Direct Roars—And Roars—At Home and Abroad

Normally I pay as little attention as possible to “Special Advertising Sections,” but in my 16 August issue of Forbes I read “The Direct Selling Phenomenon” word-by-word. (See also my DUH-RECT blog of 08.01.) Roger Barnett is an investment banker specializing in direct selling. “This industry is global and is growing exponentially,” he says. “It’s been the best kept secret of the business world.”

Perhaps there’s less hype in that bold assertion than many would imagine. The Direct Selling Association claims, for instance, that 175,000 Americans enlist as at least part-time direct sellers each week; worldwide that number is 475,000 … per week! While we may think mostly about the likes of Mary Kay, almost any industry you can name is represented, including telecoms and financial services; recent success stories even include Crayola’s Big Yellow Box subsidiary.

International growth is a phenomenon all to itself, with Avon now garnering 70 percent of its sales from overseas and Tupperware 75 percent. China, India, and Eastern Europe are all at the takeoff stage and then some. Overall causes for the Direct Explosion may include everything from backlash to impersonal “big box” retailing to job security uncertainty to direct sellers’ relatively low cost of entry and expansion.

Also, the entrepreneurial allure of so-called MLM … multi-level marketing … is an important element in the accelerating growth. While 56 percent of direct sellers used MLM schemes in 1990, the share had grown to 82 percent by 2003 (e.g., Avon went MLM five years ago, fuelling a desperately needed revenue spurt).

Bottom line: It’s a very big deal, getting bigger by the hour, and still mostly given short shrift by the traditional business “establishment.” Hey, I’m hooked! Not as in “hook, line, and sinker,” but as in no longer in the least bit dismissive.

Tom Peters posted this on August 5, 2004, in Strategies.
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