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Network Marketing Growing Trend in Europe

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The 2011 figures are not yet known, but we have signals that direct selling remains resilient in most markets.

At Seldia, obviously communicate this good news to the politicians to get the necessary support for our sector. Seldia, the European Direct Selling Association—with 27 member Direct Selling Associations and 14 companies in Europe—represents our interests and defends the direct selling model toward the European Union legislator. Our presence in Brussels, where the main EU institutions are based, is important because 80 percent of the legislation in any European Union Member State is made by the European Union. The national laws are in most cases “just” transpositions of EU directives.

For example, many of you may have heard about the recently adopted EU “Consumer Rights Directive,” which prolonged the one week cooling off period to effectively three weeks in most cases. Well, Europe is not yet finished with us. In 2012, the EU will look at the law on unfair commercial practices, adopt rules on Code Administrators, create an optional sales law, review legislation on the protection of personal data and introduce endless amounts of proposals on specific product categories.

As you can imagine, much of our work in Europe will be rather “defensive” in light of a sometimes zealous consumer rights movement. However, there are also many opportunities for the sector to highlight the many socioeconomic benefits. Politicians become more and more positive toward entrepreneurship and micro-business and start recognizing direct selling for all its merits.

The strongest growing markets continue to be in Central and Eastern Europe. Since the fall of the wall in the early 1990s, the markets in Central and Eastern Europe have grown phenomenally. The quick and easy access to top-quality Western products, combined with a drive to create individual wealth, has been the key reason for this growth. These developments have led to a company like the Swedish Oriflame to focus entirely on these emerging markets and stop operations in most markets in Western Europe.

Today, we see a more diverse picture of the Central and Eastern European market, with continuous strong growth in some countries while other countries mature and move from double-digit to single-digit growth. Without any doubt, Russia is the strongest growth market of all, probably followed by Turkey and Ukraine. In Russia alone, there are 4.5 million direct sellers—as many as in the entire European Union!

The key drivers in these markets used to be cosmetics and home products but we see a growing interest in health products. In the latter sector, the low-end market has proved to be very successful. Consumers with smaller budgets are attracted to the same products but in smaller quantities. Purchases of monthly boxes have been replaced by purchases of a daily portion.

The mature markets in Western Europe can learn a lesson from their colleagues in the East. The East is beating the West, in particular, on being more entrepreneurial. Governments for their part are more direct selling friendly in the East, with less regulation and red tape. Our call to the West: Recognize the status of the direct seller and get us better regulation.

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