With the massive increase in participation from everyday people in online marketplaces such as Amazon and Walmart, direct sellers are scrambling to prevent the unauthorized sale of their products online.

Indeed, the problem snowballs each year as more and more end-user customers search out direct sales companies’ products at the best price. Experts estimate that companies are facing billions of dollars in losses as marketplaces continue to profit handsomely from the enablement of gray market sales.

As the number of product listings and sellers become overwhelming, many direct sellers are spending a fortune in time and money trying to remove them.

Unauthorized sellers battle with companies for consumer dollars, and customers look for the quickest, cheapest way to get the product on their doorstep. This severely impacts a direct seller’s bottom line and—most importantly—hurts the field, as they often cannot compete with the cut-rate prices found online.

So, What Exactly Are Unauthorized Sellers?

An unauthorized seller is any third party that is not associated with your company and resells your products without your permission. This could be an individual, a former distributor, a group of sellers or even an entire business. And it is easy for them to maintain some level of anonymity, at least on the consumer-facing side of online marketplaces.

The selling often takes place on Amazon, which does not discriminate between official and unofficial sellers of products. Selling on Amazon in the US does require users to meet some basic guidelines and provide information such as Tax ID and State Tax ID but does not generally prioritize filtering out unauthorized sellers. It’s somewhat of a free-for-all, which is the perfect way for these sellers to make a payday from your product.

Why Are Unauthorized Sellers Risky to Your Field?

Part of the reason these sellers are so prolific is because the asking price for the product is often marked lower than your company’s Minimum Advertised Price (MAP), which means that the “Buy Box”—the box denoting Amazon’s highest-rated item in the search category—could go to the unauthorized listing.

Being that a high percentage of shoppers look for the “Buy Box” when deciding between two sellers, this is a big deal. They are usurping customers from you; lowering the price of your product; and deterring potential buyers from your official listing, while hurting the sales efforts of your field and thus your bottom line.

Secondly, the unauthorized sellers are the ones responsible for the quality of product they resell, which is often below quality standards put in place by your company. This can lead to negative reviews that result in a drop in customer loyalty, support and consumer trust.

In the end, you could experience damage to your online reputation and pricing integrity; hurt your overall business; and negatively impact your field’s ability to enroll and sell.

There Are So Many Solutions, But Few Solve the Problem

As a result of the shift in consumer behavior, service firms have proposed solutions. One early solution-centered legal remedy: identifying sellers; tracing product sales; and ultimately sending legal demands to discourage them from reselling the company’s products.

Another solution threatened an unauthorized seller’s bread and butter—their online store—by using Amazon’s policies against them, including intellectual property and other brand protection mechanisms, while using an escalating series of threats to press them to drop the listings.

A more recent approach that has stopped these sales centers around an attempt to “out-Amazon” Amazon itself. It is the “if-you-can’t-beat-’em-join-’em” approach: build an official corporate store; advertise it heavily; and get the official site ranked on Amazon so you capture most of the sales.

However, this tactic competes with the field. Every sale that happens on Amazon is one that is not happening through distributors.

The whole point of the direct sales model is to build sales volume through a distributed workforce of independent representatives. Selling online is contrary to the model itself; it is the opposite of selling through a networked direct selling workforce.

Typically, fewer than 75 percent of listings and sellers end up being removed, and just one underpriced listing will compete with your field.

How Can a Company Stop Unauthorized Sellers?

The only way to stop the negative impact of unauthorized listings is to remove all of them. Period.

Since companies cannot trust entities such as Amazon to do so, self-advocacy is the most valuable tool. Explore solutions that are tailored with the direct selling industry in mind and have a proven track record of eliminating all unauthorized sellers.

Companies can then follow with legal avenues. However, cleaning up their unauthorized sales problems must take a proactive, multi-faceted approach.

1/ There will always be a small segment of customers who will buy on Amazon—the goal is to fulfill those sales without driving additional sales to Amazon.

2/ Remove all unauthorized sellers from the platform.

3/ Ensure all listings are at MAP or above (otherwise customers will buy at the lowest price).

4/ Be transparent with your field about your efforts to reduce unauthorized sales and push sales back to them.

5/ Engage experts with a proven track record of helping companies with these issues.

What If We Give the Money Made Online Back to the Field?

To assuage the frustration of distributors, companies whose strategy against unauthorized sellers competes with their field may elect to pay a portion of online sales to distributors through a bonus pool in their compensation plan—removing all unauthorized sellers and pushing sales back to distributors, where they belong. This will win the day with the field—showing distributors that the company did not “give in” to Amazon and instead fought to protect their businesses.

In short, direct sales companies expend substantial resources to build brand awareness and develop quality products for distributors to sell. Unauthorized sellers can destroy a company’s field success, perception of quality and even its overall reputation.

Travis WILSON heads up all business development initiatives for Momentum Factor. A finance executive in the direct sales industry since 2016, Travis brings a wealth of experience to his position at the firm. His industry expertise uniquely allows him to understand specific customer needs and provide compliance solutions.

From the October 2023 issue of Direct Selling News magazine.

The post Addressing the Unauthorized Seller Problem first appeared on Direct Selling News.

“Avon is a true pioneer in direct selling and, as we continue to realize our omnichannel ambitions, now is the right time to launch our new Amazon store,” said Kristof Neirynck, Global Chief Marketing Officer at Avon. “Across Avon worldwide, online sales are now nearly three times pre-pandemic levels and expansion into other channels complements our existing network of reps who offer best in class relationship selling.” 

More than 300 of the company’s products are now available on Amazon, with more expected to be added throughout 2023.

The post Avon UK Launches Omnichannel Strategy with Amazon Storefront  first appeared on Direct Selling News.

How the Right Amazon Strategy Can Take You From Pain to Profit.

We have an Amazon problem.

I’m not just talking about our online shopping habits or the fact that 20 Amazon boxes show up on our doorsteps each week. Amazon is the third largest search engine in the world and where 63 percent of all product searches start. Let’s be real, if your product is not on Amazon, customers think you’re weird. Amazon is not where the world is going—the world and consumers are already there.

In my 22 years in the industry, I’ve been blessed to have gathered a fairly unique perspective from living on all sides of the direct selling fence. I’ve been a top earner, an owner that went from a scrappy startup to major acquisition, an officer of a public direct selling company, and now president of Prüvit.

I understand launching, hypergrowth, scaling and all the ups and downs in-between. At Prüvit, we’ve been on the leading edge of the customer-centric conversation and have always been heavily invested in the mainstream trends around the world. Through experience, I can tell you that in order to bring relevance to the channel today, Amazon has to be a critical part of our strategy.

You may assume that since you haven’t chosen to sell on Amazon, that your products aren’t available there. If you think that’s true, pause a moment right now and do an Amazon search for your brand name. Odds are, someone is using your brand reputation and image to sell products without your permission.

If you’re a product-based company, you can either choose to sell on Amazon or unauthorized sellers will do it for you.

The Dangers of Letting Amazon Run Wild

Imagine being a new distributor, excited to launch your business. You’ve finally worked up the nerve to talk to your first prospect and, when you tell them about your great product, the first thing that customer does is what everyone will do: they either will go to Amazon directly, or stop by Google, where it’s almost certain that one of the first listings that pops up for your product will be…Amazon. So, what happens if the product on Amazon is cheaper than the price you, a new distributor, can sell it to them?

This is what happens when we don’t pay attention to Amazon. In that scenario, you’ll not only lose the customer relationship, you’ll also lose the morale of that brand new distributor and all of their potential growth. And, on their way out, they’re probably going to complain to their upline, who will complain to their upline and now you have a telephone game of complaints and a support team who is dealing with issues out of their control.

And the complaints won’t stop there because you can’t regulate the quality of products sold this way. You don’t know what claims are being made on the product descriptions, how long it’s been in a hot garage, what the expiration date is or what the packaging looks like when it arrives on the customer’s doorstep. All of this does serious damage to the brand. At the end of the day, an uncontrolled Amazon model violates the integrity of the business model and upends what is supposed to be a fair opportunity for everyone.

Defense and Offense

Winning the Amazon game begins by owning and protecting your brand on Amazon. Start by setting up your Amazon store and brand registry so that you have the ability to remove all unauthorized sellers. Amazon makes it easy to hide behind seller names, and many times it’s the same person with multiple accounts.

Trying to deal with these ghosts merely through a company compliance process is extremely difficult, which is why an Amazon brand registry strategy is a welcomed solution. Over time, your company will own the Buy Box, control the price and ensure that all Amazon imagery matches your marketing. Don’t try to shortcut this by setting up a brand registry without selling any products. Amazon wants the sales, and this won’t work long term.

Next, tackle pricing. I’ve seen brands make the mistake of competing with themselves by matching or dropping their prices on Amazon. At Prüvit, we don’t match the price; we raise the price. Our Amazon price is always higher than what distributors sell the product for, which guarantees our distributors always have a better hookup than Amazon. Why would someone go to Amazon and pay more money if they already have a relationship with a distributor who can give them a better deal? We have chosen this channel because we believe in creating and growing entrepreneurs. Give your community the advantage.

There is good news with Amazon. Having a controlled footprint on the most trusted third-party website on the internet lends unique credibility. Ratings and reviews are what customers trust today, so even if they’re not buying on Amazon, a managed presence there is elevating the brand for everyone. Amazon’s search traffic can also organically drive incremental sales with a very high profit margin, so find an expert who knows Amazon’s platform and leverage their advertising options in order to scale. Don’t forget to play offense and defense here as well through strategic keyword selection.

Three Plays to Consider

There are three ways to build an Amazon strategy, and I’ve tried all of them.

1 / Find a wholesale distributor.

This is someone in the field who is already successfully selling on Amazon or has the expertise to take it on. Generally, this takes place through a wholesale agreement. The benefit to this is that it’s hands off—you get the revenue and don’t have to think about it, you limit other sellers and protect your pricing. In my experience, however, because you don’t control the inventory, have no visibility into what’s happening and they often cut corners, this method can leave the brand vulnerable in ways you don’t intend.

2 / Do it yourself.

You can leverage your internal marketing team for design, but building the expertise in-house also means hiring talent that understands both Amazon and the nuances of your company compliance. This can be difficult to find, and building a small, dedicated team will likely be more expensive, time consuming and have a longer learning curve than seeking outside expertise.

3 / Engage an expert.

After learning from the first two options, I now prefer to work closely with an agency that specializes in the direct selling channel to run our Amazon strategy. This allows us to have full visibility and control while staying fairly hands-off on the day-to-day. The sales it generates pays for itself, while allowing us to actualize all of the benefits of protecting our community and elevating our brand. It’s become a real win-win for the company and our community.

How to Win

I’m a firm believer that intention matters—so it’s important to have strong understanding and belief in why you are making a decision to incorporate an Amazon strategy and how it will really help both the company and community. The benefits are clear, so successful implementation really comes down to leading with education, transparency and communication.

You may run into some pushback from the field if some of your distributors are already using Amazon to become super sellers without realizing that they’re degrading the brand in order to advance themselves. But our role as leaders is to do what’s right for our communities and companies long term, and that means protecting the brand and maintaining equal opportunity for distributors.

Start with the top leaders and educate the field on how this new strategy protects their businesses. As it begins to pay off, provide an upside for distributors through a revenue pool, bonus, incentive trip or some sort of additional recognition or reward. This helps create alignment with the company and the community.

It’s easy to understand the value of additional revenue, but I would say that the strategic benefits of Amazon—the brand protection, quality control and increased visibility and credibility—are even more valuable to the company long term than the potential financial benefits.

The world has shifted. We are in the business of teaching people how to shift paradigms, and that begins with a shift in our own thinking. We can’t get stuck in old paradigms because omnichannel visions are not the future—they’re the present. This is the way the Amazon game is played, and—if you want to win—you must control it.

Blake Mallen, President of Prüvit, is a billion-dollar brand builder and community marketing expert. With over two decades of field, ownership and executive experience in the direct selling industry, Blake offers a unique combination of wisdom and innovation that has helped him turn ideas into iconic healthy lifestyle brands.

Three industry leaders share their experience tackling AMAZON—the eCommerce Goliath

By Sarah Paulk

It’s likely that every direct selling executive has been in a meeting when someone has asked, “What are we going to do about Amazon?”

Amazon, with its sprawling marketplace, free shipping and trusted third-party reviews, is radically altering the direct selling landscape. Unauthorized sellers list products for less than the retail price and shoppers flock to it as a search engine to discover their new favorite products. In the process, distributors and the business model in general are losing out.

“What good is a wholesale price that you’re offering to all of your affiliates or preferred customers, if there really is no retail price?” shared Danny Lee, 4Life President and Chief Executive Officer. “If it’s just window dressing and no one ever buys at that price, then it really has no meaning at all. That can’t be a long-term strategy for any company, but especially in our industry where we are relying upon this sales force that works with friends and family on a one-on-one basis.”

Unauthorized and Anonymous

For years, the direct selling industry has stepped up compliance and put safeguards in place to prevent inventory loading or large purchases of products by one person rather than real, individual customers. But Amazon has fed this activity through its powerful privacy protections for sellers and customers alike, making offloading products easy and anonymous.

Under cover of anonymity, distributors can leverage Amazon to engage in “garage qualifying”—the process of using a wholesale discount to buy in bulk and make rank—by setting up multiple shell storefronts under fake names and sell surplus products at a price that is deeply discounted from retail.

This is not only a legal issue, but one that inflicts damage on all parties: Distributors lose sales, companies endure brand damage and customers miss out on product support and affiliate relationships. Effectively combating this endless supply of anonymous sellers means companies must fully own and build their brand presence on Amazon.

“By having a presence on Amazon, we become the ‘authorized seller’ and therefore we can protect our brand from the host of unauthorized sellers who plague many direct sales companies,” said Roger Morgan, pawTREE Founder and Chief Executive Officer. “We control our prices on Amazon, and we are committed to selling our products on Amazon at higher prices than we do on our petPros’ websites.”

The Amazon Learning Curve

A managed presence on Amazon is ideal, but not simple. Advertising, compliance and uncovering the best ways to drive traffic on the platform requires an experienced team—something that is not always easy to find. Combine that with high-end products and the nuanced direct selling business model and that search for knowledgeable talent becomes even more trying.

“If you have your brand registered and trademarked, it’s not hard to set up, but it is what you do afterwards that is challenging,” said Gaya Samarasingha, Kalaia Founder and Chief Executive Officer. “I just engaged our third agency in a short period of time. It’s another whole business, and there is a learning curve.”

Kalaia, which was featured on Amazon during Small Business Prime Day, originally turned to Amazon as a way to enhance new customer acquisition and increase visibility. The company still maintains Amazon as an important part of its sales strategy, but Samarasingha has adjusted her expectations of what the platform will provide for her company.

“Would I call us a success on Amazon? No, we are still a small fish in a humongous ocean, trying to navigate and learn as we go,” Samarasingha said. “We will maintain a presence on Amazon to be able to control our brand and make sure no one else comes in and starts selling our products on it, but it may become less of a priority for us.”

Resource vs. Rival

Amazon can either be a resource or it can be a rival. When companies protect their brand presence on Amazon, the platform becomes a place where customers can find complete product descriptions, unbiased reviews and beautiful product images that serve to only elevate the brand and the industry as a whole. If they see all of this and a higher price, it strengthens their relationship with the distributor who referred them to the product in the first place, protecting the distributor’s business opportunity and the integrity of the model overall.

“The question is, are you going to just be passive, stick your head in the sand and just hope for the best?” Lee said. “Or are you going to run to those theaters of war, if you will, and establish and protect your brand and prices?”

Frequently Asked Questions

1. What is the BuyBox?
   The Amazon BuyBox is the “Add to Cart” button on Amazon. If you have multiple sellers of an item, the store that gets the sale or gets the BuyBox will rotate based on Amazon Metrics.
2. How do you “Win the BuyBox”?
   The primary metrics that Amazon looks at are who has the lowest price and who is in Amazon FBA. The best way to ensure that you are winning the BuyBox and getting the sale is to ensure that you are the only seller for your brand.
3. What is the difference between Amazon FBA and FBM?
   Amazon FBM is “Fulfilled by Merchant.” This means that when a customer orders, the brand owner is required to pick/pack/ship that product to the customer.
   Amazon FBA is “Fulfilled by Amazon.” This means that when a customer orders, Amazon will pick/pack/ship that product from an Amazon facility.
4. Why is it important to do Amazon FBA?
   Amazon rewards FBA sellers, and it is often a more cost-effective model. Having your products in FBA allows for Prime and Amazon’s quick shipping. It also allows the brand to take advantage of Amazon’s shipping rates and customer service team.
5. What is the difference between Amazon Seller Central and Amazon Vendor Central?
   Amazon Seller Central is the most popular model. In this model, the brand owns the inventory and is paid for it when it sells. The brand has the most control with this model.
   Amazon Vendor Central is when the brand sells it directly to Amazon, and Amazon has control of pricing, etc. 
6. Why is our product not the first one that comes up when we search our brand? 
   This is typically due to other brands advertising and winning the paid advertising space on Amazon. You can control this by running a small amount of defensive advertising. 
7. What is an ASIN, Storefront, Seller Account and A+ Content?
   ASIN is Amazon’s internal identifier code. Similar to a UPC, but specific to the Amazon platform.
   Storefront is a landing page that allows a brand to provide marketing for all of its products.
   Seller Account is the account that is selling the product—the account that owns the inventory and receives the payments from Amazon.
   A+ Content is additional marketing space below the product listing. It is a great opportunity to provide additional brand education to your customers.
8. What is a Sponsorship Guarantee?
   A Sponsorship Guarantee ensures that the brand will provide credit to a distributor if that distributor can prove they lost a customer to Amazon.
9. Does Amazon regulate what you can ask customers and what you can send them?
   Yes. Amazon has very specific rules around how you are allowed to communicate with customers. 
10. What is the average percentage of product returns?
    In the direct sales space, the average return rate on Amazon is under one percent.
11. Do you recommend using the Amazon Transparency Program?
    No. This program has very specific guidelines for how it is applied. Using it incorrectly will put your brand and trademark status with Amazon at high risk. 
12. Do you recommend utilizing the Amazon Subscribe & Save Program?
    Yes. The Amazon Subscribe & Save Program has a great adoption and retention rate. 
13. How do you decide what product you want to sell on Amazon?
    Start with your top selling items and over time expanding to offer your full assortment. Having all your products available from a marketing perspective is important but not necessary Day One. 
14. How do you decide how to price your products on Amazon?
    Price your product 5-15 percent above retail, so that you are not competing with the field for sales. 
15. Who manages the customer service side of Amazon?
    Your agency partner should manage all Amazon customer service and use company guidelines to respond to Amazon customers with the correct information. 
16. Is Amazon good for brand visibility?
    Yes. Amazon is an amazing marketing tool. Aside from the sales opportunity, it is important that your brand have a presence on Amazon to continue to gain exposure. 
17. How long does it take to set up an Amazon account and start selling product?
    When done properly, set up of a new Amazon account can take 7-14 days. You can start selling product with Amazon FBA within 21 days. 
18. How long does it take to clean up an Amazon account and become the only authorized seller?
    This depends on the partner or company that is supporting with this activity. Done correctly, Amazon clean up should take no longer than 90 days.
19. How much work is needed by the Brand Owner in order to launch or clean up Amazon?
    This depends on the partner or company that is supporting the launch. When using the right partner, the Brand Owner only needs to provide images, content and basic product information.        

From the November 2022 issue of Direct Selling News magazine.

The post Cracking the Amazon Code first appeared on Direct Selling News.

Amazon, gig economy competitors and other market forces have taken some wind out of direct selling’s sales.

After years of significant growth, our industry’s U.S. revenue was down 1.6 percent in 2016 and nearly two percent in 2017, according to DSA’s Growth & Outlook Survey.

The surge in alternatives to direct selling and pressure from e-commerce has knocked us back. And we’re just now regaining our balance. Last year U.S. direct selling retail sales was slightly up again, a paltry 1.3 percent over 2017 to $35.4 billion, and the number of business builders—those who regularly buy product at a discount and sell it for a profit—was up 1.6 percent to 6.2 million. The Direct Selling Association (DSA) projects that U.S. direct sales revenue will continue to rise, between one and three percent annually for the next three years.

“We have to be willing to change what used to work. Because although it may have worked in the past, it was never sustainable.”

That seems doable, right? If we can grow by 5.9 percent—our high between 2011 and 2015—surely, we can manage a percent or two. But we have to be willing to change what used to work. Because although it may have worked in the past, it was never sustainable. We must find new tactics, set new expectations and rephrase our recruiting message because times have changed. The “You, too, can have the house, the boat, and retire a millionaire in five years!” hard sell our industry has been known for has done us more harm than good. “The appeal to greed is repugnant,” said LifeVantage President and CEO Darren Jensen at DSA’s 2018 Fall Conference. “We keep going back to that well time and time again, and we need to shift away from it.”

Putting Field Leaders Back To Work

The lure of network marketing was this grandiose plan to work hard for a few years until the big money rolls in and then coast on the residual income. Direct selling companies have themselves to blame since they have traditionally organized their compensation plans to reward these top earners to coast on the work their downline does. It’s time to start rewarding activity that directly brings in new customers and representatives. This strategy not only will energize your ground-level representatives, it should motivate those veteran team members to re-engage in business building.

There are examples of this priority shift all over the channel, notably what happened with AdvoCare earlier this year. In May, the Plano, Texas-based company announced it would abandon the multilevel marketing model, no longer paying distributors on the sales of the salespeople in their downlines, but paying only on sales to retail customers. “Over the years, we have made many changes to the AdvoCare policies as the regulatory environment has shifted,” said AdvoCare Chief Executive Officer Patrick Wright in a statement. “Based on recent discussions [with the Federal Trade Commission], it became clear that this change is the only viable option.”

Other companies are still offering tiered compensation plans, but those plans are getting flatter and easier to understand.

“The more our industry focuses on being customer-centric—the more our business will work in the future.” —Gordon Hester, direct selling analyst

The compensation plan at Salt Lake City, Utah-based Perfectly Posh pays Posh influencers commission on their own sales and a maximum 15 percent commission on the sales of influencers on just two additional levels, or “spheres.” Said Perfectly Posh CEO Ann Dalton in May, “Our new Influencer Pay Plan transitions away from the more typical pyramid pay structure in direct sales, which is neither simple nor transparent. We’ve taken a modern approach to compensation, ditching the complex and often confusing steps it takes to build a successful business.”

Brand ambassadors for Provo, Utah-based Nu Skin can earn same-day sharing bonuses when registered retail customers buy directly from Nu Skin or through the company’s mobile app, the Velocity pay plan. “When we looked at the desires and the needs of [our sales force], we found there was a fairly large group of people building a Nu Skin business because they needed income today—not six weeks or even a week from now,” says Nu Skin President Ryan Napierski.

Companies with comp plans similar to those at Perfectly Posh and Nu Skin understand that customer acquisition and increasing retail sales have to be their main goals. The bottom line is that most people who come to our doors are just looking for premium products at a fair price. They’re not interested in selling it. Lehi, Utah-based Xyngular puts front and center on its comp plan description that only 20 percent of its members are business builders. When we recognize and respect customers’ motivations, they’re more likely to become repeat customers because they don’t feel pressured to become anything else.

“The more our industry focuses on being customercentric— the more our business will work in the future,” said direct selling analyst Gordon Hester at DSA’s recent annual meeting. “That’s what the data is saying.” The data he’s referring to includes a 48 percent growth in preferred customers in 2018. Preferred customers purchase at a discount, often as a perk of signing up for automatic repeat shipments.

“As the strength of the customer base—what we call ‘customer density’—grows, then all of a sudden, everything around it grows,” Hester continued. “We’re going to see a longer customer lifetime value and longer customer lifetime stay, and we’re going to see distributors staying longer and engaging at higher levels.”

A New Reality

Engaged, loyal distributors take time to cultivate—and it’s more challenging now that direct selling no longer dominates the work-for-yourself market. According to Statista, 57.3 million people are earning money from some kind of gig economy job—Uber driving, Airbnb renting, etc. This likely includes the 6.2 million direct selling business builders, but it also includes 51 million others who aren’t working in our channel. Why do so many people choose these other opportunities?

Experts say it’s because gig companies not only offer the work flexibility and autonomy that direct selling used to own, but they have set new side hustle standards. Gig work often

• has low or no startup costs;
• pays instantly (sometimes up front); and
• provides customer leads—no sales experience required.

Gigs have put in stark relief the difference between wanting to earn extra money and wanting to be an entrepreneur. The two can be mutually exclusive, says Brett Duncan of Strategic Choice Partners.

“While direct selling companies keep promoting ‘business opportunities,’ the Gig Economy keeps showing us just how many people aren’t interested in that,” Duncan wrote recently. “ In fact, it may actually turn them off. Making an extra $300 a month isn’t typically considered ‘a business’ by a normal person. Sure, it technically is a business, but that’s not how most people think about it. So why do we keep pushing it?”

“The appeal to greed is repugnant. We keep going back to that well time and time again, and we need to shift away from it.” —Darren Jensen, Life Vantage President and CEO

Recruiting in our industry has no choice but to stop pushing against the expectations and motivations these gig opportunities have revealed. Yes, there are people who have entrepreneurial skill and drive and who see direct selling as the perfect way to achieve their dreams of business ownership. Most people pick up side work to make ends meet more easily and are bringing in less than $50,000 a year with their gig—only 11 percent are clearing six figures, according to Statista data. Even among direct sellers, only 16 percent of them are working full time (30 or more hours per week), according to the latest DSA’s Growth & Outlook Survey. That suggests that the majority are putting in part-time work because they’re looking for part-time income.

Direct selling companies need to develop recruiting messages and strategies that meet prospective distributors where they are and likely will be comfortable staying. If we don’t, we’ll become irrelevant, says LifeVantage’s Jensen. “We need to recognize we are in a battle of the side hustle.”

We’ve gathered some best practices for winning in this side-money, customer-driven era:

1. Set honest, realistic expectations. Tell prospective business builders what most distributors actually earn and what it takes to achieve and sustain that level. Xyngular’s comp plan states clearly that nearly 80 percent of its distributors earn $67 a month.
2. Offer quick payments. Instant commissions are one of the biggest trends in our space. Airbnb hosts get paid before their guest even arrives. So, we have to  get faster. Perfectly Posh pays in less than five minutes from the time of sale, at no additional cost.
3. Provide complete, accessible information about your opportunity. Make it easy for potential distributors to find your compensation plan and startup requirements on your website.
4. Watch your language. Reinforce the separation between customers and distributors at every stage. At Xyngular, for example, distributors enroll but customers check out, Jensen says. If a customer has to click “enroll,” there’s an implication that she is getting in deeper than she wants and she may bail on the purchase.
5. Emphasize product and experience sharing. Potential customers and distributors are more likely to respond positively to authentic content from satisfied product users.

Compliance Matters

Class action lawsuits across all industries are costing companies more money and time than ever.

According to the 2019 Carlton Fields Class Action Survey, the number of companies that reported facing class actions in 2018 dropped slightly to 54 percent, but the average number of matters per company increased from 6.3 in 2017 to 7.8 in 2018. And class action spending increased for a fourth consecutive year, to $2.46 billion in 2018, accounting for 11.1 percent of all litigation spending in the United States. The companies surveyed said most class action lawsuits brought against them last year alleged either consumer fraud or a labor and employment violation.

“Recruiting in our industry has no choice but to stop pushing against the expectations and motivations these gig opportunities have revealed.”

We don’t have class action lawsuit volume for our industry, but the general sense is that we’re feeling the pinch as much as or maybe more than other channels. “In my experience, we’re seeing more and more direct selling companies targeted by class-action lawsuits due to product and earnings claims,” says Crayton Webb, owner and CEO of Sunwest Communications, a Dallas-based public relations firm.

Most of these claims come, though, from a lack of understanding, training and awareness—and while distributors have a responsibility to represent our companies and products truthfully, it’s incumbent on our industry and individual companies to continually educate our field teams. We have to tell them often what they can and can’t say and then monitor our marketplace for statements and activity that come dangerously close to or go over the line.

Do The Right Thing

Amazon and other e-commerce players have rewritten the retail rules. The gig economy has rewritten the work-for- yourself and extra income rules. And regulators are watching us more closely than ever to make sure we stick to the ethical and legal rules—rules, by the way, that we should follow even when no one is watching. We have a choice to make—A) evolve and thrive or B) cover our ears and eyes and hope no one notices if we do business as usual. The thing is, though, A is really the only choice. Because “as usual” will put us out of business.

The post Raising The Bar first appeared on Direct Selling News.

In January, news outlets reported that Amazon was quietly piloting a new ad strategy: free samples based on shoppers’ online activity. The pilot is separate from the Prime Sample Program, a paid subscription service available to Amazon customers.

Let’s say, for example, you’ve been browsing coffee brands on the site and maybe even have a bag or two sitting in your shopping cart for later. Then lo and behold, a surprise shows up in your mailbox or doorstep one day: a coffee sample. Like many other retailers, Amazon understands that these days, customers want to try before they buy. And using the enviable data to which they are privy, they’re taking a targeted (albeit a tad creepy) approach.

The power of sampling, of course, is something direct sellers have known for decades. Samplers in a starter kit can help jumpstart a new distributor’s business or, when purchased by an existing distributor, provide a tool for attracting prospective customers or introducing longtime customers to new products.

Along with a highly personalized customer experience, it’s one of the competitive advantages our industry has had over the retail giants. Given that Amazon’s sampling strategy is based on a treasure trove of customer data, though, this pilot program has thrown up a red flag for some skeptics who have privacy concerns. Even with a sampling program, retailers remain a largely faceless entity. While they can offer up data-driven cross-selling opportunities and product recommendations, they can’t deliver a dedicated salesperson—a welcome change in our digitally-driven society—who knows the product line intimately, can answer any question you may have and who often establishes a relationship with you beyond the sale. Sampling takes the prospective or existing customer’s experience to the next level.

How often does a sample result in a sale? While we don’t have statistics that are specific to direct selling, EventTrack 2018, a report issued jointly by EventMarketer and Mosaic found that across the board among all industries, “the primary purchase decision factor by far is getting a sample or seeing product demonstration, according to nearly half of consumers [47 percent].”

“Sampling is even more effective in an event setting, like a home party or gathering where social influence can help move someone,” says Senior Vice President of SUCCESS Partners Noah Westerlund. “No one wants to miss out. Many of the products in direct selling have advantages that don’t come through via packaging, and being able to not only sample but educate the consumer to the benefits is one of the big advantages of direct selling,”

Technology Expands Reach, Quantifies Results, and More

Emphasizing our foundation of personalized service, though, doesn’t mean to imply that direct sellers aren’t using technology to strengthen their sampling strategies. The reality is quite the contrary. “The execution has been sped up significantly by technology, and the reach has been expanded,” Westerlund adds. Direct selling representatives, then, are no longer limited to an in-person meeting to offer or deliver product samples. However, a representative’s best chance for building a long-term customer relationship will come from incorporating more personal touchpoints with the convenience of technology, whether that consists of a call, a text, a Google Hangout, face-to-face visit or some combination of the above.

Where technology is having perhaps its biggest influence is around tracking; direct selling companies are increasingly relying on metrics to analyze the success of their sampling efforts. Instead of waiting until the conclusion of a sampling initiative to discover an element that needed improvement, direct selling companies now are able to examine their progress at every stage, making tweaks on the spot. “If they’re using an automated system to send the samples, like an app or an online portal, then it’s not difficult to track the close rate of those sampled,” Westerlund says. “It’s a lot more difficult to track when it’s one on one, at least from a micro level. On a macro level, is the business experiencing lift or not? Right now, I’d say a lot of companies are trending towards making sure they implement a sampling program and making it simple and accessible. Technology is driving these programs as it allows for scale, tracking and for quick adjustments to programs.”

“Many of the products in direct selling have advantages that don’t come through via packaging, and being able to not only sample but educate the consumer to the benefits is one of the big advantages of direct selling.” —Noah Westerlund, Senior Vice President, Success Partners

For example, the Mobile Office by SUCCESS (mOS) app, introduced by SUCCESS Partners in summer 2018, has provided distributors the ability to fulfill sampling requests from their mobile devices. The idea is to empower the distributor to work her entire business full circle – sharing, sampling, follow-up, selling, recruiting and onboarding – all from her smartphone or tablet. mOS supports multiple payment modes, giving distributors the option to send samples to potential customers at no charge, or choose the option to charge for the sample only or shipping only. The app also enables distributors to offer samples to prospects overseas, effectively eliminating one of the traditional barriers to building a global independent business. From the company side, while sampling “sounds simple, the nuances can get complicated,” Westerlund says. “Is it a credit-based system or pay as you go? Who is doing the fulfillment? What about cross borders and exchange rates? There are a lot of questions that need to be answered on the back end to make it simple for your users on the front end.”

Best Practices

That simplicity is everything, by the way. The vast majority of sampling is initiated by new distributors and/or lower ranks, simply by virtue of the fact that they comprise one of the largest segments, if not the largest segment, of any direct selling company’s independent sales force. Keeping your initiatives straightforward and affordable, repeatedly training your distributors to use sampling effectively, and providing them the tools to follow up with prospects all will increase the odds of their success. The most common mistake by distributors when it comes to sampling is neglecting to follow up with prospects, and on the company side, it’s the failure to train and train often; “you need to make it core to your culture,” Westerlund says.

Another point worth considering for companies and distributors alike is that sampling isn’t just about the results the product delivers. Results are important, no question. However, the experience that sample delivers may be even more consequential. Companies generally choose which product to offer as samplers based on whether they deliver immediate gratification—results consumers notice on the spot. But how does the product look on the table? How does it feel in the hand or on the face? How did it taste? Is it a product easy enough to use that the customer could see herself using it on a daily basis? Does it work as a stand-alone product, or will she need to purchase additional products to enjoy the full experience, so to speak? If she needs to purchase additional products for best results, how will the prospective customer interpret that caveat?

Whatever you can do to maximize the aesthetics of the customer’s experience—and simplify the delivery—will likely enhance her perceived results. Direct selling companies must determine how to train distributors to harness that customer experience, turn it into a commitment to try to the product for 30 days and, ultimately, create a long-term customer and brand advocate.

THE PSYCHOLOGY OF RECIPROCITY

Should direct sellers ever charge customers for samples?

Reciprocity refers to the old “You scratch my back, I’ll scratch yours” adage.

Although it can play a significant role in any distributor-prospect relationship, it can operate in the customer’s subconscious. It works like this: You offer the prospect a free product sample, and the customer is then more likely to feel obligated to purchase something from you. She may not make a purchase on the spot, but if she decides to do so later, she’s likely to remember your generous gift and make that purchase from you. That doesn’t mean that we should be training distributors to have an agenda with their prospects. The most effective strategy for landing a sale remains the fine art of listening to the prospective customer’s needs, empathizing with her pain points and offering her the opportunity to try a product that could provide her a solution.

Should distributors charge customers for samplers? “This is a tough one, as there are so many factors to consider,” says Senior Vice President of SUCCESS Partners Noah Westerlund. “In general, I don’t think they should for traditional samples, but remember—there’s a difference between sample and trials. You want to create a program that doesn’t allow people to take advantage of samples for free long-term supplies. Remember the idea of reciprocity only happens if you give them something. If you charge for samples that idea goes out the window.”

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Over the past two days—July 15 and 16—Prime Day sales surpassed the previous Black Friday and Cyber Monday combined. Prime members purchased more than 175 million items throughout the event.

Global Highlights from Prime Day 2019

• Prime members worldwide saved more than $1 billion throughout Prime Day.
• Millions of items shipped in one day or faster using Prime Free One-Day, Prime Free Same-Day, or Prime Now worldwide—making it the fastest Prime Day ever.
• Members in 18 countries shopped—double the number since the first Prime Day five years ago.
• Amazon welcomed more new Prime members on July 15 than any previous day, and almost as many on July 16—making these the two biggest days ever for member signups.

U.S. Highlights from Prime Day 2019

• A record number of Prime members shopped during Prime Day in the U.S.
• Prime members purchased more than 100,000 lunchboxes, 100,000 laptops, 200,000 TVs, 300,000 headphones, 350,000 luxury beauty products, 400,000 pet products, 650,000 household cleaning supplies and more than one million toys.
• Prime members in the U.S. received tens of millions in Prime Day savings when they shopped at Whole Foods Market. The best-selling Prime Day deals were organic strawberries, red cherries and blueberries.

Spotlighting Small and Medium-Sized Businesses

Prime Day 2019 was another record-breaking success for independent third-party sellers—mostly small and medium-sized businesses. Products from these unique businesses increase variety and contribute to the ever-expanding selection available to Prime members worldwide. Globally, these businesses far exceeded $2 billion in sales this Prime Day, making it the biggest Amazon shopping event ever for third-party sellers when comparing two-day periods.

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Amway and Oriflame, along with multi-level marketing company Modicare, filed a complaint against e-commerce platforms such as Amazon, Flipkart, 1MG, and Snapdeal for selling products on their platforms at discounted prices, which led to the companies incurring heavy financial losses.

The companies also have alleged that the e-commerce platforms have been indulging in tampering or contamination of the products, and that the commodities sold may have been counterfeited and might not be authentic at all.

Siding with the companies, the Delhi High Court has restricted Amazon, Flipkart, Snapdeal and 1MG from selling Amway, Oriflame and Modicare products, and has specified that prior consent from the companies must be taken by the platforms.

The Court’s opinion was that it is easy for e-sellers to sell products on these platforms without verification or a quality check. Based on a report submitted by local commissioners who inspected the warehouses of the e-sellers, the Court concluded that not only were the MRPs manipulated to be higher, but names were wrongly attributed, codes and inner seals of products were unauthentic and dates were changed on expired products.

In its 225-page order, the Court said, “This Court has no hesitation in holding that the continued sale of the plaintiffs’ products on the e-commerce platforms, without their consent, results in inducement of breach of contract, and tortious interference with contractual relationships of the plaintiffs with their distributors.”

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Day 1 companies are:

• Agile
• Customer obsessed
• Embrace trends
• Make high velocity decisions

My translation for being a Day 1 company means always thinking like a startup, never being comfortable and content with anything you have at the moment. It means always looking ahead, never resting on what you have done in the past.

So, what does Day 2 look like? During an Amazon all-hands meeting in March 2017, he was asked this same question. His answer was “Day 2 is stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death. And that’s why it’s always Day 1.”

Sounds pretty grim, right? He also notes that many larger companies can be Day 2 for a long time and not even know it until it’s too late. Decline isn’t always obvious—it can be subtle and stealthy for sure.

Yes, Amazon has 600,000 employees, and some may say it’s too hard to stay agile and nimble at that size of the company, hence Day 2 isn’t the end-all for them. But I disagree. It’s even more amazing that Bezos constantly drills this into his employees and culture.

So, the question is—where is our channel in this discussion? Are we Day 1 or Day 2?

“It’s always Day 1” is Amazon’s mantra, and that needs to be the direct selling channel as well. We need to resist complacency by continuing the vitality, curiosity and focus of a startup. I think we can all agree that Amazon is anything but complacent. They are at the forefront of almost every e-commerce and retail innovation and are never caught leading from behind.

So how do we as a channel keep the vitality of day 1 and fend off day 2?  In his 2017 letter, Bezos gives his Starter Pack of Day 1 Defense.

1. Stay agile by resisting proxies

A 2018 article from McKinsey & Company, The Five Trademarks of Agile Companies, says we are moving from an “organization as machine” model to a new business paradigm of “organization as organism.” The agile company is dawning as the new dominant organizational paradigm. Rather than the organization as machine, the agile organization is a living organism.

A machine is inflexible, unmoving, bureaucratic. A living organism is nimble and quick on its feet. It adapts to the environment quickly. If companies want to stay successful, they must act with agility and resist proxies.

Bezos says a common example is process as proxy. “Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing,” he says.  “This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right.”

1. Stay Customer Obsessed

• Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great.
• Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.
• Double down when you see customer delight.

Are You Listening to Your Customers?

There is a goldmine of information on your own social media channels. Customers are telling you what they want and what they like and don’t like.

You may have your own brand fanatics: Super fans who know you inside out, love what you do, and even invest elements of their personal identity in your brand. Direct selling companies do a great job in recognizing our salesforce, but what can you do to delight, empower and learn from your customer super fans?

1. Embrace External Trends

• The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly.
• Embrace them and you have a tailwind.
• Fight them and you’re fighting your future

As we have talked about over the past few months, the Gig economy has put a lot of pressure on our channel by making it easy to earn income.

Are We Making Direct Selling Harder Than It Should Be?

Have you looked at your back offices or compensation plans lately? We are a very complicated industry. We teach that it’s easy to earn—you purchase, you share, and make money. What if left out is the calculus needed for new distributors to figure out complicated compensation plans?

If I’m an Uber driver, I know exactly how much money I’m going to make. Plus, the company is going to feed me passenger leads until I call it quits for my shift.  The model provides a high level of predictability and a clear path to the next dollar. At last year’s Fall DSA Conference, Darren Jensen, President & CEO of LifeVantage said his company is making tactical changes for customers and distributors and are focused on simplicity. “Business should be as easy as calling an UBER.” he said.

1. Make High-Velocity Decisions

• Never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors.
• Most decisions should be made with 70 percent of the information, if you wait for 90 percent you’re being slow
• If you don’t have consensus, disagree and commit to the decision

In Super Bowl XLIX, Seahawks coach Pete Carroll made one of the most controversial calls in football history. With 26 seconds remaining, and trailing by four at the Patriots’ one-yard line, he called for a pass instead of a hand off to his star running back Marshawn Lynch.

The pass was intercepted and the Seahawks lost. Critics called it the dumbest play in history. But was the call really that bad? Or did Carroll actually make a great move that was ruined by bad luck?

Pete Carroll was a victim of our tendency to equate the quality of a decision with the quality of its outcome, what poker players call “Resulting.” Even the best decision doesn’t yield the best outcome every time.

As executives you face difficult decisions that have to be made quickly. Go with the best intel you have at the time. Staying in Day 1 requires you to experiment patiently, and accept and learn from failures as they come and course correct as needed.

Direct Selling News is committed to helping you fend off Day 2 by talking about the topics needed to help your company keep the vitality of a Day 1 startup.

The post Always Keeping A Startup Mentality first appeared on Direct Selling News.

The new incentive will fund the startup costs, up to $10,000, as well as the equivalent of three months of the former employee’s last gross salary so employees-turned-business-owners can more easily get their package delivery companies off the ground.

“We received overwhelming interest from tens of thousands of individuals who applied to be part of the Delivery Service Partner program, including many employees,” said Dave Clark, senior vice president of Worldwide Operations. “We’ve heard from associates that they want to participate in the program but struggled with the transition. Now we have a path for those associates with an appetite for opportunities to own their own businesses.”

Amazon will take an active role in helping interested employees launch their own package delivery businesses. An employee will leave their role at Amazon to build their business knowing they will have consistent delivery volume from Amazon, access to the company’s sophisticated delivery technology, hands-on training and discounts on a suite of assets and services, including Amazon-branded vans customized for delivery, branded uniforms and comprehensive insurance.

This program is the latest example of Amazon initiatives aimed at encouraging employees to develop and advance their careers. Across the US, more than 12,000 people have already taken part in Amazon’s Career Choice program where Amazon pre-pays up to 95 percent of tuition for courses related to in-demand fields, up to $12,000, regardless of whether the skills are relevant to a career at Amazon.

Since the launch of the Delivery Service Partner program in June 2018, Amazon has enabled the creation of more than 200 new small businesses that have hired thousands of local drivers to deliver packages to Amazon customers. This year, the company plans to add hundreds more new businesses, starting with employees-turned-business-owners. Additionally, the program offering has expanded to employees in the UK and Spain.

The post New Amazon Initiative Helps Employees Start Their Own Businesses first appeared on Direct Selling News.

The announcement comes just a few weeks after Amazon announced plans to spend $800 million for one-day delivery for all Amazon Prime members.

Walmart said it is rolling out next-day delivery in Phoenix, Las Vegas and Southern California over the next few days and will expand it to reach roughly 75 percent of American consumers by the end of 2019, including 40 of the top 50 major metros. Amazon hasn’t yet detailed a timeline for its own rollout of next-day shipping.

Walmart isn’t disclosing the cost of its latest delivery push. But the company says it has been working on it for quite some time.

“We have been working on this for the past several years,” Marc Lore, head of Walmart’s e-commerce business in the U.S., said about the move toward next-day shipping. “We’ve been investing … and now we are in the position to reap the benefits.”

In January 2017, Walmart started offering free, two-day shipping for orders totaling more than $35, lowering its minimum purchase threshold from $50. It had already bought Jet.com for $3 billion in 2016 to juice its online business and compete with Amazon. That deal helped it reach shoppers in bigger cities, like New York, in less time.

To start, next-day delivery will be available for about 220,000 items “most frequently purchased” online, Walmart said, including toys and electronics. The company said it plans to make more items available to ship next day over time. And the option is only free for orders over $35. Amazon, for comparison, has no minimum purchase threshold for free, next-day delivery but requires customers to have a Prime membership, which costs $119 annually.

When Amazon made its one-day shipping the new standard for all Prime customers last month it sent shares of Walmart and Target tumbling, as investors worried bricks-and-mortar retailers would now have to spend more money to match the e-commerce giant’s steps. Walmart’s stock price was up 0.5% in Tuesday’s premarket. Amazon shares were 1% higher.

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