To determine this economic reality, the new rule considers six factors: 

• The worker’s opportunity for profit and loss. Does the worker have the option to negotiate prices for work or decline assignments and projects? Is the worker engaging in activities to expand their business or find more work? Does the worker make their own decisions about hiring, workspace rentals, etc.? Independent contractors have more freedom and responsibilities for their own income and growth. 
• Investments made by both worker and potential employer. Workers making similar investments as their employer—even if on a much smaller scale—to grow their own business suggests independent operations. 
• Work relationship permanence. Work that is indefinite, continuous or exclusive signals an employee relationship. Independent contractor work is definite in duration, non-exclusive and project-based or sporadic. 
• The nature and degree of control. Who controls the work schedule and rates for services? If there is performance supervision or a limitation on whether or not the worker can pursue other clients, independent contractor status is in question. 
• The importance of the work for the business. This does not analyze how integral an individual is to the operations, but rather how integral their function is to the overall business. If the work is central or critical to the success of the operation, the worker would be considered an employee.  
• Specialized skills and initiative. It is not specialized skills that are the determining factor, but whether or not a worker using specialized skills does so “in connection with business-like initiative” indicative of an independent contractor.  

This final rule provides additional context beyond the previous Independent Contractor Rule from 2021, particularly further insight and analysis of the “control factor”, which encompasses scheduling, price-setting, supervision and the freedom to work for others. 

The Direct Selling Association (DSA) released a statement strongly opposing the final rule, stating that it “dismisses valid criticisms raised in the Notice of Proposed Rulemaking by DSA and could require high investments to start a business, limits the use of technology, diminishes high self-regulatory standards and disregards conflicting federal statutes defining direct sellers as independent contractors.” 

Further, the DSA announced it will “support efforts to ensure the rule does not take effect and continue to support more statutory clarity including H.R. 5419, bi-partisan legislation that clearly defines direct sellers as independent contractors.” 

The post US Department of Labor Issues Final Rule Restricting Independent Contractor Status  first appeared on Direct Selling News.

“It was great sitting down with small business owners from across North Carolina to hear how they are positively impacting the state’s economy,” Senator Budd said. “The spirit of entrepreneurship they bring to the state where individuals can start a flexible, low-cost business that becomes an integral part of their communities is commendable. I look forward to continuing supporting policies that will facilitate their growth in the United States Senate.” 

DSA President and CEO Joseph N. Mariano believes the conversations that take place in these roundtable series meetings can have far-reaching impact on legislation. 

“This series provides in-person opportunities for direct sellers to meet with elected officials like Sen. Budd in their states and districts to discuss their positive experience with the business,” Mariano said. “It’s important for policymakers to hear directly from their constituents and hear how policies being considered in Washington will impact them. We appreciate Sen. Budd for being the first United States Senator to participate in this roundtable series and hope his colleagues will follow his lead.” 

The post DSA Hosts Roundtable for Women Entrepreneurs  first appeared on Direct Selling News.

Neora’s ultimate landmark victory, during which the courts rejected all of the FTC’s claims, is a reminder of the importance of clear legal standards. 

“We hope yesterday’s decision in the Neora case will help provide clarity about the direct selling business model to regulators, consumers, and the public,” said Joseph N. Mariano, DSA President and CEO. “The court cited the company’s robust inventory repurchase agreement and strong compliance efforts that all DSA members abide by. The decision reinforces the importance of these principles as core tenets of consumer protection and Neora’s adherence to them as part of their membership in the association.” 

The post DSA Applauds Neora’s Compliance Efforts  first appeared on Direct Selling News.

“Our annual Legal & Regulatory Seminar showcases the reason that DSA is located in Washington, D.C.,” said Joseph N. Mariano, DSA President & Chief Executive Officer. “Direct selling is engaged in one of the most active regulatory times in our history. This meeting could not have come at a better time to bring together these officials with company General Counsels, compliance professionals, top law firms and industry partners. We look forward to providing continued opportunities as these challenges are navigated over the coming years.” 

The post DSA Brings Together Direct Sellers and Policymakers at D.C. Event  first appeared on Direct Selling News.

“Each year, DSA provides the opportunity for member company executives and independent direct sellers to meet with their elected officials and share their stories and how what happens in Washington, DC impacts their businesses all over the United States,” said Joseph N. Mariano, DSA President and Chief Executive Officer. “There are no better advocates for the value of direct selling to entrepreneurs in all 50 states than these independent workers.” 

The post DSA Day on Capitol Hill Advocates for Independent Worker Status  first appeared on Direct Selling News.

The DSA sees this as important legislation given that the US Department of Labor is currently finalizing a rule on independent contractor status under the FLSA, which could result in confusion regarding direct sellers. 

“The independent contractor status of direct sellers has been vital to the business model for decades,” said Joseph N. Mariano, DSA President. “This legislation recognizes there is bi-partisan support that direct sellers and real estate agents are true independent contractors. As Congress and the Administration debate the merits of independent work in our recovering economy, we hope that the independent contractor status of direct sellers and real estate agents will continue to be supported.” 

The post DSA Supports Legislation Defining Independent Contractor Status for Direct Sellers  first appeared on Direct Selling News.

Two entrepreneurs from Georgia’s 12^th Congressional District, met with Rep. Allen to discuss the flexibility with a direct selling business around and how their involvement in direct selling has provided them with advancements personally and professionally. 

“It was great sitting down with talented businesswomen from Georgia’s 12^th District, as we discussed the importance of flexibility in business and the value of being an independent entrepreneur.,” said Rep. Allen. “The great products they provide and the positive impact they have in our community serve as a model for individuals to start a business and achieve the American Dream. I look forward to working on their behalf in Congress so they can continue to create good-paying jobs and stimulate our local economy.”

“Connecting independent direct sellers with elected officials like Rep. Allen allows these entrepreneurs to share their interests first-hand with those who are making important policy decisions,” shared Joseph N. Mariano, DSA president. “We appreciate Rep. Allen for taking time to help us continue the fifth year of this important series and providing the opportunity to share how entrepreneurship has impacted their lives with thriving businesses.”

The post DSA Hosts 2023 Women’s Entrepreneurship Roundtable  first appeared on Direct Selling News.

This year, at the DSA Annual Meeting, DSA ENGAGE, the DSA’s Industry Research Committee and Ipsos presented the survey results and provided commentary. I’ll share that collective industry insight here.

The 2022 survey results tell us the following:

• Direct selling retail sales are stable. The channel generated $40.5 billion in retail sales in the U.S. in 2022, a slight decline from 2021.
• The number of direct sellers decreased slightly, with 6.7 million selling on a part-time or full-time basis.
• Demand for direct selling products and services continues to evolve. In 2022, 41 million preferred customers and discount buyers purchased through the channel. (This number excludes those who have not signed an agreement with a direct selling company.)

Topline Results and Demographics

U.S. direct retail sales decreased five percent to $40.5 billion in 2022. Despite the decline, 2022 had the second highest level of U.S. direct retail sales on record. “The drop of five percent is within DSA’s forecast of sales declining four to seven percent in 2022. Direct selling is still a huge industry in the U.S.,” said Monica Wood, Vice President, Global Consumer and Member Insights at Herbalife, and DSA’s Industry Research Committee Chair. “In fact, U.S. direct retail sales were up by 15 percent during 2019-22.”

This five percent decline is not the typical direct selling company experience in 2022. While sales of services increased by 10 percent, other categories fell: [slide 49 – by category]

• Home and Family Care, Home Durables decreased 11%
• Personal Care Products decreased 17%
• Clothing and Accessories decreased 13%
• Leisure and Educational Product decreased 3%

Party Plan/Group Sales represent a longstanding and successful group of direct selling companies with proven products and services. U.S. Party Plan/Group Sales decreased by 19 percent in 2022 but remain above the 2019 pre-pandemic level.

U.S. Preferred Customers dipped seven percent in 2022 to 33.3 million but remain the largest group of customers. “Preferred customer programs have really become popular in direct selling because they are a great option for brand loyalists,” explained Wood.

U.S. Discount Buyers were reduced by 11 percent in 2022 to 7.9 million. “Discount buyers are becoming Preferred Customers to take advantage of those programs’ product discounts and other benefits,” Wood added. “This is not a surprise. We anticipate that this movement between categories will continue.”

In 2022, we saw the number of direct sellers decrease by eight percent in 2022 to 6.7 million.

“Our industry still skews female,” shared Wood. Women make up 75 percent of direct sellers (and discount buyers).

The industry is also predominately white and Caucasian. However, the share of Hispanics in the salesforce increased slightly in 2022 to 23 percent. By comparison, 18.9 percent of the U.S. population in 2021 was Hispanic (source: U.S. Census Bureau)

The share of the 55+ age group in the salesforce is growing, while the share of the 25-34 age group is
trending downward.

U.S. Macro Trends and Direct Selling Opportunity

“The number of new recruits normalized in Q1 2023,” said Mary Earley, Senior Manager, Global Consumer and Member Insights, Herbalife. Early 2023 results suggest recruitment is likely to remain a challenge this year even while long term prospects for salesforce growth are good. Turnover rate in Q1 2023 was 10.9 percent, another factor contributing to the reduced direct sales workforce.

“However, independent workers are growing and represent an opportunity for direct selling,” Earley added. “There are many people seeking flexible ways to make money outside of a traditional job. The total number of independent workers grew by 57 percent from 2019 to 2022 (from 41.1 million to 64.6 million people).”

There are 40 million gig workers in the U.S. Twenty-four percent of the US workforce does gig work all or part of the time. But only 65 percent are satisfied with what they are earning.

Side hustles, a source of extra income to augment primary income, are increasingly important. An estimated 50 percent of Americans have a side hustle; 28 percent of them believe they will always need one. The average side hustle brings in $810 per month, however 28 percent earn $50 or less each month.

Macro Forces
Ipsos has identified macro forces and key themes that are shaping direct selling in the U.S. and across the world, including:

Life stage evolutions
Many people are rethinking traditional milestones and definitions of success and are marrying later and having smaller families.

Technology
There’s growing concern about the toll of technology on individuals and on society. Artificial Intelligence is headline news. Gen Z is using social media less often. We can all agree that information overload has reduced our collective attention span.

Inflation
Continuing concerns about inflation and rising energy costs impact prices and consumer spending decisions.

Climate Change
Extreme weather events are front-and-center in daily local and global news. Companies must anticipate and plan for disruption and future changes in regulations.

“Society is facing several broad, observable challenges at the same time. There are many interrelated issues at play,” explained Lisa Gudding, Executive Vice President at Ipsos. “Macro forces like inflation and mental health impact society, markets and people and will continue to do so five years from now.”

For example, populations are aging and so are important demographic segments of opportunity for new distributors and consumers. “As companies continue to upgrade and invest in technology, it’s critical that they innovate without alienating their older distributors and customers, ” added Gudding.

Putting 2022 in Perspective

“This distribution channel has meaningful global impact,” says Gordon Hester, General Manager, Sales, USA and Canada, PM-International. “To put things into perspective, direct selling has generated $3.7 trillion in worldwide sales over the past 30 years.” Historically, the U.S. represents 24 percent of the global market and the salesforce.

Overall revenue for the channel remains higher than the pre-pandemic revenue reported in 2019. Looking at 2022 numbers in context is helpful. “We’re in a transitional post-pandemic period,” Hester shared. Average annual sales for 2019-22 were five percent. The cumulative annual growth rate for the past 30 years was 4.03 percent, and the cumulative annual salesforce growth for that period was 3.93 percent. “The industry has been agile and able to succeed for 30 years, regardless of the business, economic, social or political landscape,” he added.

“Reputation does matter,” said Hester. “We need to work together as an industry to promote the ethical practice of direct selling. We need to attract great leadership, and we need to build for our next generation of direct sellers.”
Our members are important to local economies in all 50 states – and worldwide. They are dedicated to philanthropic contributions to communities across the globe. They have demonstrated the resilience of the business model.

Despite general economic uncertainties, direct selling continues to demonstrate its resilience and ability to serve the needs of millions of customers and salespeople. Growth and Outlook 2022 Survey results show that DSA members remained focused on technology innovation, product development, entrepreneurship education and consumer protection.

JOSEPH N. MARIANO is the President of the U.S. Direct Selling Association and the Direct Selling Education Foundation.

The post The State of Direct Selling Insights Into a New Era first appeared on Direct Selling News.

Holl joined Mary Kay in 1993 and has served in a number of executive roles for the company, including Chief Financial Officer and treasurer, President and Chief Operation Officer, and Chief Executive Officer. 

“I’ve had the distinct honor to work with David throughout the past several decades as he’s led and impacted several industry initiatives for DSA and DSEF, always challenging us to go beyond the status quo and foster new relationships,” said Joseph N. Mariano, DSA President and Chief Executive Officer. “David’s commitment to the channel and development of entrepreneurs globally is unmatched. His vision for the future of direct selling and how it should offer support to communities worldwide is revolutionary and an example to us all.”

The post Mary Kay Chairman Inducted into DSA Hall of Fame  first appeared on Direct Selling News.

The U.S. Direct Selling Association (DSA) released its Direct Selling Growth and Outlook Survey, revealing 2022 retail sales of $40.5 billion, a slight decline from 2021, and 41 million customers. Direct sellers decreased in number slightly from the previous year to 6.7 million. 

“Direct selling continued to thrive in the U.S. where the focus on technology innovation, product development, entrepreneurship education and consumer protection remained as top agenda items for DSA members,” said Joseph N. Mariano, DSA President and Chief Executive Officer. “While the overall revenue for the channel declined somewhat last year, it remains higher than the pre-pandemic revenue reported in 2019.” 

The post DSA 2022 Growth and Outlook Survey Shows $40.5 Billion in Industry Retail Sales  first appeared on Direct Selling News.