728x90 AdSpace

Latest News
May 30, 2017

How Direct Selling Helps the Global Economy

At one time, direct door-to-door selling was a regular part of everyday life in America. Today, sales is becoming increasingly dominated by online marketing, but direct selling continues to play an important part in both the U.S. economy and the global economy. Globally, direct selling generated $184 billion in 2015, according to the World Federation of Direct Selling Associations (WFDSA). The Asia-Pacific region is the world’s largest direct selling region, holding a 46 percent share, while the Americas account for 34 percent. On a national basis, the U.S. leads the global market with an annual sales volume of $36.1 billion, edging out China’s $35.5 billion. Here’s a closer look at some of the ways direct selling contributes to the U.S. and global economy.

Employing Entrepreneurs

One of direct selling’s major contributions to the global economy is providing income to millions of workers who participate in direct sales either part-time or full-time. WFDSA data shows that 103 million people worked as direct sales representatives in 2015, not including China, where the total number of workers in the industry is unknown. In the United States alone, 20.2 million people were involved in direct selling in some way in 2015, according to the Direct Selling Association. The U.S. direct selling industry includes over 700,000 companies that employ nearly 800,000 people, according to IBISWorld research.

In addition to employing entrepreneurs, the direct selling industry also plays an important role in increasing the number of entrepreneurs by teaching sales, marketing and other small business skills. For instance, Amway, which is the largest direct selling company in the world with over $9.5 billion in sales in 2015, provides strong training support to its independent business owners. Amway IBOs receive educational materials as well as free online training that teaches business skills like how to sell products, how to grow a business and how to be a business leader. In the process of learning these skills, Amway IBOs are also taught how to grow their sales teams, which brings new entrepreneurs into the industry. This self-perpetuating quality helps account for the large, ever-growing number of people employed in the direct selling industry.

Promoting Manufacturing

In addition to the number of people who work in the direct selling field itself, the industry helps promote related segments of the economy. One of these is manufacturing. For instance, in 2015, according to Direct Selling Association data, industry sales in the U.S. included $12 billion in sales of wellness products, $6 billion in sales of home and family care products and durables, $6 billion in sales of personal care products and $3 billion in sales of clothing and accessories. All these goods depend on manufacturers, helping to support the manufacturing industry.

Direct selling supports manufacturing both in the U.S. and in other countries. For instance, between 2012 and 2016, Amway invested $335 million in manufacturing upgrades, the majority of which was spent in the United States. But Amway also has manufacturing plants in Asia for specific product lines, such as durables and electronics. Direct selling nutrition company Herbalife recently expanded its manufacturing capability by investing $135 million in a new 46,000-square-meter plant in Winston-Salem, North Carolina.

Supporting Logistics

The international outreach of today’s direct selling companies also helps support the U.S. and global logistics industries. For instance, in 2013, Amway moved 10,000 containers through ocean freight and 1,700 shipments by air. Domestically, the company uses U.S. companies such as FedEx and UPS, but internationally, it works with regional carriers closer to its markets abroad. Likewise, Avon works domestically with U.S. third-party logistics providers such as Lynden, while its supply chain also encompasses markets in 100 other countries. Today’s direct selling companies thus provide significant business to logistics providers in the U.S. and around the world.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

© EconMatters, LLC All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle

  • Blogger Comments
  • Facebook Comments
Item Reviewed: How Direct Selling Helps the Global Economy Rating: 5 Reviewed By: Econ Matters