New Data Reveals Canadian Direct Selling Grew Significantly in 2020 

The recent release of Canadian industry statistics for 2020 has brought good news. What a difference 15 months makes!

In March last year, there were so many unanswered questions about the direct selling industry and the world in general. So, to be at a point in mid-2021, where we are able to publish data showing record Canadian sales growth in 2020, seems a little surreal. In fact, retail sales for direct selling companies in 2020 were up 26% over 2019 numbers, which in retrospect is hard to believe.

In mid-March of 2020, international flights were grinding to a halt, the NBA had just cancelled games, and governments were scrambling to understand what was happening and how to deal with it. Similarly, the challenges for direct sellers seemed equally large and potentially existential. Among the questions many of our members asked were:

• Will my distribution center be allowed to stay open?
• Will my consultants be interested in moving to fully online selling?
• Will I be able to source raw materials from overseas?
• Without incentive trips and conferences, how will we connect with and reward people?
• Will consultants be drawn to government support programs, instead of entrepreneurial activities?
• Will my staff do any work at home?

And most importantly:

• Will my company even be able to keep its doors open for the next six or twelve months?

As the President of DSA Canada, I heard all of these questions and didn’t necessarily have all the answers. But through the hard work of our members, many calls with government officials, support from industry suppliers, and some aspects of the pandemic that actually favoured our business model, we have arrived at today.

So, here are some of our topline numbers from our 2020 industry survey:

• Retail sales grew 26% over 2019, to C$4.15 billion. 2020 was the largest ever year, in dollar value, for direct sellers in this country. This growth is significant, and also compares favourably with growth in other direct selling markets.

• The number of Canadians signed up as independent sales consultants rose to 1.39 million, up 20% over 2019. This total number is comprised of 5% full-time business builders (or those working 30 or more hours per week), 70% part-time business builders (or those working less than 30 hours per week or more) and 25% other independent representatives (or those who are not active).

• The percentage of the independent sales force in Canada who are women rose by 2%, to 84% overall. A small rise, but significant. Perhaps this is a sign of the “she-cession” that has been discussed as one of the pandemic impacts. Hopefully, it is also a part of the “she-covery”, which is helping to lead us out of our challenges.

It is also interesting to consider one other part of the industry that is evolving at this point, that being the existence of preferred customer programs. As of this survey, just over half of DSA member organisations, or 53%, have a preferred customer program, and this accounts for 11% of their sales. This will likely be an area where we continue to see growth in future years.

Why did sales spike like this? I have a few thoughts:

• Consumers wanting to shop safely from home; to buy products that were important to them during a pandemic (such as healthcare products and kitchenware); and to support the entrepreneurial business of their families, friends and social circle;

• People looking for additional earnings opportunities; perhaps rethinking their careers; and spending more time working on their existing direct selling business; and

• Direct selling companies having effective and established digital platforms for carrying out commerce (or at least being able to speed up an existing digital transition)

I recognize that not all companies experienced the same level of growth and many did struggle with significant pandemic-related challenges, but overall, the industry had a phenomenal year. The next question many of our members are asking is, can these sales numbers be maintained and can industry participants continue to post year-over-year growth? I know that this is something that direct selling companies are working on right now, by building connections with newer independent consultants, altering product selections to suit our new reality, finding innovative ways to recognize success and by diving headlong into the new digital reality.

DSA Canada will continue to work with members and stakeholders to set the table for success. We encourage all direct selling companies to participate fully in industry research efforts, as with verifiable numbers comes advocacy power.

I can’t wait until this time next year, when we release our 2021 numbers. Then we will have an even better understanding of how this crazy time in our lives has impacted direct selling in Canada.

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A few weeks ago, the Canada Direct Sellers Association reported the findings of an important study on the Canadian direct sales industry.

The study was commissioned to Nathan Associates that used three principal resources to construct the estimates of industry impact:

* A survey that was conducted in spring 2019 of nearly 5,000 individual direct sellers,
* A survey of 17 direct selling companies again, that was done in spring 2019,
* Statistics Canada’s reports.

Industry Grows

To me, one of the most significant findings is that the industry has been growing in Canada. In fact, from 2015, retail sales grew by 5% to $3.50 billion in 2018. The growth during the last 10 years (between 2008-2018 period) was 16%.

Besides, new companies continue to enter the Canadian market. In recent years, for example, Zinzino from Sweden launched in 2015, Infinitus from China in 2016, AdvoCare from the U.S. in 2018, and Vorwerk from Germany in 2019. Currently, the number of direct selling companies that exist in the industry exceeds 200.

According to the study, there are 1.16 million independent direct sellers operating in Canada, up 4% from previous year.

Socio-Economic Impact of the Industry

Economic

The direct selling industry contributes to the overall Canadian economy through the income, sales, and employment it generates. Companies in this industry create employment opportunities, that result in wages and salaries for their employees and compensation for their field members. These are the industry’s direct contributions:

* Sales revenue of $3.50 billion,
* Participation of nearly 1.2 million direct sellers and employees of direct selling companies,
* Household income of $1.21 billion, and
* Tax revenue of $886 million.

Additionally, there are also “indirect contributions”. For example, these companies purchase goods and services from other Canadian businesses, resulting in additional employment, income, and sales in those industries.

Direct selling also generates employment, personal income and sales. This happens through the spending done by the individual direct sellers, employees of direct selling companies and by employees of suppliers to the industry. And these are direct sales industry’s “induced contributions” to the economy.

These indirect and induced contributions, as reported, are:

* Sales revenue of $3.85 billion,
* Employment of 21,500 people,
* Household income of $876 million, and
* Tax revenue of $424 million.

Social

The study finds that a typical Canadian direct seller has lived in the same province/territory for over 20 years, is female, is mid-forties, is married, defines themselves as Canadian, speaks English, lives in a 2-3-person household, has an annual household income around $70,000, and has some post-secondary education.

Behind this average profile of a direct seller, the study shows there is a diversity that reveals direct selling is open to all, especially to women. In the Canadian economy, half of all employees and 38% of the self-employed workforce are women. However, 82% are women among direct sellers.

The survey tells us that direct selling is not only an opportunity to make money. It also provides an opportunity for self-improvement. 32% say, they become involved in direct selling to learn something new and 45% for personal development (e.g. to become more confident or better business minded). Moreover, 75% believe the benefits carry over into their private life.

“Direct selling is an important retail channel, which delivers a wide range of products and services to Canadians”, says Peter Maddox, President of the Canada DSA. “Through financial opportunity and social benefits, it also plays an integral role in improving the quality of lives for all those associated with this industry.”

I couldn’t have said it better myself!

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Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is a Supplier Member of the Canada DSA. It is 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.

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Peter Maddox

Could you tell us about your education and your professional background?

Originally from Australia, I have an MBA from Chifley Business School and a Marketing Degree from the University of Tasmania, both Australian schools. Over my career, I have managed files as diverse as government relations, regulatory affairs, marketing analysis, member engagement, communications, business development and sales, both in corporate roles and with respected national associations in Canada. My role at the DSA calls on all of these skills and experiences to help achieve the organization’s strategic goals.

I worked for the Canadian Propane Association, Canadian Tire Corporation, the Australian Professional Engineers Association (now Professionals Australia), the Australian Pharmacy Guild and Rhone-Poulenc Rorer Pharmaceuticals.

What were your opinions and observations on direct sales before?

I had definitely had some contact with direct selling companies, through family and friends.

I knew that direct selling is an industry that rewards entrepreneurship and hard work, and that it is also often a “side gig” for people looking for something more from everyday life. However, I was also aware of the perceptions and misconceptions that exist about the industry, specifically regarding a small minority of companies and individuals occasionally pushing the boundaries of appropriate business practice. Fortunately, I have discovered that, in Canada in particular, both the DSA and regulators set and maintain a very high standard for those involved in the industry. Our member companies pride themselves on achieving and exceeding these high standards.

What made you choose Direct Sellers Association of Canada as a place to work for?

I was just incredibly impressed and inspired by the energy and the passion of the people I met during the hiring process. And even though many of our member companies compete with each other, they seem really open to collaborating and growing the industry as a whole.

From a personal perspective, this role gives me the opportunity to drive an organization that has so much potential, in an industry that has innovation and creative thinking in its DNA. It really was a case of “right time, right place” for me career-wise.

From your perspective, what are the biggest threats or challenges to the Canadian direct sales industry?

The way that people are purchasing and consuming is changing, particularly from generation to generation. As we become “time poor” it is important that the direct selling industry continues to position itself as a great model for both consumers and those looking to create a business for themselves. If the industry stops innovating and fine-tuning its tactics to meet the latest consumer needs, challenging times will surely follow.

I think the industry’s other major challenge is to uphold the highest possible standards in everything we do. There are other consumer goods distribution models who we compete with fiercely, so we cannot afford to be our own worst enemies by letting standards slip. It is very important that the DSA, through our Code of Ethics and Business Practices, continues to support our members in their aspirations.

And the biggest opportunities are?

People are looking for more freedom and control in the way they make a living. Direct selling offers exactly that, without a huge investment in real estate or products. And Canada is still a little bit of an untapped market, particularly when you look at the number of direct sales companies in the US who haven’t yet ventured north of the border. We offer low-barrier entry to generating income for individuals and an attractive environment to invest and grow for businesses.

Canada is a great first step for US companies looking to expand globally. It’s close, business practices are similar and consumer tastes are relatively closely aligned. But it does take focus and dedication to make it work.

Secondly, there is an opportunity for the industry to be a strong lobbying presence and to proactively play a part in the evolution of regulation and policy. As an example, the Canadian DSA has taken strong positions in NAFTA negotiations and we have subsequently built meaningful relationships with various government departments. Where appropriate, it is better to work with government in shaping policy, rather than fighting against it.

The federal government, especially, has demonstrated a clear interest in supporting policy and industries that allow women opportunities to earn, learn, and succeed. Direct selling is well-aligned on this, with 83% of participants being women, so we are continuing to deliver this message.

What will be your priorities in the coming weeks or months?

Initially, my goal is to get to know the people, companies and issues that are central to our industry. If I can’t speak from a position of knowledge, then I will have little chance of convincing stakeholders to support and embrace what we do.

The next step will be to continue our advocacy work. We need to find ways to leverage the political power of the estimated 1.2 million independent sales consultants involved in direct selling in Canada – that is a great basis for having a strong voice with policy makers. I have already had an opportunity to do some lobbying in Ottawa and am focused on establishing relationships that will pay long-term dividends for our industry.

Beyond that, we have the challenge of upgrading and revamping our messaging and communications, to ensure that our members are involved and that they see value in the work that we do. This will start with new online resources, and will also include programming more events, refining our news distribution, and providing more in-depth research and information for members.

What would you recommend to a person considering becoming an independent salesperson?

Research, research and then maybe a little more research. Find out about the company you are considering, including their products and business model. Talk to people who have been a consultant for them and see if their experiences meet your expectations. Consider your talents and ambitions, and whether they align with the skills required and likely outcomes of being a consultant.

Of course, you should also confirm that the company is a member of DSA Canada, to ensure integrity and trust!

Thank you for your time Peter, and wish you all the best! Anything you would like to add before we conclude?

Thank you! The World of Direct Selling is an important communication channel for the industry. I am glad I had this opportunity to speak with and I hope to share more with you as the Canadian DSA evolves and grows.

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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 proud Supplier Member of the Canadian 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.
 
 

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Some Facts

Continuous Flow of New People to the Economy 

Canada’s current population is 36.6 million. While the yearly number of new immigrants has been around 250,000 for several years, it hit 320,000 during the July 2015-July 2016 period.

A Statistics Canada survey projects almost half of the country’s population could be an immigrant or the child of an immigrant within the next 20 years. It suggests immigrants in Canada could reach 30% of the population in 2036. This was  20.7% in 2011, and a further 20% of the population is expected to be the child of an immigrant.

Difficulties in Finding a Job or Starting a Business

Those who immigrate to Canada generally come as educated, experienced in their career fields and with several skills gained in their home countries. However, these do not help them much in the beginning.

In the job market, new immigrants inevitably lack the work experience in Canada. This, coupled with the reluctance of the Canadian employers to be the first (or, even the second) employer of a new immigrant makes lives quite difficult.

For those immigrant who have entrepreneurial aspirations, the situation is not much different, either. Here, not knowing the necessary rules and regulations, the customary practices in this new market as well as what works and what does not, make up the barriers.

There are several government-supported courses in Canada to help new immigrants but all these mean considerable time and in many of the cases, considerable money to be spent by these individuals.

Ties Back at Home

All immigrants keep warm ties with their relatives and friends in the countries they come from. With the advances in the communication tools the Internet provides such as WhatsApp, WeChat or Messenger and the social media platforms like Facebook, Instagram and LinkedIn, these ties have never been stronger before.

What Do All These Mean to the Direct Selling Industry?

It means a continuous inflow of large number of people every year:

* Who are in need of full time or part time income,

* Who would be willing to take a business opportunity that will require minimum amount of investment, that their lack of Canadian work experience will not be much of an obstacle to success and that they will not risk almost anything by taking this opportunity,

* Who can take advantage of a warm market in Canada consisting of immigrants that come from the same country and that they can easily socialize with,

* Who can also take this opportunity to their friends and relatives in their home countries to further grow the business.

Conclusion

Many would think Canada has a mature, saturated direct selling market, probably because it is a developed country. However, due to the continuous inflow of immigrants, it is not quite the fact.

This represents a huge opportunity for both growing in the Canadian market and also for taking the business to other countries via the help of immigrants. However, making use of this opportunity by a direct selling company requires a well-defined strategy and persistently executing it.

…..

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 and Regional Manager roles at various multinationals in Turkey and in Canada. You can contact Hakki here.

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