Below is an excerpt from my upcoming book, Reset: the re-imaging of direct selling. Whether you are a fan or critic of network marketing, you cannot ignore the facts. In a future blog, I will differentiate between direct selling and network marketing, but for now let’s loosely assume that they are one in the same. The only real difference that separates the two is the compensation plan. If you define a direct selling company based on the ability of its salesforce to recruit others, then there are very few true direct selling companies left in the marketplace. Even traditional direct selling companies have this component in their compensation plans.
Consumers and the Direct Selling Distribution Channel
To determine the value of any distribution channel, it is important to look at it from the eyes of the consumer. If the distribution channel is “proven” then it can be documented over time. If the distribution channel is “meaningful”, it can be seen by the magnitude of customers that buy goods and services from the channel. Let’s examine the data shown in figure 3-1 to support this premise.
In the eyes of global consumers, direct selling continues to be a proven and meaningful distribution channel. Consumers in over 170 countries buy goods and services from direct sellers. Since 1987, the cumulative global sales have surpassed three trillion dollars in sales. What does three trillion dollars look like? Let me give you some perspective. If you went out and spent ten million per day, you would have to live 273 years to spend one trillion dollars.
Over the past twenty-five years, more and more consumers are using direct selling to buy goods and services. During this time, global sales grew an exorbitant 279.72 percent and sales increased in twenty-one out of those twenty-five years. Interestingly, during the nineteen-month recession between the years of 2007-09, sales didn’t decrease and grew minimally. After the recession, sales grew every year but one. Since the last recession, sales have increased at a faster rate than any prior economic cycle, even during the largest global recession since World War II. This long-term data suggest that consumers continue to buy products and services from direct sellers in all economic cycles and that consumers continue to buy products and services from the direct selling channel of distribution.
Another way to understand the power of the direct selling distribution model is to compare the historical global numbers to the global Gross Domestic Product. The Gross Domestic Product (GDP) is the total value of everything produced by all the people and companies in the country. It doesn’t matter if they are citizens or foreign-owned companies. If they are located within the country’s boundaries, the government counts their production as GDP. Comparing global sales through the direct selling distribution channel to global GDP, the global direct sales grew thirty percent faster than the global GDP.”