The year draws to an end. So, it would be interesting to hear from some of the prominent persons of the direct selling community what they see coming in 2016.
“What will be the most important issue, whether it be an opportunity or a threat, in the direct selling industry that will need a closer focus Next Year?” was the question.
You will read in this week’s article their responses as below:
Oscar Canio Arias, Managing Director of Direct Selling Europe
“2016 will be another crucial year for the sector, for many reasons. From the legal perspective, we expect to see the results of the investigations opened by the FTC, FBI and SEC against Herbalife. The investigations will not ignore the recent FTC decision to close down Vemma Nutrition, a case that may have close similarities to Herbalife’s. From the regulatory perspective, the EU legislators are expected to announce new proposals affecting our industry, after a transition year following the renewal of the EU Commission and Parliament end of 2015. The new year will see proposals on data protection (mainly following the EU Court of Justice’s decision annulling the EU-US Safe Harbour Agreement), digital contracts rights, geo-blocking and VAT for electronic commerce, among others. Direct Selling Europe is working will all key decision makers to ensure that the interests of well reputed and sustainable direct selling companies continue well preserved.”
Jeff Babener, Legal Counsel at Babener and Associates
“In its updated Preliminary Injunction Order, the Vemma trial court has ruled that a sponsoring distributor may not receive any override commissions unless more than 50% of his or her sales organization sales are made to non-participant retail customers. And, in calculating total sales organization sales, the purchases of the sponsoring distributor are to be given no credit whatsoever. This draconian ruling not only renders the Vemma program non-competitive with all other direct selling companies, but it is also ‘at odds’ with established case law, from Koscot to BurnLounge. Is this ruling the new norm for the industry, or are the ‘handcuffs’ merely punishment for alleged past abuses? One way or the other, the industry will need to come to grips with so called ‘fencing in’ orders that would eviscerate the typical direct selling marketing program.”
Anders Berglund, Chairman and Executive Director of Direct Selling Sweden
“I have always said that we shall only talk about what we are. Lately I have frequently been forced to explain what we are not. Our focus for 2016 is thus to positively describe our industry. We have updated the association’s Facebook and website to welcome not only our own people but also external stakeholders. We can be proud of our industry. Our lead words for 2016 are communication, interaction, community and pride. Our presence on social media shall be interactive and create pride and demonstrate that our industry consists of enthusiastic, hardworking and proud ordinary people.”
Doug DeVos, Chairman of The World Federation of Direct Selling Associations (WFDSA), President of Amway
“Direct selling must evolve even higher standards of excellence to meet the demands of today’s dynamic marketplace. The majority of people in our business approach their work with integrity, honesty and sincerity. But the actions of a disreputable few can overshadow the reality, which only counteracts our collective efforts and perpetuates negative misperceptions. The WFDSA is not content to tolerate even one misdeed. We are committed to doing everything in our power to minimize it. Especially for the benefit of entrepreneurs that choose the direct selling channel, and the societies and economies where they operate”
Tamuna Gabilaia, Executive Director and COO of The World Federation of Direct Selling Associations (WFDSA)
“The direct selling industry, like no other industry, empowers millions of people around the globe every day. Several companies within the industry have been in business for more than 100 years, yet, as the WFDSA Chairman Doug DeVos mentions, direct selling still remains mysterious, misunderstood and misrepresented. One of the big opportunities that exists as we look forward to 2016 is our ability to align around common industry messaging that will remove doubt regarding the mystery, the misunderstanding and the misrepresentations. With clear concise language that normalizes our business around the globe we can speak with one comprehensive voice. Under the leadership of the WFDSA Advocacy Committee we will develop guidelines that will assist member DSAs to leverage common language, and advance the transparency and consistency in industry messaging and the understanding of the social and economic benefits of the direct selling industry. ”
Jonathan Gilliam, Founder and President of Momentum Factor
“Most pressing is the immediate threat from regulation enforcement. The OPPORTUNITY is that such scrutiny and action could lead to a truly positive transformation for the industry. Think 3 years, 5 years out… What could the industry look like if we all were hyper-focused on creating the most innovative products and creating real community, with substantial AND achievable income opportunities? Yes, regulation is a threat, but I would argue the real threats stem from wild claims made online that not only prove untrue but put companies at real regulatory risk: Over-promising that results in crushed dreams from companies whose continued success is based on ‘selling the plan’. Companies must offer more than just a comp plan, and be vigilant about enforcing how their offerings are promoted to the public.”
Brent Kugler, Partner at Scheef & Stone, LLP
“Companies that derive a significant percentage of revenue from the sale of enrollment starter kits bundled with products will be increasingly at risk of regulatory action. Recent regulatory enforcement actions indicate an increase in scrutiny of enhanced starter kits or starter kits that combine products at the time of enrollment. A growing trend in the industry has been to bundle products with a starter kit and offer this as a higher-priced enrollment option to new distributors. The Vemma case highlights the problem of tying commissions to the sale of enrollment kits. Even if not commissionable, enhanced kits are problematic because they greatly increase the cost of entry to new distributors. The fact that the kits are “optional” may not insulate a company from regulatory scrutiny if the enhanced kits are heavily promoted over a less expensive basic starter kit.”
Roberta Kuruzu, Executive Director of Brazil Direct Selling Association
“I envision great opportunities for direct selling companies in Brazil. Not only because of the Brazilian large market, but also due to the rising of unemployment index derived from our current economical and political crisis. This implies a good scenario for implementing the companies’ best strategies to attract new Representatives and also to invest in sales training. The direct selling industry must use its best asset: relationship and offer a great shopping experience. Finally, companies, should be mindful to provide technological means to Representatives, thus being able to provide products information according to each customer profile, in a very tailor made manner.”
Miroslaw Lubon, Executive Director of Poland Direct Selling Association
“Three issues come to mind when looking ahead to 2016. First, ethics. Honest market practices and full respect for consumer rights will be the most important precondition for any success in sales – by companies and individual sellers alike. Second comes omnichannel meant as a rational use of many communication instruments to reach out to potential clients and distributors. Full integration of these different channels is a must, otherwise instead of their complementary services, mutual penetration and enhancement, we’ll have a classical example of cannibalism. Finally, a possible threat: This time generated by processes beyond the control of direct selling itself, namely the gradually worsening international climate which can easily become a real barrier hampering the growth of many industries and trade in general.”
Alan Luce, Senior Managing Partner, Strategic Choice Partners
“Four key phrases will dominate direct selling discussions and plans in 2016 and beyond: 1. Multi-channel retail selling: Direct sellers must compete with the convenience and efficiency of online selling. 2. Retail focus: 2016 will see all forms of direct selling putting increased emphasis on selling to end user retail customers. Compensation plans and marketing programs will be revised to reflect this focus. 3. Transparency: Regulatory focus will insist on greater transparency about income and product claims. 4. Virtual personal relationships: Our potential customers and independent sellers consider a virtual relationship on line to be the same as a face to face relationship. Direct sellers must facilitate and strengthen these virtual relationships. In recent months the attention of direct sellers in the US has been on regulatory actions. While paying attention to regulators is important, it is more important to not allow that distraction to blind direct sellers to the tremendous opportunities today’s market presents.”
Bob Woodard, Founder of BW International
“The biggest opportunity is to implement the right digital strategies to attract, engage, convert and serve customers and consultants (prospects, new, and/or repeat). Each strategy should in some way improve productivity and thereby support the earnings opportunity of the independent sales consultant. The biggest threat is to ignore this opportunity and fail to provide an attractive and sustainable value proposition for both the consumer and the independent consultant.”