2020 is almost behind us. This was a rather tough year for all and the difficulties are far from being over. Yet, we are seeing very promising signs as well. Similar to last year (*), I asked some of the prominent figures of the global direct selling industry their opinions on this matter:

“What will be the most important issue, whether it be an opportunity or a threat, in the direct selling industry that will need a closer focus Next Year?” was the question.

Their responses have forged a two-part article. This week’s part encompasses comments from seven notable persons from the industry. Feel free to add yours at the end of the article.

Laure Alexandre, Executive Director of Seldia (The European Direct Selling Association)

“The EU is unambiguous in its determination to lead the twin green and digital transition despite the coronavirus crisis. Numerous regulatory proposals affecting companies supply and value chains are to be expected, as well as an “EU digital levy”. Some Members States, and the European Commission have also clearly expressed their wish to offer some level of social protection, balanced with adequate tax collection for ‘new forms of work’. While there are fundamental differences between platform workers, freelancers and direct sellers, there are also many similarities. Risk mitigation will be required when the EU legislative proposal is presented in 2021.”

Mona Ameli, Founder and Managing Partner of Ameli Global Partnerships

“While 2020 was a year of challenges and changes, 2021 would be a year of strategic stabilization and full transformation. Some of the effects of the pandemic and the social-racial movements triggered immediate and accelerated adjustments. It’s imperative for organizations to discern which of these changes will be permanent and how to integrate them as part of a longer-term re-defined business plan. The priorities would be to re-calibrate between 2020’s “circumstantial” and 2021 more “real” growth expectations and to re-assess budget allocations accordingly. This will ensure priority for key transformation opportunities: Cultural inclusion, customer focus, virtual & digital evolution, and operational nimbleness.”

Oscar Cano Arias, Managing Director of Direct Selling Europe

“2021 will be an intense year for the sector in the EU from a regulatory perspective. First of all, Direct Selling Europe (DSE) will follow closely the transposition of the new provisions on unsolicited marketing sales in the EU 27 Member States. Furthermore, we will continue working to make sure that the upcoming legislative proposals on the revision of the rules on Commercial Agents or the Consumer Credit Directive are in line with the interests of the industry. Last but not least, DSE will continue helping its members and sellers to make sure that they can continue receiving economic and/or financial support from their respective national authorities to mitigate the effects of the Covid-19 pandemic.”

Michel Bayan, CEO of Directech Labs

“2021 is the year of retention. With the gains made by the industry in 2021 we need to prove that we provide better value to more of the customers and representatives who put their trust and belief in us. We prove this quantifiably by increasing the lifespan and lifetime value of our people. Our rewards: A more stable business that is less dependent on big recruiting numbers in order to grow. A much improved public image. The praise and admiration of regulators. Higher multiples for valuations and market cap. This is all within our grasp if we give it the energy and focus It deserves.”

Tamuna Gabilaia, Executive Director and COO of the WFDSA (World Federation of Direct Selling Associations)

“These are unprecedented times we are living in with the current pandemic.  It profoundly affected the lives of millions of people around the world disabling entire communities and forever changing our lives. At the same time, despite unprecedented challenges, we saw our industry has not only been resilient but has seen the wave of inspiring new ideas, innovation, adaptability and creativity even more than ever before. As our new WFDSA Chairman Roger Barnett said so well, it is an opportunity to look forward and to ‘Reimagine, Reinvent and Redefine’ the global direct selling industry. It is truly and amazing, inclusive and diverse industry I love so much which provides an income earnings opportunities to millions of people around the world and changes lives.”

Dan Jensen, Compensation Plan Specialist, Founder of Dan Jensen Consulting 

“Things that do not change will remain the same. We must either ADAPT to the changing marketplace or see revenues and active sales force counts decline. Adapt or die a slow death. That is our greatest challenge. But how should we adapt? Attention spans… have they grown longer or shorter in the last 5 years? Adapt. Social media influence. Use it. Instant gratification. Drive it. Predictable results – if I do this, I WILL get that. Vital. Many of the things we did 5 years ago no longer work well. Change takes courage and leadership and your future depends on both.”

Robert Kreklewetz, Founding Partner of Millar Kreklewetz

“We see 2021 as a huge opportunity for home-based businesses like those in the direct selling industry – and particularly for new companies look to start-up operations in Canada. Almost everyone I know is either working from home OR looking to supplement their primary source of income OR both! We offer US direct sellers a ‘one-stop shop’ for Canadian start-ups and have personally seen an uptick in companies looking to open up Canada. I see 2021 as a ‘early bird gets the worm’ situation, with the first companies opening up, reaping the bulk of the rewards!”

(*) Please click here and here to read last year’s comments.

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The post In 100 Words: Looking Ahead to 2021 – Part 1 appeared first on The World of Direct Selling.

As we have left another year behind, I asked some of the prominent figures of the global direct selling community what they saw coming in 2019.

“What will be the most important issue, whether it be an opportunity or a threat, in the direct selling industry that will need a closer focus Next Year?” was the question.

Below are their responses:

Oscar Cano Arias, Managing Director of Direct Selling Europe

“2019 will be a crucial year for the sector in the EU from a regulatory perspective. First of all, 1Q will see the closure of the amendment of the Unfair Commercial Practices Directive, which will change the way to operate unsolicited marketing sales in the EU. Another important piece of legislation to be completed soon will be the new EU law on Collective Redress, which will have some similarities to the American one. Furthermore, in May 2019 a new EU Parliament will be elected for a new 5-year-term period, in parallel to a new EU Commission – the EU executive branch. Direct Selling Europe is working with all key decision makers and industry representatives to ensure that the interests of well reputed and sustainable direct selling companies continue well preserved with the new EU decision-makers.”

Jeff Babener, Legal Counsel at Babener and Associates

“In 2019, dual challenges, business and legal, face direct selling. On the business front, can the industry leverage the personal touch of direct selling to overcome the satisfying Amazon consumer buying experience, and the instant earning experience of gig opportunities such as Uber and Lyft? On the legal front, can the industry continue to cement its independent contractor exemption under state unemployment laws in such states as Connecticut and Oregon, and develop a strategy with the gig industry in California and at the federal level to avoid application of fair labor standards laws that require minimum wage and hours?”

Michel Bayan, CEO of Directech Labs

“Direct sellers will need to continue to step even further out of the box, questioning ideas that may seem completely fundamental to us, and become the attainable “gigs” that people around the world are looking for. In order to do that we’ll first have to let go of selling the idea of riches. Some people are setup to achieve this, but most are not. We’ll have to lever our data to better understand our customers and sellers, offering them the experience that’s right for them, and not the experience we wish they would have. Those who experiment and learn rapidly will win big.”

Sean Eggert, CEO of Hanna Shea Executive Search 

“According the the U.S. DSA 2017 Direct Selling Report the largest age segment within the industry is now millennials. This is a group that has often been misunderstood and in my opinion unfairly labeled in a negative way. They have been brought up in a world that is very different from the one previous generations grew up in. The failure of a direct selling business to understand this group in terms of how they learn, socialize and share opportunities could severely limit the growth potential of an organization. The companies that embrace this unique group and offer solutions to them that compliment their learning and selling style along with having a strong mission statement will have a much better chance of success.”

Tamuna Gabilaia, Executive Director and COO of the WFDSA

“This year marked a milestone WFDSA 40th Anniversary. We saw sustained growth in all regions – global retail sales increased by 1.6% and the industry experienced 3.7% CAGR. As I look around, it gives me an immense satisfaction to see that millions of people are involved in direct selling and we have played a part in impacting ordinary people’s lives. Our industry’s future is bright as we move in 2019. Direct selling is an omnichannel marketing – marriage of traditional direct selling with internet tools while maintaining individual approach. Little advertising, word of mouth recommendations, best products at competitive prices. Mobile tools help run a business and present products, social media gives direct sellers an ability to reach their customers in new ways, live/interactive training makes learning more accessible. Therefore, we must continue proudly promoting the positive story of our industry and solutions we provide for people all over the world while maintaining individual approach which our industry does better than any other industry!”

Ed Jarrin, President and Co-Founder of Exigo

“Long before innovation created the ‘Amazon Effect’ for consumers, ‘direct sales’ software providers spearheaded our own technological revolution by developing the capabilities to connect and pay millions of distributors simultaneously and differentially with the same ease of paying a one-time commission on a simple retail sale. Without those breakthroughs, their is no gig economy, no downloading a biz opp from a smartphone faster than you can make a phone call or should I  say, “Send a Snapchat.” Our greatest opportunity in front of us, is to create a new direct sales experience that transports customers to a new destination of personalized and authentic real-time data centered right in the palm of their hand.”

Robert Kreklewetz, Founding Partner of Millar Kreklewetz

“The Canadian direct selling marketplace continues to be dynamic in terms of compliance concerns. First and foremost is the Competition Bureau’s evolving administrative position on legal and illegal recruitment requirements, and all direct sellers operating in Canada should be revisiting their compensation plans. Low US tax rates are also making many current Canadian ownership structures stale, at the same time that the USMCA and Canadian retaliatory tariffs threaten to impose duties on imported goods. Clearly, international tax and customs reviews are called for in 2019. We have been fielding a lot of calls and emails on all of this lately, and I think it is just going to get worse!”

Roberta Kuruzu, Head of Business Development and Services at Kuruzu & Marostica

“Both for 2019 and for any short-term planning direct sales companies should focus on developing tools to digitize its sales force, as well as position itself strongly in attracting the new generation of entrepreneurs (millennials and new retirees who are highly qualified and will lose their jobs in the near future).”

Sebastian J. Leonardi, President & Chief Business Strategist at DSXgroup

“Direct sales companies must recognize that retail’s transformation and the rise of e-commerce marketplaces have set the tone for all customer expectations. As retail continues to prioritize relationships over transactions, direct sales has to evolve to remain competitive, relevant and sustainable in what is clearly a global omnichannel marketplace. One that has been transformed by technology, culture and generational shifts in buying power. Direct sales is no longer an impenetrable bubble and we cannot escape the influence of transformation. To survive, companies need to be proactive and preemptive. Focusing on a ‘Reactionary Approach’ to define strategy will lead you to extinction.”

Alan Luce, Managing Partner at Strategic Choice Partners

“The most serious issue facing direct selling in the new year is the fact that the US direct selling industry is becoming ever more fragmented. Not so long ago the Direct Selling Association membership included nearly all the top names in the US industry and could claim to represent nearly 90% of the independent sales forces. Today that is no longer true. Many of the largest and best-known companies no longer belong to DSA and more and more small and start-up companies for various reasons are choosing not to join. At some point this lack of universal representation in the association will weaken its ability to speak for the whole industry in regulatory and legislative matters. Industry leaders must work to find consensus and support a unified voice again that benefits and will attract all direct selling companies.”

Peter Maddox, President of the Direct Sellers Association of Canada

“In 2019, I believe that we must continue building a positive narrative about our industry. We can do this by emphasizing the trustworthy and ethical business opportunity that direct selling provides, and by showing that our distribution model creates solutions to help build strong economies and communities. Our CEOs, staff and entrepreneurs must place ethics at the front of their minds and never be afraid to proactively proclaim what makes this industry so great – wonderful people, acting with integrity and building dreams. The DSA Code of Ethics is at the heart of this commitment.”

Brian Palmer, CEO at Krato

“In 2019 there will be a burst of new direct selling companies who will be able to launch in just a few months and with a quarter of the budget that it used to take to launch a company five years ago. Here’s why: Technology is making everything possible. People with the right knowledge and tools can launch a new direct selling company using an affiliate model. While limited in levels and back office access a company can test their concept faster. This will allow many e-commerce stores to give direct selling a chance without investing a lot of money.”

Rich Schubkegel, V.P. of Business Development at Thatcher Technology Group

“Direct selling has always prided itself on offering individuals an opportunity to earn extra income and build a business while accomplishing it around their own personal schedules. Now that the “Gig Economy” has validated the attractiveness of those same concepts, the threat that direct selling faces is whether we can execute the model as well as these new competitors. Ask yourselves a few simple questions: How easily can someone find out about your opportunity among thousands of alternatives? How easily can they sign up? How easy is it to sell your products or perform your services? Then, if you have gotten them that far, how quickly will they be compensated, incentivized and recognized for their performance?”

Gillian Stapleton, Executive Director of the Australia Direct Selling Association

“The direct selling channel is fueled by passion but this alone will not drive growth and innovation. With digitization, the growth of the gig economy, the channel must stay relevant to meet the changing needs. We have for a longtime stood out as being connected to our customer base but this is being eroded away by the changing nature of commerce. Fear or excitement towards this change depends only on your point of view. In my mind, the channel has never been as relevant as it is now. Flexible work, more time and money are on everyone’s agenda and the channel has always been able to offer that. The fundamentals remain solid; customers still respond to personal touches and moving stories and they as consumers, want to feel empowered. Exceptional products, great value, fair and rewarding plans and distribution systems that meet the needs of the consultants and consumers will ensure sustainability and relevancy of the channel I have loved for 30 years.”

Kevin Thompson, Partner and Co-Founder of Thompson Burton

“2019 represents a great opportunity for the industry to implement self-regulation in a meaningful way. Dubbed the Direct Selling Regulatory Council, or “DS-SRC,” the effort looks like a solid step towards having true, independent accountability in the industry.  The current FTC seems to be cooling off, which makes it more important than ever that the industry work together to weed out the rotten companies.  I expect this entity to make a meaningful splash in 2019, teeing it up for greater importance in the future for both companies and consumers.” 

Terrel Transtrum, President and Founder of ServiceQuest

“The threat: In general, business is driven to be more transparent than ever before. Yet direct sellers (though they think they are transparent) can be closed if for no other reason than they are remote and, some perceive, in a far-away fortress. Consumers want more than a transaction. They want a relationship. But a relationship depends on transparency, and too few direct selling companies are prepared to be that frank, to be that open. It’s a grave threat to direct sales as other direct-to-consumer companies embrace this expectation. We need to get serious about pulling back the curtain and inviting people to come in to build their trust. In practice, it means sharing things like ingredients, supply chains, and real compensation. These relationships matter, and they are fortified by giving people a reason to believe in us in the first place.”

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As we come to the end of another year, I wanted to ask some of the prominent persons of the direct selling community what they see coming in 2017.

“What will be the most important issue, whether it be an opportunity or a threat, in the direct selling industry that will need a closer focus Next Year?” was the question.

You will read in this week’s article, their responses:

Oscar Cano Arias, Managing Director of Direct Selling Europe (DSE):

“Yet again, ethics will be a top issue in the year 2017. Due to the lack of serious and effective self-regulations in the US, the FTC is determined to react. In 2015, the FTC closes down Vemma accused of operating a pyramid scheme. Then, in July 2016,  it adopts a Resolution against Herbalife that could have not been tougher: “Herbalife is going to start operating legitimately, making only truthful claims”… “Herbalife will have to restructure its business so that participants are rewarded for what they sell”… “Herbalife will have to compensate consumers […] as a result of unfair and deceptive practices”. 2017 will see new FTC Guidelines for the US direct selling industry, likely to include main points of the Resolution against Herbalife. Direct Selling Europe (DSE) welcomes the FTC move and invites the FTC to publish its new Guidelines the earliest possible. In the meanwhile, DSE continues working with all stakeholders to make sure that the interests and image of the well reputed and sustainable companies are well preserved.”

Jeff Babener, Legal Counsel at Babener and Associates:

“The thrust of the message of the October 2016 presentation of the FTC Chairwoman, Edith Ramirez was “more FTC regulation is coming… live with it”. On notice going forward: The FTC would reject a legal standard accepted by courts for 40 years, The Amway Safeguards Rule, and proposes guidance to “upend and reject” decades of industry practices that recognize full credit for personal use by distributors, track qualification volume based on wholesale movement of product, allow for monthly sales volume activity qualification based on distributor purchase volume and encourage and reward autoship programs that deliver predictable volumes to distributors. A surprise: The 2016 Presidential election results may usher in an anti-regulatory climate. Sponsor of a bi-partisan anti-pyramid bill to codify recognition of personal use purchases and establish legitimacy standards acceptable to the direct selling industry, is Rep. Marcia Blackburn, member of the Trump transition team and potential Cabinet member. To its surprise, this may be the year of opportunity for the industry to seek refuge from over-regulation, with model legislation that has already been adopted as law in more than a dozen states.”

Jacques Cosnefroy, General Secretary of the France Direct Selling Association (FVD):

“In a world in constant transformation, where the cultural revolutions are exempted from principles of belongings of the majorities, where the faith in the other one has become a variable of adaptation, where the inherent values of our personal construction are no longer considered as sources of reference, where the fear of the next day is a component of the everyday life, where the transparency is not anymore an option, the direct selling industry creates for each and every one a solid bedrock for the future, which could be threatened by a lack of control of our communication. Communication has become an asset and a threat for our companies! An asset because it offers this incomparable universal dimension which connects the people, and a threat because if uncontrolled  it can convey unethical information that could severely damaged the image of the direct selling industry.”

Tamuna Gabilaia, Executive Director and Chief Operating Officer of The World Federation of Direct Selling Associations (WFDSA):

“2016 was a very exciting year for the industry. We saw sustained growth in all regions – global retail sales increased by 7.2% and the industry experienced 7.2% CAGR. 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. However, we still need to tell our story better. We need to align around messaging and a common narrative. There are widespread misperceptions and misunderstandings about direct selling. Explaining who we are and how our businesses work is an area we need to focus on. The WFDSA Messaging Guidebook developed under the WFDSA Advocacy Committee is a tool that will increase public understanding of direct selling and foster greater communication among member companies. Lastly, WFDSA World Congress XV “Rendezvous with the Future” which will be held in October 2017 will be an unforgettable event which will clearly demonstrate the key role our sector plays in the global economy.”

Brent Kugler, Partner at Scheef & Stone, LLP:

“The winds of change continue to grow stronger in the direct sales industry. Companies must be proactive in addressing changes that can now be seen as inevitable, if not mandatory, in light of recent FTC activity and comments from FTC Chairwoman Ramirez following FTC- Herbalife. The “wait and see what others do” approach is no longer a viable option in today’s regulatory climate. Companies must retool their compensation plans and reinvest in technology to track verifiable retail sales to non-distributor customers and calculate commissions and rank advancement based on those sales. Companies should also be wary of promoting “optional” high-priced enrollment bundles, as recent enforcement actions make clear that regulatory authorities are increasingly focused on the percentage of distributors who are unable to earn enough compensation to offset the cost of enrolling with a company.”

Alan Luce, Senior Managing Partner at Strategic Choice Partners:

“Rising to the challenge to provide world class access and service levels to end user customers and salesforce members will be the defining characteristic of successful direct selling companies in the future. Those companies that meet or exceed world class status in access and service will succeed. Those who do not raise their game will wither and fail as both customers and sales people choose to go elsewhere regardless of how good or unique their products and services may be.”

Nick Mallett, Director at Pan European Solutions:

“The Internet has reached the stage where established social media platforms are now less essential to new entrants to networking businesses. There will be increasing instances of ‘private’ networking portals, worldwide. These represent a competitive threat to established network marketing businesses. We see a serious risk from the spread of such platforms in the regulatory sense of their being somehow above the law, through operating in the ‘virtual world’. The viral spread of such businesses is such that they are subject to the laws of the many jurisdictions in which they operate. On the one hand, they may be able to carry on business in multiple jurisdictions despite being closed down in one or more where their operation contravenes local legislation; on the other, a regulatory challenge in one jurisdiction might just cause them to close down altogether. In the meantime, they may have given network marketing such a bad name – perhaps worldwide – that the various regulators introduce a more restrictive regime of control such as to restrict the previously legitimate activities of our established network business clients.  We must be vigilant on behalf of the legitimate industry.”

Katarina Molin, Executive Director of The European Direct Selling Association (Seldia):

“In 2017, we expect the positive growth for direct selling in the European region to continue, which shows that it continues to be a vibrant retail sector and enjoys high consumer trust. From a policy perspective, Seldia will continue its close dialogue with European policymakers on the EU consumer policy. It will be crucial to focus on the proper implementation and enforcement of existing EU legislation, an area that needs more attention in the future. Addressing issues such as non-tariff barriers as well as how to effectively put a stop to the practices of rogue traders must be prioritized. It is also time to step up our efforts to communicate better and more transparently on how the sector works, on what the channel is – and is not. We must also explain that it is not outdated channel of distribution, but on the contrary – very receptive to innovations and technological development. In terms of communication, it will be important to engage in a constructive discussion about segmentation of the people involved in direct selling, to keep a continued focus on ethics, and to collect independently verified data to share externally.”

Gillian Stapleton, Executive Director of the Australia Direct Selling Association (DSA):

“The Entrepreneurial Consumer is both an opportunity and threat. Great service has long defined direct-selling: establishing great rapport in-home, the personal delivery of products and follow up every season. Will that define the industry in the next 5 years? Direct-selling faces the biggest challenge in service it has ever experienced. Next day delivery, packaged in tissue paper, a hand -written note signed by the packer, establishes a good relationship for me with that company. An offer to exchange the goods or have three alternatives shipped at no cost to me and send back what I don’t want. That cements it. I am the Entrepreneurial Consumer and I could be your consultant. Will your company attract me?”

Bobbie Wasserman, Managing Director of Wave2 Alliances:  

“The FTC is now distinguishing between Distributors, personal consumption and customer purchases. Direct selling companies can harness this opportunity to engage and attract more customers – helping build each company’s credibility for its own brand and contribute to enhancing the industry’s credibility. Public relation campaigns focusing on executives’ leadership, premium products/services and entrepreneurial successes can provide a corporate narrative and business tools for Distributors. In the future, the industry can argue the semantics of purchase behavior via legal battles. However, now is the time to impact decisions being made in the ‘court of public opinion’ – those decisions are often made swiftly and without access to an appeal.”

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