail sales. Each of these countries generates in excess of $1 billion in direct sales per year (see chart below).
GLOBAL MARKET REVENUE BY COUNTRY (IN U.S. DOLLARS)
Points of Interest:
- Two new countries have entered the “Billion Dollar Markets”: South Africa at $1.1 billion and Peru at $1.05 billion. The total number of markets that cross the billion dollar threshold is now 21.
- The U.S. and Japan continue to dominate by nearly twice as much as any other nation.
- Outside of China, Brazil continues to hold in the top four markets, several billion ahead of any other South American nation as well as others—though South American countries have a small increase, and there’s a new entry with Peru entering the game in 2011.
- China continues to climb—going from $8 billion to $10.9 billion to $12.5 billion.
- South Korea increases by almost $2 billion.
- Malaysia is increasing steadily from $1 billion to $2 billion over the last year.
- Many European nations continue to hold around $3 billion.
In terms of how individual direct sellers approach their customers, globally 76 percent use a person-to-person sales method and 18 percent a party plan method.
- The range is 64 percent person-to-person/ 28 percent party plan in North America.
- The range is 91 percent person-to-person/ 9 percent party plan in Latin America.
There is also a great difference in the ratio of single-level companies to multi-level companies across regions of the world. Globally, 57 percent of companies are multi-level in structure; 40 percent are single-level.
- Multi-level companies range from 20 percent in Latin America to 93 percent in North America.
- Single-level companies range from 7 percent in North America to 80 percent in Latin America.
For serious researchers, statistics provide a good starting point. However, it’s always a good idea to delve deeper and understand how the numbers are derived. Ross Creber, President of the Direct Sellers Association of Canada, emphasizes just how important it is to understand what a given statistic actually represents.
“We probably created more excitement than we should have,” Creber says about Canada’s hefty increase in retail sales within the industry. He then went on to explain that the numbers reported to the WFDSA most recently were those from a socio-economic impact study done on the direct selling industry in Canada back in 2010. This data was on the entire industry, as opposed to data from only DSA member companies, as had been reported in 2009 and prior years. “That’s what has created these numbers,” he says. “It’s distorted from what we had been presenting in the past.”
The WFDSA has created a new Global Research Sub-Committee so that the data collection process of direct selling statistics can be standardized around the world
Indeed, when some countries provide data on their entire market, while others provide data only on DSA member companies, an apples-to-apples comparison among countries cannot be made. The WFDSA has Global Research Sub-Committee to address this issue so that the data collection process can be standardized around the world. Judy Jones, who serves as Chair of this WFDSA sub-committee and also of the United States DSA Industry Research Committee as well as Insights Lead, Consumer & Market Insights for Amway, notes that the data year-to-year will not be strictly comparable until the new process is completely implemented.
Jones goes on to explain why implementing this standardized process to include entire markets is so important to the direct selling industry and how they plan to do it:
“The direct selling industry must present credible statistics in order to be viewed as a serious industry,” Jones says. “Statistics form the basis for the story of direct selling and why it is such a powerful engine of opportunity. And this story is used for government affairs purposes, to ensure that new legislation and regulations relating to direct selling actually protect consumers and company distributors, while not being restrictive.
“The direct selling industry must present credible statistics in order to be viewed as a serious industry.”
—Judy Jones, Chair, WFDSA Global Research Sub-Committee
“As well, when journalists wonder about the direct selling ‘opportunity engine,’ it is again statistics that are used to tell the story at the global, regional and local country levels for these media relations purposes,” she continues.
“Finally, direct selling statistics can be highly useful at the individual company level, providing a benchmark against which any one company’s performance can be measured.
“By way of process, we collect company data from all the member companies of DSAs around the world, in over 60 countries,” Jones says. “We have a 2012 goal of 100 percent participation from all member companies. In addition, this year our goal is to size the entire industry beyond just member companies, and to do so we have a group of professional researchers from Avon, Mary Kay, Natura, Tahitian Noni, Amway and Seldia (the European Direct Selling Association) on our research sub-committee. This team will apply their expertise to research the sales of non-members of the direct selling industry, as well as to size those areas of the world where there are no DSAs yet in place.”
Certainly, with an improved data collection process in place, statistics in the future will present an even clearer picture of the direct selling industry.
A special thanks to Direct Selling News for Statistics and Information for this article. Please click here for further information: http://directsellingnews.com/
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