Diversity. Equity. Inclusion. Seldom have three words been packed with so much potential, yet also mired in controversy. They can be bounced around like political footballs; serve as HR “to-do” boxes aimed at maintaining a status quo; or be harbingers of real change that accelerate the success of the people, companies and industries who understand that there’s a business case to be made for DEI and widen their strategic planning accordingly.

“Diversity is real. Diverse people do things differently. Diverse means we often live differently; have different priorities; eat differently; raise our kids differently; dress differently; wear our hair differently; we even worship differently,” John Fleming, a consistent advocate of the direct selling industry with a storied, decades-long career at Avon, who also helped build Direct Selling News (DSN) as its one-time Publisher and Editor-in-Chief, explained.

Fleming’s wide-angle perspective on DEI comes from decades spent in executive board rooms, where his thinking and performance track record supplied valuable input on strategic planning and problem-solving. But he’s well aware that undercurrents existed, as typically the only African-American in the room and a looming temptation for HR to check a few “diversity” boxes.

“I passed on many invitations to be part of committees and special task forces when I knew or surmised that the real objective was to try to check a few boxes without disturbing the status quo,” Fleming said.

So, Fleming comes at DEI with a uniquely informed perspective—one encompassing his life’s work within the direct selling industry, as well as one formulated in the potential and eager anticipation of its future.

It’s with the future in mind that DSN—supported by Fleming’s expertise—rethinks DEI and pushes its evolution from a one-dimensional HR-driven program to a multi-dimensional business growth strategy. This is the first in a series of articles we’ve entitled, The Business Case for Diversity, Equity and Inclusion.

Our hope is that readers use this as a primer to better understand DEI; sort out the state of DEI in their companies; and expand their thinking about its potential in helping them meet strategic goals.

Subsequent articles in this series will feature case studies of direct selling companies who have adopted DEI as a business growth strategy. We want to look in-depth at their decision making, action plans and results. If your company is actively participating in a multi-dimensional DEI business growth strategy and would like to share with our readers, please reach out to DSN Publisher, Patricia White.

The Multi-Dimensional Potential of DEI

Often, DEI falls under the auspices of HR. It is here where programs are established to foster a welcoming work environment for under-represented groups, while simultaneously protecting the company by eliminating bias and unfair discrimination in the workplace that could constitute a violation of law.

And while those efforts are vital to employee, cultural and corporate growth as well as maintaining proper legal standing, Fleming believes DEI holds even greater potential when considered as a multi-dimensional business strategy. The business case for DEI lives not in the one-dimensional HR world, but rather in the realm of market growth potential, strategic business acquisition, customer/representative targeting and results-oriented communication, all of which drive profitability.

Going Global or Staying Home

Going global has long been the steppingstone of choice by direct selling companies seeking to make leaps forward in market growth. And it’s no wonder looking at the World Bank’s 2022 Top 15 GDP list.

To make a successful run at any international market takes commitment to research and fostering in-depth understanding of economic and cultural landscapes very different than the United States.

“It has always been interesting for me to observe that when we decide to go global for strategic growth reasons, we are actually committing to DEI. Yet, we may not be as committed when we manage the same enterprise locally,” Fleming said.

Fleming’s point is that there is intrinsic value in companies parsing out and capitalizing on the strengths and potential we have here at home when it comes to DEI. No country outpaces the US in terms of GDP, standing at $20.89 trillion. And our segmented annual purchasing power of ethnic- and age-based groups mirrors the GDPs of entire countries.

“The United States is the most diverse marketplace in the world. However, many businesses go global to access talent pools, reach new markets and hopefully activate new growth opportunities,” Fleming said.

He believes there are cost-effective growth opportunities right here at home—driven by the same DEI principles now used by companies in international expansion—without the challenges faced when going global.

“Theoretically, a new company could build a successful enterprise targeting any one of the consumer segments. Some of the segments are as large as other countries, and they are all within the borders of the United States of America,” Fleming said.

Evolving Business Growth through DEI

How then might a company take effective steps toward a multi-dimensional DEI business growth strategy here at home? The first step in making a business case for DEI is knowledge.

Fleming vividly remembers a mandatory course called “Finance for Non-Finance Managers” during his years at Avon. “It helped to change my thinking from the more emotional, optimistic mindset to a more strategic mindset.”

Such a course teaches the essence of the business model and the reasons for its existence. It focuses on how the business grows and the importance of gaining market share in the marketplace. It also teaches people how to think strategically with clarity and purpose, no matter which department is leading a conversation.

The goal, Fleming said, is to develop a keen, company-wide understanding of the financial components necessary to grow a business. It is possible to cultivate a group dynamic and mindset that is mindful of growth, regardless of proximity to sales and marketing efforts.

Who Do You Invite to the Table?

In his experience, Fleming believes there to be three steadfast rules, if not universal laws, direct selling companies should follow when strategizing about new business acquisition.

1/ It is difficult to understand the motivations of women without including women in the conversation.

2/ It is difficult to understand the nuances of ethnic groups and their cultural differences if such representation isn’t included in the conversation.

3/ Pictures and data don’t tell the whole story. Relying on data alone often results in a lack of understanding about diverse groups of people and misunderstandings about DEI and its potential.

An estimated 80 percent of consumers are more likely to buy from brands that tailor experiences to customer preferences, and emotionally connected consumers are two times more valuable than highly satisfied ones.

In the past, direct selling as a channel of distribution, was highly dependent on the field of independent contractors to lead new business acquisition. Grassroots prospecting recruited customers and distributors/consultants primarily from existing field networks.

But today, companies have more options and greater control. They use marketplace research and data to strategize new business acquisition, and then provide intermediaries in the field with the right tools, at the right time and using the right messaging to reach target markets more effectively.

So, who sits around the conference table giving input during new business acquisition strategy sessions makes a big difference.

According to Innovation, Diversity and Market Growth, a white paper put forth by researchers from the Center for Talent Innovation, teams that have one or more members who represent the gender, ethnicity, culture, generational or sexual orientation of a target market are as much as 158 percent more likely to innovate effectively for that end user.

Granted, some geographies are less diverse than others, and therefore have less diverse hiring pools. And the industry has long favored sales and marketing candidates who possess experience related to direct selling. But Fleming posits, neither is an “acceptable rationale for not pursuing diverse talent that might serve to improve every facet of the business model, especially the sales and marketing effort.”

Colleges and universities are in the business of doing this. They recruit raw talent and potential, then proceed to develop those individuals over time. Perhaps the direct selling industry would be better served if it looked at leadership recruitment in the collegiate way—discover, mentor and develop.

“It appears logical that those who represent the various segments might bring new and relevant ideas to the conversations and decision making,” Fleming said.

But as Forbes reported, “Implicit biases are driving certain employees out of leadership positions and resulting in a less diverse workforce, impacting the bottom line.”

According to the American Psychological Association, “Individuals’ perceptions and behaviors can be influenced by the implicit biases they hold, even if they are unaware they hold such biases. Implicit bias is an aspect of implicit social cognition: the phenomenon that perceptions, attitudes and stereotypes can operate prior to conscious intention or endorsement.”

“Throughout the world, we have economies that are built, developed and managed by people who do not look or think exactly the way we do, nor speak our language. They not only survive; they also thrive and compete effectively,” Fleming explained.

Choosing Who and What is Most Important

It is certainly possible to live within and operate a business in the most diverse country in the world without appealing to broader, more diverse audiences. But doing so is not without risk.

Business models without a DEI focus may limit their effectiveness in attracting broader marketplace support that stakeholders and investors expect. They may also hinder the ability of their brand partners and affiliates to expand their independent businesses in a marketplace of opportunity that is now larger than a single individual’s identity—a marketplace that is increasingly built upon numerous authentic voices coming from diverse groups of people.

“We can choose what we do and how we do it more so than our counterparts in any other nation,” Fleming said. “Therefore, we can choose to determine what matters most.”

That applies to not only consumers whose loyalty direct selling companies covet, but also the contemporary decision makers who seek effective strategies to expand available market share segments.

Perhaps, it’s time to re-frame those conversations and ask a new question: What is our effective market share within the segments that are important to us?

“Once we clearly understand the business case for being diverse in the decision-making ranks of the company, the clearer we become about the value to be gained from thinking and planning that offers a diverse perspective. To think, plan and budget effectively, how we attract diverse segments requires representation that understands the targeted segments,” Fleming said.

It is precisely what direct selling companies do when opening international markets. “Why would we ever think that we can operate differently locally, if we are intent upon growing market share?” Fleming asked.

Share Your DEI Success Story

We’d love to hear how your company adopts a progressive, growth-oriented approach to DEI. Please contact our Publisher Patricia White at pwhite@directsellingnews.com. You could see your company’s story featured in a future article in DSN.

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

The post The Business Case for Diversity, Equity & Inclusion first appeared on Direct Selling News.

“Further expansion of USANA in Europe broadens our international reach, and we couldn’t be more excited,” said USANA CEO Kevin Guest. “When Dr. Myron Wentz founded this company, he wanted to provide personal and financial health and wealth to everyone in the world, and this expansion helps Dr. Wentz get one step closer to his ultimate goal.”

“I have seen USANA grow from being in a handful of markets, to 20, and now to 24, and it’s truly amazing to see what this company has become,” said USANA Chief Field Development Officer David Mulham. “This expansion will provide the people of Romania, Germany, Italy and Spain the potential opportunity for financial freedom and the access to some of the highest quality nutritional and skincare products on the market.”

According to the company, Romania is a very entrepreneurial population that is hungry for opportunity. The World Economic Forum states that Romania is the second-fastest growing economy in Europe. In addition, large Romanian populations live in Italy, Spain, Germany, United States, Canada and France.

Germany is the fourth-largest direct selling market in world, according to the World Federation of Direct Selling Associations. According to WFDSA, direct selling in Germany has grown at a 5.2 percent compound annual growth rate (CAGR) over the past three years. In addition, Germany is ranked among the top 10 most health-conscious countries in world, according to US News.

Italy is the 12th-largest direct selling market in the world, according to WFDSA, with direct selling growing at a 4.7 percent CAGR over the last three years. According to the International Monetary Fund, Italy has the fourth-largest economy in Europe.

Spain boasts the 14th largest by nominal GDP in the world and the 30th largest population in the world. The country features a healthy direct selling community, with local operations by more than 20 direct selling companies. According to the World Tourism Organization, Spain is the third-most visited country in the world.

The new European markets will be supported by both in-country directors of Field Development and by USANA’s European headquarters in Paris, France.

The post USANA Expanding into Four New Markets first appeared on Direct Selling News.

While direct selling is a niche channel for distributing goods and services, each year more and more companies are discovering the power that can be unleashed through an independent salesforce tapping into personal networks.

Where door-to-door sales and in-home parties fueled the growth in direct selling generations ago, today’s direct selling is often more high-tech and, as you might expect, growing faster into new markets as a result. In fact, in 2016, the channel generated retail sales of $1 billion or more in 23 countries.

In 2016, global direct selling generated $182.6 billion dollars retail sales, a 1.9 percent increase over 2015, as well as 5.2 percent three-year compound annual growth rate (CAGR) for the period from 2013-2016 with sustained growth in all regions. This is according to research by the World Federation of Direct Selling Associations, its partner DSAs and participating companies around the world.

WFDSA’s 2016 research showed direct selling increased total retail sales by $25.7 billion in just four years. There were strides forward with sales in most country markets outpacing 2015’s growth, but the year was not without struggle in New Zealand, Hong Kong, and Greece. Billion Dollar Markets were not immune, as France experienced flat-line retail sales and the U.S. saw a 1.6 percent pullback.

But the global direct selling channel witnessed a remarkable sight in 2016 with an important first. The emerging regional market on the African continent crossed the billion-dollar retail sales threshold, as a result of rocketing South African growth of 18 percent.

“Over 107 million independent representatives are involved in direct selling, up 3.1 percent,” says Tamuna Gabilaia, WFDSA’s Executive Director and Chief Operating Officer. “We can see that people all over the world are increasingly interested in getting into business for themselves, and we anticipate we will continue our growth pattern and will remain a vibrant industry bringing economic empowerment to people all around the globe.”

Phoenix, Arizona

Direct Selling in the Americas

The Americas—the combined markets of North America and South/Central America—ended 2016 up 1.1 percent with retail sales of $60.9 billion and 2013-2016 CAGR of 3.3 percent. The Americas comprise 33.4 percent of global retail sales and are represented by seven Billion Dollar Markets. Cosmetics/Personal Care products are most popular (33.5 percent) with Wellness ranking second (29.6 percent). There are 36.0 million independent representatives.

Americas 2016 Billion Dollar Markets

No. 1 United States (down 1.6%)
No. 6 Brazil (down .1%)
No. 7 Mexico (up 3.7%)
No. 14 Colombia (up 5.6%)
No. 16 Canada (up 5.8%)
No. 17 Argentina (up 41.2%) *
No. 18 Peru (up 7.1%)

* Argentina is a highly inflationary market. As of April 2017, the IMF forecasts inflation of 26% for 2017, but a real increase in the economy of 2%. That GDP in constant prices will increase 2%.

Liberty Island, Manhattan, New York city

While North America and South/Central America are reported together for regional purposes, they are unique marketplaces in terms of cultural characteristics, product popularity and growth.
After four years of sustained growth, South/Central America recorded an increase of 5.1 percent in 2016 and retail sales of $23.4 billion. These sales make up 12.8 percent of the global direct selling marketplace and there are five Billion Dollar Markets: Brazil, Mexico, Colombia, Argentina and Peru.

Product category research showed gains of 9.3 percentage points for Wellness since 2013. Wellness products strengthened their position and reported in at 21 percent of the market, while Cosmetics/Personal Care still comprised 60.9 percent.

North America—the Billion Dollar Markets of the United States and Canada—represented 20.5 percent of global retail sales and generated $37.5 billion in retail sales in 2016, but that was a pullback of 1.3 percent. In this marketplace, Wellness products made up roughly one-third of product sales with Cosmetics/Personal Care at 17.4 percent. There are 21.8 million independent representatives.

U.S. Pullback

North America’s slip of 1.3 percent was predicated on a 1.6 percent downturn in the U.S. market. Joseph Mariano, President of the U.S. DSA, reasoned that flat-line performance of a few large American direct selling companies, a transitioning retail industry, and the recalibration of U.S. companies to identify their ultimate consumer, combined for this result. Politically charged immigration issues, Mariano says, could also be in the mix.

Special Section:

Segmenting Direct Selling’s SalesForce in the U.S.

Regardless of the pullback, the United States generated $35.5 billion in retail sales, the second largest producing year on record. The U.S. comprised 19.5 percent of global retail sales and ranked first of 2016’s Billion Dollar Markets. The 2016 result showed modest growth (1.5 percent) of the 20.5 million U.S. independent representative base, as opposed to 11 percent in 2015.

The socio economic impact of direct selling in the U.S. was estimated at $83.11 billion in 2016, according to study findings presented at the 2017 DSA Annual Meeting in June by Dr. Robert A. Peterson, John T. Stuart III centennial chair in business administration, Charles Hurwitz fellow, IC2 Institute, University of Texas Austin.

“It’s clear direct selling has a huge impact across the country,” Mariano says. “Even with relative minor fluctuations (like 2016), we have a huge impact. It’s also clear, as it has been for many years, we are still a relatively small percentage of total retail in the United States. So we have potential for tremendous growth.”

Shanghai, China

Asia-Pacific’s Heavy Hitters

After an 11.1 percent increase in total retail sales for 2015, Asia-Pacific growth slowed in 2016 and rose 1.1 percent with total retail sales reported at $83.7 billion. That totals 45.9 percent of global sales. Asia-Pacific’s CAGR between 2013-2016, however, was the highest of all direct selling regions at 6.7 percent.

Wellness products comprised 42 percent of sales and Cosmetics/Personal Care 26.3 percent in 2016. There are 53.4 million independent representatives, up 4.4 percent, and 10 Billion Dollar Markets.

Asia-Pacific 2016 Billion Dollar Markets

No. 2 China (up 1.9%)
No. 3 Korea (up 3.8%)
No. 5 Japan (down 6.2%)
No. 8 Malaysia (up 1.2%)
No. 11 Taiwan (up 9.8%)
No. 13 Thailand (up 1%)
No. 19 Philippines (up 5%)
No. 20 Australia (up 8%)
No. 21 Indonesia (up 10%)
No. 22 India (up 4.2%)

China’s Advantage Despite Economic Change

China’s significance within the direct selling channel cannot be understated. Since 2013, the Chinese market increased retail sales by $10.3 billion. 2016 retail sales figures in China stand at $33.9 billion, and the market comprised 18.6 percent of global sales.

Predictions foresaw China usurping the United States’ grip on the No. 1 Billion Dollar Market slot in 2016, but China’s market growth slowed to 1.9 percent after three consecutive years of retail sales growth above 18 percent.

China’s economy is changing, and its path to becoming the No. 1 Billion Dollar Market is unclear. According to the International Monetary Fund, China’s 2016 GDP growth was approximately 6.7 percent, down from 7.5 percent in 2013. By 2020, some project a fall to 5.9 percent. At the same time, the Chinese government is no longer expected to double licensures of direct selling companies as it did between 2014 and 2016, when the rate rose from 40 to 80.

These factors, combined with China’s overall unique brand of direct selling and a regulatory network like no other in the world, present some uncertainty. But its sheer size and the government’s remarkable 5-7 percent GDP economic goals signal opportunity for Chinese startups and international companies granted licensure to operate, according to U.S. DSA’s Mariano.

2016 Regional Sales & Top 3 Product Categories

“I think the direct selling model, as it’s been embraced by China, owes its legacy to what has happened in the rest of the world,” he says. “They have welcomed the growth of direct selling, both Chinese companies as well as non-Chinese companies, in recent years. They have reached out to us and others, in terms of the model and how the model works and how it works in terms of self-regulation and business ethics.”

There’s little doubt China’s economy and direct selling market will grow, which is advantageous not only to China but also to the global direct selling industry.

WFDSA data showed minimal shifting within the ranks of Asia-Pacific’s Billion Dollar Markets. Malaysia raised one slot from No. 9 to No. 8 in 2016, as did Indonesia from No. 22 to No. 21 and Australia from No. 21 to No. 20. However, India slipped from No. 20 to No. 22. All other markets retained 2015’s rankings.

European Stability

The two distinctive European markets—Western Europe and Central/Eastern Europe—comprised the third largest 2016 direct selling regional market globally with 20 percent of retail sales, $36.5 billion. Statistics show steady growth since 2013 with three-year CAGR at 4.9 percent. The European Region contains six Billion Dollar Markets and 14.9 million independent representatives. For the second year, Wellness products were the top product category (32.4 percent) followed by Cosmetics/Personal Care (25 percent).

Europe 2016 Billion Dollar Markets

No. 4 Germany (up 4.3%)
No. 9 France (down 0.7%)
No. 10 United Kingdom (up 7.5%)
No. 12 Italy (up 5.5%)
No. 15 Russia (up 11.1%)
No. 23 Poland (up 5.2%)

“We are pleased to see that the European market has remained stable over the last few years. In fact, direct selling is growing at the same rate as general retail in Europe (3 percent), and the vast majority of European markets reported growth in 2016 compared to 2015,” says Katarina Molin, Executive Director at Seldia (The European Direct Selling Association).

Western Europe’s mature regional marketplace comprised 16.7 percent of the world’s direct selling market on its own. Regional Billion Dollar Market leaders included France, Germany, Italy and the United Kingdom. Despite France’s flat performance in 2016 with retail sales of $4.6 billion, it remained second only to Germany, which reported a 4.3 percent increase with retail sales at $15.9 billion. Germany alone comprises 8.7 percent of global sales.

Brexit worries had no visible effect on direct selling in the European region; however, Seldia will monitor Brexit negotiations closely. A weakening of the British pound, as well as various industry sectors rethinking the viability of headquartering European operations in the United Kingdom post-Brexit, have occurred, but Molin expects more concrete retail trade implications—including possible tariffs—to come after the U.K.’s expected exit from the European Union in March 2019.

A breakdown of European regional statistics indicated Western European sales ($30.5 billion) were five times that of its Eastern/Central European counterpart ($6.1 billion). However, growth in Western Europe slowed (4.1 percent) in 2016, while Eastern/Central jumped to 8.2 percent, a rise of 6 percentage points in one year after steady growth since 2013. This was a continued trend caused in part by Eastern Europe’s need and desire to generate additional income, as well as cultural differences in the approach to direct selling.

Leading the way in Eastern/Central Europe were two Billion Dollar Markets: Russia, which experienced one-year growth of 11.1 percent after losing ground in 2015 (-5.5 percent) and Poland that reported 5.2 percent growth in 2016 after increasing 7.0 percent in 2015.

Molin says in Poland, ample room exists for new companies and products to succeed. “Poland is a strong market for direct selling, if only because of its sheer size, the growing purchasing power of the population and the enterprising spirit of many people, especially the young,” she says.

Some emerging Eastern/Central European markets to watch are Romania (up 11.9 percent), Turkey (up 10 percent) and Ukraine (up 27.7 percent, 2015; up, 4.2 percent, 2016).

Serengeti National Park, Tanzania, Africa

Emerging Regions: Africa and The Middle East

Direct selling provides opportunities around the world, not only in advanced regions, but also in emerging ones. This held true in 2016. According to WFDSA research, more than 8 in 10 people live in the world’s emerging markets (85 percent) and they subsist on just 4 in 10 global GDP dollars (39 percent).

2016’s data showed continued improvement and growing balance between emerging and advanced direct selling markets. Since 2012, emerging market sales share shifted from 35.7 percent to 41.7 percent in 2016. These emerging regions comprised just 1 percent of world sales share. But a great deal happened in emerging markets in 2016. The whole of Africa crossed the Billion Dollar threshold and experienced 9.8 percent growth with retail sales of $1.1 billion. South Africa emerged strong with an 18.3 percent one-year jump in retail sales, thanks to an aggressive public awareness campaign by the Direct Selling Association of South Africa.

Ernest du Toit, Chairman at DSA of South Africa, says the association educated the public on feasible business opportunities, high-quality products and customized training programs offered by member companies. The DSA also highlighted the differences between compensation plans of member companies and those of pyramid and ponzi schemes. The DSA’s campaign bolstered public confidence in member companies and acknowledged them as agents of positive change.

“This campaign—together with focus by member companies on the consumption of their products and services, targeted marketing initiatives, and consistent and effective training programs—has contributed to the 18 percent sales growth in South Africa,” du Toit says. Member companies across the continent of Africa, both local and entities of international companies, enjoyed a 9.8 percent sales growth in 2016. There are just over 2.2 million independent representatives across the continent of Africa, where Wellness leads in product category.

The Middle East

The Middle East welcomed the region’s second Direct Selling Association in United Arab Emirates in 2016 and continued three years of retail sales growth by posting a total of $220.9 million, a 7.5 percent increase. There were some 825,000 independent representatives. While global perception of The Middle East and North Africa (MENA) is tarnished by ongoing instability in three countries, it’s not indicative of the entire region, says Ali Shabdar, General Secretary of DSA United Arab Emirates.

Dubai, United Arab Emirates

MENA is home to many stable countries and cities in the world, like Dubai and Abu Dhabi, as well as successful industries like fast-moving consumer goods, auto and energy. MENA offers fertile ground for the relatively new phenomenon of modern direct selling to grow.

There is a young and ambitious population with strong social and family ties as well as a traditional power for word of mouth woven into to the Middle Eastern culture. Plus, there is a massive consumer market for nutrition and beauty products. “In more conservative communities, the possibility of women enjoying high-quality products and sharing experiences, while working with other women within their communities and contributing to the household income, is often welcomed. No other industry can provide this,” Shabdar says.

“The region is culturally very open to new business ideas; however there is natural skepticism, which should be taken positively and addressed by education and raising awareness,” Shabdar says. Laws and regulations for direct selling are not yet in place, which is a challenge. But DSA UAE and local government are taking first steps.

Markets to Watch

Inching ever so close to Billion Dollar Market status are three markets to watch in the coming years: Ecuador, Spain and Turkey. Ecuador’s total 2016 retail sales reported at $949 million; however, independent representative totals waned with a 15.7 percent reduction for a total of 902,000. Of sales, 50 percent were derived from Cosmetics/Personal Care products, and Wellness tracked at 20 percent.

On the heels of 7.8 percent growth in 2014 and 13.2 percent in 2015, Spain mounted 8.6 percent growth in 2016 for total retail sales of $866.3 million. Over the past four years, Spain gained some 50,000 independent representatives bringing 2016’s total just over 250,000. Cosmetics/Personal Care and Wellness rank No. 1 and 2, respectively. Turkey’s direct selling market grew by 10 percent in 2016 with sales at $755.3 million and 1.4 million independent representatives.

The post Billion Dollar Markets and Beyond first appeared on Direct Selling News.