This week’s article is by Brett Duncan, Co-Founder and Managing Principal of Strategic Choice Partners. Brett has worked in direct selling since 2002, holding titles that include Vice President of Global Marketing and Sr. Director of Online Solutions. He works directly with direct selling companies as a strategic facilitator and corporate consultant, specializing in leading marketing, communications and digital teams and projects
Guest Post by Brett Duncan
7 Industry-Changing Trends in Direct Selling That Can’t Be Ignored
For quite a while now, we’ve all been speculating about how much the direct selling industry will change over “the next five to 10 years.”
We make statements like, “All I know is direct selling is going to look very different in five years from now,” or “Today’s direct selling company isn’t doing ‘business as usual.’”
I’ve made statements like that, and I stand by them. They aren’t incorrect.
It’s been a fun and poignant phrase to add to our conversations with colleagues. It’s a sentiment that has captured our sense of change, while also pointing out our lack of clarity on exactly what that change will be.
It’s been the perfect thing to say when we don’t know exactly what to say.
In conversations, we like to think of these shifts as occurring at a specific time. In reality, they happen in micro-phases: An innovation here, a new technology there. So when you’re in the midst of it, it’s hard to see exactly where you sit in all the change.
As a consultant who is privileged to work with many different direct selling companies of all shapes and sizes, I can tell you one thing for sure:
We’re all sitting right in the middle of the change right now.
Just take a look at the news from within our industry over the last 18 months or so. Look at how many direct selling companies have been bought. In some cases, they’re merging into existing direct selling companies. In others, they’re purchased by large firms that aren’t specifically focused on direct selling.
On the other hand, you have noteworthy companies closing their doors, while at the same time investment companies are scrambling to get in on finding the next big company in direct selling.
Entrepreneurs with no direct selling experience at all are choosing the channel as a preferred way to launch their business, while traditional direct sellers are shaking in their boots over how to exist in an Amazon-centric world.
There’s both a heightened sense of excitement and fear that coexists within the industry today. My firm partners and I have personally experienced it with so many companies in the industry.
What does it all tell us? And what are we doing about it all?
Listed below, I’m calling out a few of the trends that I see emerging quickly in our industry. Some are obvious. Some, not so much. And some may even offend a few of your direct selling sensitivities.
The key is realizing these trends cannot be ignored, no matter how much you agree with them. How will you respond to them?
1. It’s About How People Buy, Not About How People Sell.
I’m not even sure this one is a trend, but rather just a principle that’s simply
clearer than it’s ever been. In direct selling, we tend to ask ourselves the question, “How does someone sell in party plan these days? How does a network marketer make money? What does the modern sales force look like?” These are all secondary questions. The real question is, “How do people want to buy products in today’s environment?” When you are clear on how people want to buy (vs. forcing the market to buy the way you want them to), then you can develop unique selling experiences that match their buying preferences.
2. The Side Hustle Could Be Hustling You.
The Gig Economy… The You Economy… Side gigs and side hustles… Freelance Nation… We’re surround by clever phrases for the emergence of all the different ways people are looking to earn income outside of (or instead of) a full-time job.
This trend is very attractive to direct sellers (as it should be), because we feel we’ve been offering this since the inception of our industry. On the one hand, you have a marketplace that’s more open to earning income on the side and in the spare time than ever before. On the other hand, we have many people who are looking to their “side hustle” to never be more than that. They aren’t interested in building teams and long-term income. Many have more than one side hustle. They’re interested in squeezing in as many income-generating opportunities as possible into their current life. Many are even foregoing a traditional full-time job and settling for three or four side hustles. What’s this mean for direct sellers? In a land where everyone is open to a side hustle, the one that is the easiest to start, the easiest to understand, fits nicely into my existing lifestyle and provides the lowest risk will win.
3. Compensation Plans Are Flattening.
It’s a running joke in our industry to create compensation plans that make the U.S. tax code seem like a piece of cake. For decades, companies have created compensation plans that provide the “real money” deeper into the plan, rewarding the leaders that build and manage strong teams. And that requires a lot of complicated nuances. That makes sense if making income that rivals a full-time income is the goal. But in the land of the side hustle, as mentioned above, where affiliate programs, crowd-sourcing and virtual work abound, the opportunity to build teams like that (and the time it will take) is not as attractive as it used to be.
More direct selling companies are significantly simplifying their compensation plans, and focusing more on the payout of its early stages. Today’s prospective Consultant isn’t as impressed with “8 Ways to Earn Income,” as they are with “Earn an Extra $200 by Next Week.”
4. Is the Party a Plan, or Just an Event?
Is the party dead? You’d be shocked at how many executives from party plan companies have asked me this question. It almost seems like sacrilege at first, but it’s also quite eye-opening given their personal experience and love of the party, and their current struggles with it. I’m not going to answer the question directly right here.
I still think there are huge opportunities for “buying experiences,” whatever that might look like. What I do know is that the compensation portions that often go along with a true party plan company may no longer be relevant. Most “party orders” aren’t actually coming from parties. They are just lots of individual orders thrown into a single group order so that the Consultant and Hostess can take advantage of all the free and half-price specials. If we think about how people want to buy, though, they rarely answer this way: “I’d really like to submit an order to a Consultant, and then let them show me how to shuffle things around a bit to get the best deal, and then wait two weeks for other people to order until that party closes and the order gets submitted, and then wait for that order to ship to my Hostess so she can then deliver it to me when her schedule allows (or when her Consultant picks it up and does it for her).
I think parties can be a powerful selling experience, but I think it’s going to be difficult for direct selling companies moving forward to make the “party” as we’ve defined it in “party plan” the central unit of commerce. Companies can leverage the discounts and compensation in many other creative ways to drive the results they’re looking for (like preferred customer programs).
5. The Peaks and Valleys Are Steeper Than Ever.
Compared to other industries, direct selling is extremely volatile. Always has been. But it’s more volatile than ever before. That word “volatile” typically has a negative connotation, but it shouldn’t. Looking back at direct selling over the last 10 years, and five years especially, we’ve seen a massive influx of hyper growth situations, most of which occur at or near a company’s launch.
It’s really quite amazing when you look at the overall landscape. 
At the same time, we’ve seen epic crashes occur at the same rate (and often times to the same companies that rose so fast). There really seems to be a “flavor of the year” when it comes to direct selling companies. Direct selling is an industry of many rises and falls. Some companies recover well after their hyper growth and settle into a nice business. Others never get over it, and come and go within 10 years. I don’t have an opinion on whether that’s good or bad. I think the more important perspective is to understand if it’s simply how our industry works. Are we all simply waiting for the next burst of success, and then saving up for the sure-to-come fall soon after? And do we have to accept it? I’ll let you answer that. Our firm tracks the companies that are listed in the Direct Selling Global 100 each and every year in a single spreadsheet, and the insights when you look at it holistically are quite amazing. While the results aren’t definitive or complete due to how the ranking works and the varying degrees of participation within the industry, it’s definitely the best gauge available.
Since it’s inception based on 2009 revenue numbers, through last year’s listing, there have been 198 different companies listed in the top 100. And of all those companies, there are only TWO companies who have a) had a listing every year since 2009, and b) have had a year-over-year increase in sales every year. Can you guess which two they are? To be clear, there are companies who launched after 2009 who have had year-over-year increases every year since their launch, but only two that go back to 2009. It’s quite telling, isn’t it? We are an industry of big ups and downs.
6. Direct Selling is More Attractive to Investors Than Ever.
On occasion, Strategic Choice Partners is asked to help an investment firm in their due diligence process as they consider investing in a direct selling company. It’s fun work, and helps put our firm’s extensive insights and research capabilities into action. Over the last two years, those requests have increased considerably. Investors see the sharp hockey-stick increases mentioned above with some of the industry’s more recent launches, and they want in on that action.
That’s flattering and impressive. At the same time, I wonder if some investment firms and even seasoned entrepreneurs will begin to see direct selling as a great go-to-market strategy (and it is), but also account for the sharp declines that often occur, and build into their strategy a more multi-channel approach or even forego direct selling altogether once the model has helped them launch. After all, what’s the enduring value of a “go-to-market” strategy after you’ve already gone there?
Let me be clear: Absolutely no investor I’ve worked with has told me this is what their plan is. I have simply wondered if this could become an approach, especially given the volatility factors of the market I expressed above. On paper, from a pure investment standpoint, it’s not a bad plan. Buy low and sell high. For long-term growth of our companies, it’s certainly not a comforting hypothetical scenario.
7. Marketplaces are Replacing Proprietary Products.
It’s amazing to see all of the different types of products that are being offered via direct selling now. Services from electricity to professional services to home care are popping up left and right. There are even companies whose flagship product is toilet paper.
One of the cooler trends you’ll see is direct selling companies that are offering marketplaces, and not just individual products. These companies are creating curated, targeted and unique buying experiences, oftentimes selling products that aren’t exclusively their own. Sometimes they offer their own products in the mix. Some companies only offer the marketplace. This concept is intriguing on so many levels, from operational to marketing to sales. And it’s definitely one that’s popping up quite a bit. Could there be some marketplace opportunities for your company?
What trends did I miss? Which ones that I listed are wrong?
I’d love to get your feedback. Please drop them in the comments below.
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I really think people want want economical products but want the ease of getting it by way of modern technology. Internet parties and etc… are the new way of selling and buying. We all love quick and easy service. We are in a world of fast “food” or product. Everything in a hurry. Your article was so on point the way of selling and buying have changed.
Spot on Brett!
Hi Brett,
I really am interested in your views about the role of the party in Direct Sales. Thanks for sharing. Here in Europe, especially in France, party-plan companies are the trend and the most profitable but they do have an issue with the lack of flexibility of the party. Most times, I notice with my clients that they use the parties to attract customers and then I help them put together plans to retain customers. A few years ago you would focus on challenging the distributors to do more, book more, upsell. Nowadays what works best is attracting customers back to distributors by using email campaigns and other digital and social networkw strategies.
If you’d like to know more about what France and Europe are up to with Direct Sales, feel free to write or call.
Best regards and thanks again!
Jerome
Brett, excellent article! Very thought-provoking. Bottom line seems to be…know the market but more importantly, know your customers. What are they looking for by way of products, services, pricing? How do they prefer to buy?
So how do you get to know your customers? Listen, really listen. To who? To your ISCs. They are our frontline and they hear from customers before we do. Too many companies try to shape the company into what the owners or shareholders state as focus-of-the-day, but that often leaves executives with metamorphically pushing water uphill as we work to shape our customers into what the company wants them to be, rather than providing them with what they want, and what they are willing to pay for. DS has had its ebbs and flows throughout my long standing career in the industry and those who typically recover fastest from the lean years are those who have learned to listen, really listen, and then truly partner with the field to implement a viable plan. Not just paying lip service to partnership, but actually involving top leaders, active and committed leaders, in rolling out the solution. This partnership ensures they will support the plan and engage their teams in it. Win-win for all!
An excellent thought-provoking article, Brett. I present in the mindset and motivation expertise space in Direct Selling and I especially love the ‘volatility’ point, plus the ‘how people want to buy’ point!
Equipping the field AND the Head Office support crew with the behaviour of resilience is vital in our channel. Doing this means the dips and troughs – which are part of it all – are managed with behaviour instead of the often heard (and unnecessary) language of ‘cull’ or ‘clean out’ the team, which is the old world of direct sales.
There is a market out there for EVERYONE, and showing the field HOW to connect with their own personal market is a skillset well worth sharing, and underpinned with the mindset of ‘managing self’.
As for ‘how people want to buy’ – I LOVE your thoughts. Flexible behaviour in meeting the customer is the ideal. Let’s face it – we’re an industry with products we sell with an expectation the customer can embrace ‘change’ and switch to a specific direct sales product and purchase the DS range through their consultant.
If a Direct Sales company itself cannot embrace change in how customers want to buy – and create a shift for HOW a customer experiences their product – then that in itself is a BIG roadblock…and this means how can Head Office expect the field to sustain the ability to create change ( in the customer relationship) if ‘change’ itself isn’t embraced in the culture!
Well done Brett!
Best Wishes Beverley
Beverly – really appreciate your comments and thoughts here. Thanks!
bd
Hi Brett,
I agree wholeheartedly with your first proposition that it’s about how people buy, not about how they sell. Making the buying experience paramount has been forced on direct sellers, catalog sellers, brick & mortar sellers, and online sellers by Amazon. Let’s face it, we all buy from Amazon. They make it easy to find what we want, they get us the best price, and they deliver cheap (especially for Prime members) and FAST, and while they market in our faces, it’s subtle ads that appear on our facebook pages. Nobody is hard selling us a $500.00 product kit. ALL sellers are being forced to compete with Amazon, which has created a fantastic buying experience for the consumer.
So true Spencer. I often laugh (sadly) when I think of all of us as individuals and how we personally prefer shopping on Amazon, and in the meantime our companies have resources dedicated to making sure our products don’t show up there.
Thanks so much for the post.Really thank you! Great.
Thanks Metin!
This is an excellent article! You’ve done a great job of capturing exactly what all of us have seen, have lived through, actively have meetings about every week and yet have been unable to articulate clearly. That should be printed and hanging in every board room, In every founders office, in every VP of marketing’s office-and then it should be action plans put around each of these trends immediately! Honestly, really well done-thank you for sharing!
Voice to text… pardon typos
Thanks so much JoDean. Glad it is helpful.
As it was last year article, this is providing great insights on the state of direct selling industry and it should be carefully considered by all actors in this arena. I particularly liked from my side the first and I think that the tagline “It’s About How People Buy, Not About How People Sell” conveys the idea in an incredible effective way. As a Party Plan person, I am also fascinated by the part reflecting about the future of the party and still believe that people may not ask about a social opportunity to get together but they like it when they are present! In any case thanks, great job!
Thanks Luca!
Thanks, Brett. The article is thought-provoking. I think it’s important to look at the other side of the coin–what’s still the same? The answer is that direct sales requires PEOPLE to sell. If it was just about buying patterns and shopping locations, our industry would have died in its infancy. The core question for companies is “how do I support the people who sell?”
Thanks Neil – should’ve known you would come up with a great twist on it all. I like the difference in thinking about how we support the people who sell vs. how do we get more people to sell.
The way people sell in a MLM is always in flux, it’s like tying to study the nuances of a chest as it breaths without understanding it’s the lungs underneath that are doing all the work. Working at the surface layer only gets you so far. You need to understand the engine behind the breathing in order to effect real change. So it is in direct selling. People want convenience. The party plan is only so effective in todays online world. Virtual parties that last weeks where people can participate as way to spend free time are by far going to have a more lasting effect. Consumers need to share information and results. To be successful in direct selling a direct seller needs to know the engine behind the products – the reward system, and set goals within that system. The products are the responsibility of the provider.
Thanks MJ!
Great article, Brett. As a coach who works with thousands of direct sellers who sell through the party plan, my experience is that the party has shifted to a virtual room more than just putting orders together to maximize the best deal. People still like the social aspect of a party and purchasing from friends recommendations continues to be driver for purchases. What’s said is that some party plan companies are not embracing the virtual party and losing markets.
Thanks Dana! I like that … “the virtual room.” I agree, the key here is the “social” aspect, and what constitutes as “social” has changed in every other part of our lives. So we must change, too.
Scott, Your comments are “spot on” . Over the past few years we have seen several old school Direct Selling companies struggle to stay in business. Most are MLM companies that were built on the premise of leading with either PRODUCT or COMP PLANS (which typically require a MBA to understand)… Consumers do not want to be SOLD they want to buy what they want… when they want it! And if the process to buy is simple they will usually be repeat customers and if they are given a incentive they will refer others. The Direct Selling Industry has always used a PUSH approach and in this day and age this approach is no longer viable. Building the COMMUNITY FIRST allows a company to hear what the consumer is saying… they will tell us what they want, when they want it, how much they are willing to pay and who they know that may also want to be our customer. CONSUMER ANALYTICS is key and from my perspective most of the industry leaders simply do not care about the consumer unless they are on AUTO SHIP! THE INDUSTRY IS CHANGING… DIGITAL Is here and real time content is changing the rules!
Thanks Rex – I think digital is definitely changing things, but I think it’s a lot more than digital. Maybe what digital has created and caused. But it’s a different way of thinking.
The real key is to decide not to innovate as a means to keep the core of what we’ve always done in tact, but rather meet the needs of an identified market in a unique way.
bd
The ways and means on how to handle the obvious will always change, return and change again. What’s the obvious? This: Direct Sales companies / products are the unspoken, unconscious R&D divisions of major and minor retailers. “Thank You Direct Sales! For showing us the trends; we’ll take over marketshare from here.” – Retailers (big and small). Brand attractiveness and tribal relationship stickiness to what becomes overpriced consumable products is the only thing that keeps a global customer network organization from collapsing under the weight of the obvious price differential. ex. “Sweetheart, why are we buying our families berry juice, essential oils, Tumeric, Joint relief, legal services, shakes, pills, skin care lotions, and CBD, here when we can get it for 5 – 20% less over here?” But price isn’t everything: Service, experience, relationships, feelings, culture can and clearly do trump an extra 5 to 20%. Two things stand out to me. Either a company actually has global domination of resource supplies (to maintain a competitive price advantage), along with an unparalleled, difficult to duplicate, and proveable highest quality, or they have the ability to change product ingredient decks quickly and on the fly to maintain a USP in the field. Complex, “proprietary blends” do buy the residual income asset some time – before fall out begins; but high quality customer (rep) service, strong (tribal) relationships, distributor focused (pay plan) companies will keep our industry thriving.
Scott – really great point that I hadn’t thought of as thoroughly as you have. It’s so easy for us to get hung up on just how “special” our product is, but what matters is what matters to the consumer. And seeing other channels leveraging us as their innovation department is a big deal. I’ve seen this play out on a smaller scale within countries, where, say, their US market may be small but it tries a lot of different ideas in the field, and those ideas get added to other markets where they strive because, there, they are cutting edge.
Really appreciate your perspective.
bd