The annual Direct Selling Growth and Outlook Survey is our industry’s most important study, conducted by the Direct Selling Education Foundation (DSEF). Each year direct selling companies provide their confidential sales data for expert analysis of the size and scope of direct selling in the U.S. This report is audited by Nathan Associates, a Cadmus Company, a third-party international economic consulting firm.
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.
