On DSN’s 20th anniversary, we asked industry leaders and legends to share how past evolutions and current opportunities are shaping the future of the industry.

In 2004, Stuart Johnson, now CEO of Direct Selling Partners, Direct Selling News (DSN) and NOW Tech, held a clear vision: to create a monthly publication that offered timely and useful information to direct selling executives. Today, that vision has expanded beyond a print publication to include podcasts, workshops, executive forums and informative in-person events featuring the biggest names in the industry. The format and appearance of the magazine has changed throughout the years, but the original foundation of Johnson’s vision remains unchanged.

As we celebrate 20 years of innovations and insights, we take a look back on a few of DSN’s most important milestones. But even before DSN’s debut in 2004, Founder and CEO Stuart Johnson had an illustrious career influencing the channel. He founded VideoDirect in 1987, which ultimately became VideoPlus and then SUCCESS Partners. He launched SUCCESS Partners University, an education conference for direct selling corporate executives in 2002.

DSN, now in its twentieth year of publication, continues to be the go-to resource for well-researched global industry news, expert insights and interviews with the founders and executive leaders behind the channel’s legacy companies and rising stars.

Deborah K. Heisz, now Neora Co-CEO, and John Fleming, a DSN Legend and former Avon executive, were two of the original staff members tasked with assembling the publication’s flagship print issues.

“At the time, there was no real periodical resource for legitimate news and information for people who were leading and operating direct selling companies,” Heisz said. “People were hungry for a trade journal they could rely on, and we received feedback from dozens—if not hundreds—of executives and owners across the industry letting us know we had truly filled a need.”

From a simple eight-page newsletter to the robust, global magazine it is today, DSN remains committed to supporting, informing, connecting and challenging direct selling executives across the US and around the world.

“I planned to stay for two to three years, but I remained Publisher and Editor in Chief for nine,” Fleming said. “We started by building something relevant and, in many ways, it has become far more relevant than we ever envisioned.”

Twenty Years of Industry-Changing Trends

The past two decades have been host to some of the most dramatic shifts in the channel, including the proliferation of the internet; the broad adoption of mobile devices; and pandemic-induced social distancing that forever changed the way shoppers buy products and interact with brands. With each paradigm shift, the direct selling industry learned to evolve and adapt.

We asked these executives: In the last 20 years, what changes have had the greatest impact on the industry?

“The vast majority of companies started in the industry by sharing products at home parties. Now, we’re sharing the opportunity virtually and across the globe without concern for physical barriers. Digital platforms forced all of us to adjust, while opening up a world of opportunity.”—Mark Pentecost / It Works! Founder and Chairman

“The operating landscape has permanently changed. Millennials want their own gig, but the average direct-to-consumer venture lacks the ability to scale up the way a direct selling company can with sales organizations.”—Rick Goings / DSN Legend, Chairman Emeritus and former CEO of Tupperware Brands

“Twenty years ago, signups and applications required a stack of paper. Today, it’s all done digitally. Technology has enabled much more efficient point-of-sale transactions and created the ability to connect and communicate with more people.”—John Addison / Addison Leadership Group; Board Member for Primerica, LegalShield; Senior Advisor to Utility Warehouse

“The digital revolution of the early 2000s felt, at the time, like a once-in-a-lifetime revolution, but it proved to be just the beginning of an avalanche of technology and business models that would profoundly change the world around us. Through all of these changes–the rise of social media, gig platforms and AI, and the challenges of the pandemic—we have demonstrated that, as a channel, we can adapt and evolve quickly.—John Parker / Amway Chief Sales Officer

“Technology has been the biggest gamechanger for us. I believe you have to have a robust strategy in both automation and face-to-face interactions for success in today’s marketplace. It is a delicate balance. Simplicity and speed can be the difference between success and failure.”—Kevin Guest / USANA Executive Chairman

The Next 20 Years

Lessons from the past 20 years have illustrated that change is not only inevitable; it is a critical part of healthy evolution. It was by welcoming social media, ecommerce and a digital-first footprint that the industry was prepared to not only survive but thrive during the pandemic. And as industry leaders look to the horizon, it will be that same bold approach and nimble, open mindset that will prepare the next generation of direct sellers for success.

We asked these executives: What actions should leaders be taking now to prepare for the future?

“We need to remember what got us here. We have always been an industry that focuses on building people, and then those people go on to build our business. We can ensure our future success by remembering that the most valuable asset any direct selling company has is our loyal, hardworking distributor field!—Rudy Revak / DSN Legend, Founder of Symmetry and Xyngular

“As technology continues to create opportunities and disruptions, I believe the future of direct selling will have to be centered around community and the social dynamic in our businesses. Great products, compelling income opportunities, competitive customer and representative experiences will continue to be basic requirements, but the community and social experiences we offer can be real differentiators.—John Parker / Amway Chief Sales Officer

“We empower women and others to work a meaningful business in pockets of their day. That’s the best part of direct selling. That’s how we win. We must continue to create and emphasize this opportunity—the side hustle is always in style.—Sarah Shadonix / Scout & Cellar Founder and CEO

“Leaders in the channel should plan for growth. Those who stay current by investing in the technologies of today and tomorrow—including new ways to purchase, improve speed to customer and product value—will thrive.—Joni Rogers-Kante / SeneGence Founder and CEO

“Direct selling will continue to thrive where the exchange of value is ongoing and supportive—like in following a nutrition or fitness plan—because of the importance of accountability to achieve success, but we need to acknowledge that affiliate marketing will replace network marketing where the relationship is purely transactional.—Carl Daikeler / BODi CEO

“Personalization and integration of AI in customer service are trends that we find exciting and that we are integrating into our strategy. Direct selling is also very unique; we never work solely online or offline. The future is hybrid, and we are relying on hybrid solutions in our strategy and development to be active pioneers in our industry.—Rolf Sorg / PM-International Founder and CEO

Creating a Lasting Impact

DSN has always strived to stay on the cutting edge of direct selling trends, news and thought leadership through its educational initiatives and events. We asked these executives: How has DSN’s coverage and perspective impacted your businesses over the past two decades?

“DSN has challenged the way I think about our business and the future of our channel. It helps me sift through the hype and understand the real innovations and opportunities that will shape our future. I am so grateful for the connections and insights that DSN has brought to me and our industry.”—John Parker / Amway Chief Sales Officer

“What DSN provides is something critical for the industry: a collegial way to share best practices with one another. One of the great things about the direct selling industry is people’s willingness to share both their successes and failures. DSN gives executives a way to learn and grow their businesses.—John Addison / Addison Leadership Group CEO; Board Member for Primerica, LegalShield; Senior Advisor to Utility Warehouse

“DSN is a powerful source of knowledge, allowing companies to learn from each other and grow. DSN has always offered great insights and innovative ideas. When there can be criticism of our industry, it’s important to have a platform like DSN to speak of the positive impact we’re having around the world.—Mark Pentecost / It Works! Founder and Chairman

“DSN is an important forum for keeping abreast to fast changing forces and how others are approaching and adapting to remain vital and resilient.—Rick Goings / DSN Legend, Chairman Emeritus and former CEO of Tupperware Brands

“The DSN articles and DSU events have been an amazing asset to the corporate leaders of this channel. They both create opportunities to gain valuable information, ideas and strategies, and they give guidance during changing and challenging times.—Rudy Revak / DSN Legend, Founder of Symmetry and Xyngular

“DSN continues to be an important voice and resource for steering the direction of this method of sales and marketing. It’s easy for institutions and regulators to lose sight of the individuals who legitimately use direct selling as their livelihood. DSN helps us all remember who is most important in this industry, and it’s not the company—it’s the distributors and customers.—Carl Daikeler / BODi CEO

“When DSN started, I remember thinking: ‘Finally! One place to get timely, reliable and insightful information on other direct sellers.’ Before DSN, people had to constantly scan multiple sources. It was very easy to miss company announcements and releases because so many direct sellers were private or just starting out.—David Holl / Mary Kay Chairman and former CEO

“DSN is my ‘go-to manual’ when I have questions; seek insight; look for surveys; or simply look for inspiration when I need it. I never throw away a publication, as I know I’ll need to refer to it one way or another. It helps me stay informed and current with what is going on in our channel.”—Joni Rogers-Kante / SeneGence Founder and CEO

“The community gains so much strength when we all work together, and DSN makes that happen. They are invaluable to the ongoing growth and professionalism of this industry, and I am so grateful for their work.”—Michele Gay / LimeLife by Alcone
Co-Founder & Chairwoman

“The coverage of the direct selling landscape in DSN is like no other, providing a clear and nuanced view into an industry that thrives on personal connections and innovative strategies. The articles are a testament to the precise research and commitment to detail that the team embodies, making Direct Selling News an invaluable resource for anyone involved in or interested in the dynamic world of direct sales. It’s journalism that not only informs but enriches and compliments the conversation around this unique sector of commerce.—Rolf Sorg / PM-International Founder & CEO

Building a Legacy Meant to Last

Reflecting on the past 20 years, the DSN team continues to build and plan for an even brighter future with more events, global coverage, expanding platforms and an unflinching grasp of Johnson’s original vision. The next 20 years will expand on that relevancy and commitment, providing more insights, developing broader resources and presenting more opportunities to support the executives working diligently to strengthen and scale the one-of-a-kind entrepreneurial possibilities found within the direct selling channel. 

From the January/February 2024 issue of Direct Selling News magazine.

The post Cheers to 20! first appeared on Direct Selling News.

THE HOLIDAYS ARE UPON US—I hope each of you are enjoying this special time of year with those that mean the most to you. This season reminds each of us of the importance of surrounding ourselves with family and friends; of giving back to our community; of creating an environment where everyone is welcome—an environment where there is always room at the inn.

These are some of the themes we cover in this month’s issue of Direct Selling News. In our cover story, we examine several of the companies in the channel committed to making the world a better place. And we discuss the surprising benefits to their bottom line. We also offer some practical tips on how to identify and edify the causes that mean the most to you and to your customers and field.

We also take a deep dive into diversity and inclusion. Direct selling has always prided itself on creating a viable opportunity and community for everyone. It should come as no surprise that the companies actively prioritizing inclusion are attracting more customers and distributors. DSU keynote speaker Simon T. Bailey generously shares his research in this month’s issue.

I think you’ll also enjoy our feature highlighting some of the most successful founders in the channel. What do they all have in common? They started out as distributors—learning the ups and downs of our channel from the ground up, pouring their experience and knowledge into dynamic, thriving companies.

This issue also features in-depth profiles on Kyäni and their resurgence and resilience in the face of unspeakable tragedy; and Oola, a fascinating startup with a product all of us benefit from—personal development tools and resources.

Finally, I’d like to thank our new Platinum Members: It Works!, Plexus, Prüvit and SeneGence, and our Premier Partners: Exigo, InfoTrax and Nexio. Your generous patronage and support allows DSN to provide even more in-depth research, advocacy, journalism, recognition and support to the channel.

From the DSN family to yours, we hope you have a safe and happy holiday season. Here’s to another amazing year!

All the best,

Shelley Rojas | Publisher & Chief Brand Officer

The post A Season to Celebrate first appeared on Direct Selling News.

Rojas is a long-time veteran of the brand, having previously served as Senior Vice President of Marketing and Publications. In fact, she has been involved in DSN working at its sister company, SUCCESS Partners, for 20 years. 

“Shelley has been an integral part of DSN’s success from the very beginning,” explains Stuart Johnson, Founder and CEO. “Her creative insights, leadership abilities, dedication and professionalism have always been key ingredients in our ‘secret sauce.’ Shelley has crafted a unique vision and voice for the brand. I can’t wait to see how DSN will grow and evolve under her tutelage.” 

The appointment of Rojas ensures DSN will continue to bring direct selling executives the news, insights and stories they need on the platforms they use most, providing an expanded, robust digital and multi-media component to the brand’s coverage.  

As Johnson explains, “Shelley is the perfect fit for this position. She has led the rebranding of DSN for the past nine months—and, as a result, we have launched a sleeker, more intuitive new website and new exclusive content including two podcasts. Our weekly emails and social media presence have also been revamped. Shelley’s influence has been game changing for the brand.” 

In her role as DSN’s Publisher and CBO, Rojas will oversee the day-to-day operations of the brand’s multimedia outlets, which include digital and print publications, podcasts, original content and research as well as a 20-year history of premiere networking, recognition, awards and educational events. 

Patricia White, DSN Editor says, “With Shelley taking the Brand Officer/Publisher role, I am more excited than ever about the important guidance and resources Direct Selling News provides the channel. Shelley’s multimedia expertise allows us to bring more up-to-the-minute news and trends to direct selling executives across all platforms.”

“I’m incredibly humbled and excited to assume the role of Chief Brand Officer and Publisher for Direct Selling News,” says Rojas. “DSN has a rich history, a formidable team and a purpose-driven future. We are excited to honor the legacy and to expand the brand’s reach and impact by providing more value than ever before serving the channel as its primary source for global news, emerging trends and inspiration.”

Direct Selling News can be found across social media, including Facebook, Twitter and LinkedIn.

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The Customer Centric Recognition (CCR) Program celebrates companies that are leading the way toward a sustainable, customer-centric future for the industry. Qualifying companies utilize business models that boast high customer-to-distributor ratios and prioritize customer sales.

The CCR Program is based solely on a company’s customer-to-distributor ratio taking into consideration the following definitions:

• Distributor—someone who DOES have a distributor agreement in place
• Customer—someone who DOES NOT have a distributor agreement in place
• Active is defined as each customer and distributor must have made a product purchase during the last six months. Active customer and distributor counts are limited to those in the U.S. and Canada.

Companies must have been in business for at least one year and have a minimum of $5 million in annual revenue. Qualifying companies must attain: 5:1 up to 10:1 for Gold status and 10:1 or more for Platinum status.

Direct selling companies with a strong retail base of satisfied customers are experiencing impressive growth and deserve recognition and acknowledgment for their efforts.  Being customer-centric equals success for everyone—distributors, direct selling companies and the channel as a whole.

DSN CCR Program acknowledges the following companies that have submitted their CCR application and been approved:

Companies who wish to learn more or submit a CCR Program Application can go to www.directsellingnews.com/ccr/or contact editor@directsellingnews.com.

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The company hopes that consumers will find the new website easier to navigate for access to the products and CBD education that fits their unique lifestyles. Kannaway’s rebranded products are designed to be more relatable to consumers and make it easier for them to incorporate CBD’s benefits into their everyday routines.

“We continue to see a large increase in consumer demand for high-quality CBD products as the U.S. hemp-derived CBD industry is expected to hit $22 billion by 2022,” said Kannaway CEO Blake Schroeder. “In response, we chose to redesign our website and rebrand our products so that consumers can easily educate themselves before discovering which products best fit their needs.”

In Q1 of 2019, Kannaway experienced an increase of approximately 130 percent in sales revenue as compared to Q1 2018.

“As awareness for CBD continues to spread, it is a priority for us to ensure consumers are well educated on the compound and understand how it may enhance their lifestyles,” said Medical Marijuana, Inc. CEO Dr. Stuart Titus. “Kannaway’s rebranded products not only provide the many benefits of CBD but are also aesthetically pleasing for consumers to use and display in their homes.”

The post Kannaway Announces Updated Branding Strategy, New Website first appeared on Direct Selling News.

Assembly Bill 5, introduced in January by Rep. Lorena Gonzalez, codifies and expands a landmark state supreme court ruling from last May, Dynamex v. Superior Court, which wrestled with the same employment classification issue. In determining whether a worker is a true independent contractor (as Uber, Lyft, and other “gig economy” platforms contend) or employees, there are a number of legal tests that, in simple terms, suss out whether the laborer has sufficient say in how and when the work is completed. California’s supreme court, in applying the broader “ABC test,” decided contract drivers working for delivery firm Dynamex were improperly classified—opening the door for gig workers across the state to challenge their own statues.

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Riding on the tailwinds of strong macroeconomic conditions, the direct selling channel is well-positioned to achieve accelerated and sustained growth if it addresses the following:

Revisiting The Retail “Apocalypse”

Before we go into further detail about the industry research findings, here’s some important context about the favorable macroeconomic environment.

Last year in this publication, I attempted to debunk the myth of the retail apocalypse and share a vision for how direct selling could return to growth.

Direct selling did return to growth. However, if you Google “retail apocalypse 2019” you continue to see tens of thousands of articles from prominent publications describing a grim reality of retail. It is true that many shopping malls are dying, which is driven by the closure of many “anchor” stores like JC Penney and Sears. And, there are already more announced store closures in 2019 than in all of 2018, including Payless, Gymboree, Walgreens, Victoria’s Secret, JC Penney, and Dress Barn.

It’s true many retail stores are closing. However, this only tells part of the story. Retail in the U.S. actually grew a healthy 4.8 percent in 2018, just a bit under the 5.2 percent growth of U.S. GDP. Reasons for retail growth include the strong economy and positive consumer sentiment.

Retail Isn’t Dead; It’s Just Evolving

E-commerce is one of the biggest segments of growth within retail at 14.2 percent in 2018. However, e-commerce still represents less than 10 percent of overall retail.

Other areas that are doing well continue to be experiential, discount, and omnichannel/harmonic retail (or companies that seamlessly blend multiple sales channels into an improved and unified customer experience). In fact, while many stores are closing, they are often being replaced by other brick and mortar stores.

How Did Direct Selling Perform?

There are numerous factors driving direct selling’s 1.3 percent growth in 2018.The direct selling wellness sector is the largest sector in terms of growth and share (representing 35.6 percent of total direct selling retail sales). Some of the wellness growth can be attributed to companies offering personalized service, coaching support, and accountability to help people become healthier within the context of a growing obesity epidemic and an aging population. Services and leisure & educational categories also experienced growth in 2018:

We also feel that growth is driven by the success of many companies that are responding well to the evolving retail channel and technology.

The 2019 Growth and Outlook Survey results also provide new clarity into who direct sellers and their customers are. In 2018, there were 6.2 million direct sellers (a 1.6 percent increase from 2017) and more than 36.6 million customers. (This customer count excludes customers that have not signed an agreement with direct selling companies.)

What’s The Outlook For Direct Selling?

DSA’s Industry Research Committee forecasts a 1-3 percent annual growth for the next three years. Rationale for the forecast includes: strong U.S. economy, retail growth, high consumer confidence, people are looking for part-time, flexible, entrepreneurial opportunities, many companies provide ongoing personalized coaching and provide unique value to the consumer. As more companies address retail and technological trends, including the recommendations below, we feel direct selling will be poised for continued growth in-line with GDP and overall retail sales. Direct selling is well positioned to achieve continued growth if companies address the following:

Segmenting Salesforce and Customers To Better Understand Your Salesforce and Become More Customer-Centric

Segmentation poses a business growth opportunity by tracking sales by segment, improving engagement with active and unengaged reps, and tailoring communications by segment. By developing preferred customer/ loyalty programs, companies are more easily able to cultivate customer data and identify how you can best empower your salesforce to meet customer needs.

Doing Research On Gen Z and Developing A Strategy To Attract Future Generations To Products and The Direct Selling Opportunity

There’s been much research done on millennials, but few in the industry are familiar enough to develop strategies to appeal to Generation Z (those born 1996-2011). By 2020, Gen Z will make up 40 percent of consumers and 36 percent of the workforce. Significant differences between Gen Z and millennials are emerging.

At DSA’s Annual Meeting, Josh Miller a 17-year-old entrepreneur representing XYZ University informed several DSA execs on how Gen Z is data-driven, competitive, and focused on financial stability and the future. Another fascinating insight Josh shared is that because Gen Z’ers don’t know a world without smart phones and social media, they now prefer face-to-face communication to online interaction. Information like this should help companies recognize if their direct selling strategy and model are poised to succeed with this generation. As the world’s largest upcoming generation, Gen Z represents the future of the labor market and consumer base. The sooner companies realize this, the more likely they will succeed.

Learning From The Gig Economy, Which Is Shaping Workforce Expectations

With the ubiquity of companies like Uber, Lyft, and Airbnb, it’s easy to forget that the gig economy is relatively new, nebulous, and rapidly evolving. What is evident is that the gig economy has already had a significant impact on reshaping workforce expectations (including direct selling) and will continue to do so for the foreseeable future.

For example, workers are increasingly expecting instant payments. Transportation services like Uber and Lyft allow for immediate payment following a ride, and even Airbnb provides payment at the start of a customer’s stay. Another way to learn and adapt from the gig economy is to make connecting with prospects easier. The appeal of many gig roles is that customers are connected to the gig worker through technology. The worker doesn’t need to do anything but show up. Some direct selling companies are addressing this challenge by matching prospects who visit their websites via geographic proximity. Companies may also be more proactive to drive prospects to their commerce sites, but traditionally many direct sellers view this as infringing on their prospect base. This is an area that needs further investigation. But technology and evolution of e-commerce platforms is likely a step in the right direction.

Another thing direct selling can learn from the gig economy is being able to control the whole business from a mobile device. There are many things we can learn from them that if addressed may make direct selling a better destination for those considering other gig opportunities.

During a tight labor market that’s achieved 50-year lows in the unemployment rate, the gig economy has increased the appeal of flexible, part-time earning opportunities. This should be direct selling’s sweet spot where we can compete and win.

While There Is Clearly Overlap, There Are Also Important Differences

Here are some key similarities and differences between direct selling and the gig economy:

Innovating To Avoid Getting Left Behind During Rapid Evolution Of Retail & E-commerce

Another component of becoming more customer-centric is placing an increased focus on customer retention. It is well documented that the cost of retaining a customer is much less than acquiring a new one. Many e-commerce and gig companies are getting into the retention game with loyalty programs. A notable example of this is Dollar Shave Club, whose retention rate at 12 months is 50 percent—far exceeding many direct selling companies. Consider ways to engage loyal customers with targeted communications, product recommendations and promotions, and consider gamification.

Prioritizing Key Points Of Differentiation That Direct Selling Offers, and Minimizing The Impact Of Perceived Weaknesses

The direct selling industry is at a crossroads as the 100+ year old industry sees the retail and labor landscapes rapidly evolving. Questions emerge like how do you stay true to your core identity while embracing technology and change? What is the best path for direct selling moving forward?

The U.S. macroeconomic conditions create favorable tailwinds for direct selling to thrive, and its best path forward likely lies first in prioritizing key points of differentiation.

The late author and management consultant Peter Drucker said, “Waste as little effort as possible on improving areas of low competence. Concentration should be on areas of high competence and high skill. It takes far more energy and far more work to improve from incompetence to low mediocrity than it takes to improve from first-rate performance to excellence.”

Direct selling has the ability to achieve sustained excellence and comparative advantages in certain areas such as personalization, relationships, and experience. Monica Wood, Vice President, Global Consumer and Member Insights at Herbalife Nutrition and incoming Chair of DSA’s Industry Research Committee said, “Personalization is becoming ever important and is a key differentiator we have in direct selling. Our distributors listen to the needs of their customers and then they customize the wellness solutions we offer based on the individual needs of that customer.”

“Direct Selling, like any industry, needs to evolve with macro and consumer trends, but it should not compromise on its inherent points of differentiation such as the priceless personalized experience a customer has with their direct seller,” says Jeff Kaufman, outgoing Chair of DSA’s Research Committee.

The unique direct selling experience is also a differentiator. As Qualtrics CEO Ryan Smith said, “we’re in the experience economy. People will pay a premium for a good experience, and experience is a growth lever… Either you’re intentionally racing to the top with experience or you’re unknowingly racing to the bottom.”

Focusing On Providing Value

No matter how hard direct selling companies try, it’s unlikely they’ll be able to beat Amazon on selection, shipping time, and price.

Amazon’s economies of scale, technological expertise, and relentless willingness to incur massive losses to compete for market share/growth make competing across any of these dimensions very difficult.

Will direct selling companies need to be able to beat Amazon on one-day drone shipping? Should direct selling companies match Dollar General on pricing? Beyond egregiously underperforming across these metrics, the answer is likely no. As long as you have value in other areas (e.g. the personalized ongoing service salesforce members offer their customers), 3-4 day shipping at a breakeven cost or selling cosmetics a dollar above the dollar store prices are likely fine. Otherwise, you’re on a race to the bottom.

However, at the other extreme, if we surrender entirely on selection, shipping time, and price, then you’re likely doomed. No matter how good your product is, consumers’ expectations have increased, and no one wants to wait weeks for their next order of protein powder. The answer lies somewhere in the middle. Being good enough to not noticeably frustrate customers here may be likely sufficient.

To see more statistics from DSA’s 2019 Growth & Outlook Survey, click here: www.dsa.org/benefits/research

The post The Evolving Retail Landscape and the Five Ways Direct Selling Can Achieve Sustained Growth first appeared on Direct Selling News.

When Direct Selling News released its Global 100 list of the top direct selling companies in the world in June, one country was conspicuously underrepresented. China, the second largest direct selling market, had only one company in the ranking—No. 4 Infinitus—compared to 26 in 2018.

How was that possible? High-profile incidents involving direct selling companies led to public outcry and negative media attacks on the channel, culminating with the Chinese government initiating a 100-day review of the health market. The increased scrutiny resulted in companies wanting to stay under the radar. “Coupled with the public opinion turmoil since the end of last year, many Chinese direct selling companies have suffered from poor performance and chose to act in a low-key manner,” said a Chinese source.

With several U.S. companies looking to China for future growth, what will be the lasting effect of this recent 100-day action? Will it be back to business as usual, or is it just the start of a new framework for the direct selling channel, one in which new guardrails will be imposed on the business model.

How It Started

The public opinion turmoil brewing over the last six months began in December 2018, when Quanjian, a Tianjin-based direct selling company, was investigated for false advertising. They were called out by a popular Chinese health website for using the photo of a child who had died in promotional materials for its cancerfighting products. Social media erupted, with people sharing their experiences with Quanjian products.

“When you talk about consumable categories like nutrition being the primary category that is down, it’s not like you are going to make that up in Q2, Q3 and Q4.” —Bob Bass, Lead Strategic Insights Analyst, Amway

One month later, another direct selling health company, Hualin Suanjianping Biotechnology Co. Ltd., made headlines when authorities investigated it on suspicion of deceiving customers and operating as a pyramid scheme.

Within days of the Hualin incident, 13 Chinese ministries and government agencies, led by the State Administration of Market Regulation, jointly launched a 100-day action to rectify the health market.

Officially begun on January 8, the “Hundred Days of Action” saw 2.741 million law enforcement personnel dispatched throughout the country to supervise and inspect key industries, key areas and key commodities. Forty-nine direct selling products were revoked during the investigation.

On April 18, the 13 departments reported that after 100 days of joint rectification, the “health market chaos was effectively curbed, but the hidden dangers caused by chaos and some deep-seated problems still exist.”

Impact On U.S. Companies

While the focus of the 100-day action was mostly on health companies, other direct sellers from around the world felt its impact, including those here in the U.S. Most analysts believed the government restrictions on holding meetings and the negative media toward health companies would show in net sales for the first quarter. That was true for most of the top U.S. companies.

USANA Health Sciences’ net sales decreased 8.7 percent in Greater China during the first quarter. In USANA’s latest investor call, CEO Kevin Guest attributed part of the decline to the action but is optimistic normal sales activity will resume once the company begins offering promotions. Guest said that while the government reviews are not uncommon in China, the company did not anticipate the significant volume of negative media coverage about health products and direct selling.

“This media coverage slowed the productivity of our Associates, and generated skepticism amongst customers and potential customers, all of which ultimately affected sales in China for the quarter,” Guest said. “Notwithstanding, we are confident that our strategies, plans and promotions for 2019 will drive sales and generate momentum.”

Herbalife Nutrition was down 25 percent in China for the first quarter. Alex Amezquita, the company’s senior vice president of Finance, Strategy and Investor Relations, said the impact on Herbalife’s business stemmed from the inability to hold standard business meetings and “that nutrition club operators faced increased scrutiny that created an overall hesitation in their activities.”

Securities analyst Doug Lane sees trouble looming ahead for Herbalife Nutrition in the second quarter due to very little momentum. “They are having to reboot from a standing start by having more meetings again,” said Lane. “They really rely on meetings for their business, and they were restricted from doing that. So now they have to recapture stalled momentum.”

One of the companies hardest hit by the action was NHT Global. Total revenue of $19.3 million decreased 63 percent compared to $52.4 million in the first quarter of 2018. Chris Sharng, president of parent company Natural Health Trends Corp., said, “While our financial performance was adversely impacted by this initiative during the quarter, we strongly support the actions taken by the Chinese government to root out bad products and deceptive practices in order to protect Chinese consumers. We have great confidence in our ability to navigate the business through uncertain times and to renew growth once the macroclimate improves.”

Nu Skin Enterprises had a stellar first-quarter performance for a company with nutrition making up 40 percent of its business. The company had 12 percent growth in Mainland China, which the company attributed to a focus on personal care products.

What’s Next?

China has always been a volatile direct selling market. In 1998, the government shut down the channel completely, calling it an “economic cult.” Companies like Amway, Avon and Mary Kay Inc. worked hard to bring it back by reforming the framework, only to see other companies come in and corrupt the model. The frequent government reviews are due to scams and pyramid schemes that continue to plague the channel.

However, as volatile as it has been, the market has always continued to grow. Analyst predictions that it would one day surpass the U.S. as the largest direct selling market were nearly realized in 2018: recent data suggests China is now tied with the U.S. for the No. 1 spot, although the 100-day action will likely cause it to fall back to No. 2 in 2020.

U.S. companies looking to enter the Chinese market can look to companies like Amway for inspiration. China is now Amway’s largest market, accounting for approximately 30 percent of its worldwide sales according to the company’s president, Doug DeVos. While not as greatly affected by the 100-day action as nutritional companies, net sales in China were down slightly for Q1 2019 according to an Amway source.

Bob Bass, lead strategic insights analyst at Amway, notes what was lost during the recent 100-day action, he believes, will most likely not be made up over the three remaining quarters in 2019.

“When you talk about consumable categories like nutrition being the primary category that is down, it’s not like you are going to make that up in Q2, Q3 and Q4,” said Bass. “It’s not pent-up demand. You lost that opportunity for people to be using your product during that full three-month period. While pent-up may apply to durable products, it should not be applied to consumables like nutrition.”

Governance May Stifle Momentum

While direct selling executives will try to recapture momentum over the coming months, the truth is that it may never be back to business as usual for nutritional companies in the China market for two reasons. One, the events of the past six months likely mean greater regulation in direct selling as a whole and more watchful eyes on health/nutrition companies. The 13 departments intend to build a system of joint governance—where none existed before—to safeguard the rights of Chinese consumers and to ensure a fair and competitive marketplace.

And two, some industry experts believe social media will play a critical role in shaping the channel. The Chinese government is sensitive to citizen unrest. The speed with which the Quanjian incident was widely shared—and the anger it generated—was because of social media. Consumers and those wishing to participate in direct selling as a business opportunity now have the means to quickly vocalize their suspicions and displeasures. The government will want the channel to regulate itself better and do better compliance so as to avoid more Quanjian and Hualin moments. Therefore, it can never again be business as usual. There must be changes if direct selling, which has received intense negative press over the last few months, can positively move forward.

What is encouraging amid all this is that the direct selling channel does have the support of the Chinese government. Dale Sun, CEO of the Global Direct Selling Research Institute based in Hong Kong, says that while the Chinese companies are currently hesitant about bringing any attention to their companies, the 100-day action could be the catalyst for a much better future for them all.

“All I see is positive,” said Sun. “The market is huge and the demand for direct selling exists. The question is, how do companies meet the customers’ need and in what way for the long-term benefit.”

The post The China Conundrum first appeared on Direct Selling News.

Nite Lights was praised by the Mensa judges with reviews that said, “Great concept and playable at all levels. Aesthetically pleasing with easy instructions,” and “fun multi-level strategy game. Very unique concept.”

“Our judges loved Nite Lights’ unique take on strategic pattern recognition, and nearly 80 percent said they would recommend the game to a friend,” said American Mensa CEO Trevor Mitchell. “Congratulations to the game designers and everyone on the SimplyFun team.”

Founded in 1990, Mensa’s Mind Games has become one of the most respected national games competitions. The 40-plus-hour board-game-judging marathon draws 300 Mensans and their guests from across the country where they vote on the year’s best new-to-market games.

This year, 71 games were selected for the Mensa Mind Games competition. Categories for evaluation included original and creative in concept, challenging to play, well designed, a good value for the price, easy to comprehend and, above all, fun.

“We are thrilled to learn that Nite Lights has been recommended by Mensa Mind Games as our team had a great time developing it,” said Stacy Longstreet, SimplyFun head of Product Development. “Our aim is to create fun, engaging and mind-developing games for kids and families. When we get recognized for this by Mensa Mind Games, we know we have achieved something special.”

The post SimplyFun’s Nite Lights Draws Recommendation from Mensa Mind Games first appeared on Direct Selling News.

This year at Nu Skin’s global headquarters, employees and their families are providing service in the local community at libraries, schools, parks, recycling centers and nonprofit organizations. Employees will paint, clean-up and beautify the community as they perform meaningful service.

“Nu Skin’s force for good culture is instilled year-round,” said Ritch Wood, chief executive officer. “Our annual Force for Good day especially inspires our global sales leaders, customers and employees to dedicate their resources and time to help children in need, while celebrating the impact we have made on hundreds of thousands of children around the world. Whether at home or abroad, Nu Skin always strives to be a force for good.”

Global Force for Good Day Projects
A sample of this year’s global Force for Good Day projects includes:

• Greater China – Nu Volunteers in Greater China will be spending the day with elementary students and teaching them safety skills.
• Singapore – Nu Skin Singapore employees will be distributing 500 goodie bags to children in hospitals.
• Indonesia – Employees in Indonesia will be assembling and delivering 1,000 school kits for children in orphanages.
• South Africa – Nu Skin employees in South Africa will be hosting a charity event for an orphanage to teach more than 150 children entrepreneurial skills.

About the Nu Skin Force for Good Foundation
The Nu Skin Force for Good Foundation provides grants that improve the lives of children by offering hope for a life free from disease, illiteracy and poverty. It began as a campaign in 1996 and was formally organized as a nonprofit foundation two years later. The Foundation is funded by Nu Skin distributor and employee donations and from 25 centsof the sale of each Nu Skin Epoch product. Nu Skin covers all administrative and overhead costs, allowing for 100 percent of donations to be used for humanitarian and charitable causes. The Nu Skin Force for Good Foundation is a registered 501(c)(3) nonprofit organization in the United States. More information is available at forceforgood.org.

The post Nu Skin Participates In Global Humanitarian Effort To Celebrate 35th Anniversary first appeared on Direct Selling News.