This week’s featured article is a brief compilation of industry news of significance from 2019. As you scroll down, I am sure you will agree with me that it was most certainly another exciting year for the industry with all the positives and the negatives.

I have also included articles from The World of Direct Selling that attracted much interest last year.

> Herbalife CEO Richard Goudis Resigns Over Comments He Made Before Taking the Job
> New Avon Names Laurie Ann Goldman CEO
> Stella & Dot to Exit European Market
> China Launches Campaign to Regulate Health Product Market
> Nerium Gets New Name
> Jeunesse Posts Record Year with $1.46B in Annual Sales
> Mary Kay Celebrates 50 Years of an American Icon – the Mary Kay Pink Cadillac
> LuLaRoe Founders Accused of Hiding Millions to Avoid Creditors

Most-Read Article in January on The World of Direct Selling:
What Direct Sellers Can Learn from the Corporate Training Industry (Vince Han)

> Amway Reports Sales of $8.8 Billion USD in 2018
> USANA Posts Another Sales Increase as China’s Direct Selling Clampdown Looms
> Avon Sees Revenues Decrease in Q4, Full Year 2018
> Herbalife Neared $5 billion Mark in 2018; Waits for Other Shoe to Drop in Goudis/China Probe
> Medifast Announces 87% Revenue Increase in Q4 and 66% for the Full Year
> Nu Skin Expands to Peru
> Skin Care Billionaires Rodan and Fields Return to the Teen Acne Market

Most-Read Article in February on The World of Direct Selling:
The 7 Giants’ 2018 Growth Review (Hakki Ozmorali)

> Fact or Fiction? Let’s Set the Record Straight – US DSA President
> Brazil’s Natura and Avon Confirm Deal Talks
> Nature’s Sunshine Reports $365 Million Sales for 2018, Up 7%
> Tupperware Parties: Suburban Women’s Plastic Path to Empowerment
> Two Mary Kay Executives Make Black Enterprise’s 2019 Most Powerful Women List
> Why Direct Sales Appeals to So Many Moms

Most-Read Article in March on The World of Direct Selling:
Common Pitfalls that Prevent Profitability in Direct Selling Start Ups (Dan Murphy)

> DSN Announces the 2019 Global 100
> Young Living Celebrates 25 Years of Global Growth
> Amway Disrupts Its Own Beauty Business, Launching 50 New Mobile Apps
> More Than 100 LuLaRoe Sellers Have Filed for Bankruptcy
> How Blake Mallen Capitalized on the Gig Economy Before It Was a Thing
> Brazilian Cosmetics Giant in ‘Advanced Talks’ with Avon
> Mary Kay Recognized by Forbes as One of America’s Best Midsize Employers 2019

Most-Read Article in April on The World of Direct Selling:
Marketing’s New Role to Keep A Direct Selling Company Relevant (Jonas Hedberg)

> Oriflame’s Co-Founder Jonas af Jochnick Has Suddenly Passed Away
> Nu Skin Named the World’s #1 At-Home Beauty Device System Brand by Euromonitor
> Tupperware Names CEO Tricia Stitzel Chairman of the Board
> AdvoCare Business Changing
> Founding Family Offers to Buy Out Oriflame
> It’s Official: Natura Buys Avon

Most-Read Article in May on The World of Direct Selling:
AdvoCare Abandons MLM: Uncertainty Returns to Direct Selling (Jeff Babener)

> WFDSA Announces Record-setting 2018 Direct Selling Business Results
> LG to Acquire New Avon North America
> US DSA Announces 2019 Awards Winners and Highest Performing Companies
> Natura’s Avon Acquisition Creates the First Latin American Beauty Powerhouse
> Retail Was Never in Our Plan and It Won’t Happen in Future Also: Frederic Widell, Oriflame VP
> Kirsten Dunst Is Making a Show About a Cult-Like MLM Company
> Amway, the Family Business that Became Global (Google-Translated Text)

Most-Read Article in June on The World of Direct Selling:
2019: The Year Direct Selling As We Know It Changed Forever (Brett Duncan)

> Happi Magazine Announces Top 50 Household and Personal Products Companies
> Canada DSA’s Recipients of the 2019 DSA Awards
> Amway Sues Sellers for Trademark Infringement, Faulty Product Distribution
> As India Hicks Closes Her Luxury Label, Is This the End of Tupperware-Party Shopping?
> USANA: China’s 100-Day Crackdown Has Damaged Consumer Confidence; Sales Drop by 15%
> Mary Kay Champions Business Excellence, Ethics and Social Responsibility, Reaps Rewards in Europe
> Nature’s Sunshine Announces New Global Leadership Structure and Appointments
> Pampered Chef Succeeds in Trademark Infringement Battle

Most-Read Article in July on The World of Direct Selling:
Five Ways the Direct Selling Industry Can Achieve Sustained Growth (Ben Gamse)

> New Amway CEO Shares Digital Vision
> doTERRA CIO Todd Thompson: Social Selling Is Taking off
> Executive Changes at Scentsy
> LG Closes $125M Acquisition of New Avon
> Coty and Younique to Part and Focus on the Development of Their Respective Strengths
> US Direct Selling Association CBD Memo: Ingestible CBD-Infused Products Violate DSA Code of Ethics
> “Tupperware-Style” Retail Makes a Comeback with 27% Growth in UK

Most-Read Article in August on The World of Direct Selling:
Why Are They Leaving Our Company? (Hakki Ozmorali)

> DSA Canada Responds to Globe & Mail Article
> Natura Lands in Asia and Starts Operations in Malaysia
> Tracy Britt Cool to Leave Pampered Chef to Start New Venture
> Rodan + Fields to Launch in Japan
> WorldVentures Expands to Brazil
> Nature’s Sunshine Announces Entry into CBD Market
> MONAT Expands into Europe with Its Launch in Ireland and Poland
> Amazon Challenges Amway, Modicare and Oriflame Ruling in Supreme Court

Most-Read Article in September on The World of Direct Selling:
Natura and Avon: Will This Acquisition Work for Both Sides? (Hakki Ozmorali)

> AdvoCare Will Pay $150 Million To Settle FTC Charges
> FTC v. AdvoCare: Enforcement Action Demonstrates Importance of Compliance Programs
> Uber Is Launching a New App That Matches Freelance Workers with Businesses
> Herbalife Announces CEO Succession Plan
> How Mary Kay China Is Trying to Stay Relevant with Younger Beauty consumers
> Beautycounter Appoints COO and CCO
> Origami Owl CEO Chrissy Weems Explores the Roots of a Successful Business
> USANA Announces Appointment Promotion of Walter Noot to Chief Operating Officer
> Oriflame to Focus on Wellness, Position as Healthy Lifestyle Brand: CEO Magnus Brannstrom

Most-Read Article in October on The World of Direct Selling:
FTC vs. AdvoCare: A Teachable Moment for Direct Selling (Jeff Babener)

> Neora Files Suit Challenging FTC’s Attempt to Change Direct Selling Laws
> Herbalife, Younique, LuLaRoe And Other MLMs Suddenly Under Fire
> LuLaRoe: From Startup to Over $1 Billion in Less Than 4 Years. Lessons and Growing Pains
> Tupperware Appoints Chris O’Leary Interim CEO
> U.S. Charges Two Former Herbalife Executives in China over Bribery Scheme
> UK DSA Announces 2019 Star Award Winners
> Jeunesse Enters Global Essential Oils Market

Most-Read Article in November on The World of Direct Selling:
AdvoCare, Neora, an Ever More Aggressive FTC! What Now? (Alan Luce)

> Kyani Founders Identified as Victims in Plane Crash
> Former New Avon CEO: Company Reneged on $1M Severance
> USANA Announces Retirement of Founder and Chairman, Myron W. Wentz
> Why Market America Is a Legitimate and Thriving Business
> US DSA  2019 Sales and Marketing Conference Reveals New Data on Direct Selling and Independent Work
> The 10 Beauty Brands That Defined the 2010s

Most-Read Article in December on The World of Direct Selling:
5 Keys to Communications Confidence in 2020 (Crayton Webb)

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

SHARE THIS ARTICLE:

The post A Year in Review: 2019 in the News appeared first on The World of Direct Selling.

We will be covering 11 public direct selling companies of various sizes and with different product portfolios: Avon, Herbalife, Mannatech, Natura, Nature’s Sunshine Products, NHT Global, Nu Skin, Oriflame, Tupperware, USANA and Youngevity.

 Symbols: AVP= Avon, HLF = Herbalife, MTEX = Mannatech, NATU3= Natura, NATR = Nature’s Sunshine, NHTC = NHT Global, NUS = Nu Skin, ORI = Oriflame, TUP = Tupperware, USNA = USANA, YGYI = Youngevity

Cost of Sales

Cost of sales (or “cost of goods sold”) consists of all direct costs attributable to manufacturing the goods at a company. It includes all costs of materials bought and used in production and also the costs of direct labor utilized in producing the goods.

Within the 11 companies analyzed, Avon and Youngevity have the highest product costs (both, roughly 40%) relative to their revenues. Herbalife, NHT Global and USANA are on the other end with the lowest product costs (around 18-19%).

Operating Expenses

On our chart, this is divided into two sub-categories as a) commissions paid to the field members, and b) all other operational expenses. As you see, some companies’ commissions are presented as “n.a.” This means they did not disclose their such expenses as a separate item.

Among the seven companies that disclose commissions data, USANA has the highest bonus payments as a percentage of its sales: 45%. The second highest is NHT Global (43%).

When the total operating expenses are compared, Mannatech stands out by having the the most costly operation (almost 80%). Herbalife follows Mannatech with 72%, and Nature’s Sunshine Products with 70%.

Tupperware (52%), Natura (55%) and Avon (56%) had the lowest total operational expenses.

Profitability

Some high, some low but all 11 companies on the chart reported operational profits in at the end of 2016. The two highest operationally profitable companies were NHT Global (22%) and Tupperware (16%). Mannatech’s operational income on the other hand, was roughly at break-even.

The bottom line figure, net income or net loss, includes non-operational gains or losses like interest income or expense and taxes. Here, three companies reported net losses: Avon, Mannatech, and Youngevity. NHT Global (19%) and Tupperware and USANA (both 10%) reported solid net profit figures.

…..

Hakki Ozmorali is the Principal of WDS Consultancy, a consulting firm specialized in providing services to direct selling firms. He is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication. He is an experienced professional with a strong background in direct sales. Hakki was the first corporate professional in the Turkish network marketing industry. His work experiences in direct selling include Country Manager roles at Oriflame, Herbalife and LR Health & Beauty Systems, and Regional Director, North America role at Lifestyles Global Networks.







Forward This Article to a Friend:

The post Revenues, Costs and Profits appeared first on The World of Direct Selling.

Sponsored by:

It has always been interesting to see how direct selling companies compare on various grounds. Where they spend their money and at the end of the day, how much money they generate for their investors absolutely rank among the most interesting ones.

In this article, we will be briefly reviewing 11 direct sellers with varying sizes of business and with different product portfolios. These are Avon, Herbalife, Mannatech, Natura, Nature’s Sunshine Products, NHT Global, Nu Skin, Oriflame, Tupperware, USANA and Youngevity. This review will be based on their 2016 first quarter figures.

Symbols: AVP= Avon, HLF = Herbalife, MTEX = Mannatech, NATU3= Natura, NATR = Nature’s Sunshine, NHTC = NHT Global, NUS = Nu Skin, ORI = Oriflame, TUP = Tupperware, USNA = USANA, YGYI = Youngevity

Cost of Sales

This cost item is basically the total of the direct costs attributable to production of the goods at a company. It includes all costs of materials bought and used in the production process and also the direct labor costs. This is sometimes referred to as “cost of goods sold”, too.

Among the 11 companies analyzed, Avon (41%) and Youngevity (39%) are the two that spend the highest portion of their revenue on products. Herbalife, NHT Global and USANA on the other hand are on the other extreme, with costs of sales of 18-19%. Quite a difference between the two ends, isn’t it?

An interesting observation here is that both Avon and Herbalife made roughly the same operational expenses in absolute terms and generated revenues not too far from each other. However, Avon’s cost of sales ($519m) was more than twice as much of Herbalife’s ($213m). All other things being equal, it seems Avon can gain a lot by doing some savings in its production costs.

Operating Expenses

From the industry perspective, it would be great to see companies’ commissions payouts to sales force but not all disclose this information. Those figures are shown as “n.a.” on the chart.

Among those we have data for, NHT Global stands out with the highest bonus payments as a percentage of its sales: 47.2%. Close to it is USANA with its 44.7% commissions expense. Herbalife has the lowest figure here with 28%.

When we look at the total operating expenses combined, we see Mannatech with the most costly operation. In the first quarter, Mannatech spent more than 78% of its revenue to run its operations. Mannatech was followed by Nature’s Sunshine with 71%.

Tupperware (55%) and Youngevity (58%) had the lowest operational expenses.

It is interesting to note here that while NHT Global (15%) and Youngevity (16%) had very low “other” operational expenses, this figure was comparingly rather high in the case of Mannatech (40%).

Profitability

All 11 companies reported operational profitability in the first quarter. Among them, NHT Global’s (19%), Herbalife’s (15%), USANA’s (14%) and Tupperware’s (13%) were double-digit.

When we include the non-operational items such as financial gains and expenses and taxes to the picture and come to the bottom line, we start seeing companies making losses. In the first quarter of this year, Avon and Natura posted net losses of -13% and -4%, respectively.

NHT Global reported 15% net income as the highest of the 11 direct sellers here. USANA’s (9%), Tupperware’s (8%) and Herbalife’s (9%) net income ratios were quite healthy as well.

The post Cost Structures and Profitabilities, Q1 2016 appeared first on The World of Direct Selling.

This week we will take a brief look into the cost structures of 13 public global direct sellers as they reported at the end of the first nine months of 2015. We will see how the breakdown of costs varies from one another and also the implications on the profitability.

Cost of Sales (CGS)

On the product cost side, RBC, Youngevity and Avon have the highest figures. They are all at or above 40%. Being below 20%, USANA, Mannatech and Herbalife on the other hand, have the lowest cost of sales.

Distributor Commissions (DC)

Distributor commissions is another interesting area to look into. For one thing, it is a major expense item for all direct selling companies. But just as important as this, the compensation plan which is the engine generating this expense is a strategically important part of this business. From the chart, we see that NHT Global, USANA and Nu Skin are the three companies with the highest payout ratios. RBC’s commissions payout though, is way below than all others. This comparison as you see on the table is not complete because not all companies report their commissions expenses as a separate item (those marked as “n.a.”).

Other (OOE) and Total Operational Expenses (TOE= DC+OOE)

From the total operational expenses point of view, Reliv ranks the first place on the high end. Natura has the lowest total expense and the difference between these two is an impressive 28% (Reliv: 81.8%, Natura: 53.8%). NHT Global has a distinct stand here as it manages its business with extremely low operational expenses (12.9%). Youngevity’s figure is just as interesting (15.5%).

Operating Income

Among the 13 companies analyzed, all but two report operational profits. RBC and Reliv post losses here.

Net Income

Moving from here to net income that includes non-operational income and expenses (ex. interest gains or losses and taxes) as well, Avon and Youngevity join the above two that make losses.

Few final notes on this:

• Avon’s high net loss mainly originates from, as they report, “the negatively impacted effective tax rate by additional valuation allowances for deferred tax assets”.

• If both RBC and Reliv manage to run their business a little more efficiently in terms of lowering their other operational expenses, they can easily start generating profits.

• If Youngevity can lower its cost of sales, it seems it will post profits, too.

The post How Do Their Cost Structures Look Like? appeared first on The World of Direct Selling.