The Elephants in Direct Selling’s Room!
Guest author Alan Luce is Co-Founder and Managing Principal of Strategic Choice Partners (SCP), a consulting firm that provides strategic support and services to help today’s direct selling companies thrive.
Alan is a US DSA Hall of Famer, and member of the DSEF’s Circle of Honor. He’s served in executive roles at Tupperware, PartyLite, DK Family Learning and other companies, and has been a part of launching more than 30 direct selling companies over his career.
Guest Post by Alan Luce
The Elephants in Direct Selling’s Room!
No one likes having difficult conversations. But there comes a time when you can no longer ignore the proverbial “elephant in the room.”
Well, guess what? That time has come for the direct selling industry. We need to face our most recent “elephant,” better known as “the gig economy.”
So let’s take a moment to address this problem pachyderm.
The gig economy is the general term that describes the ever-widening variety of non-employee income opportunities available to Americans. Some of the giants of this new work relationship include:
- Uber and Lyft, offering transportation
- DoorDash and Deliveroo offering food delivery
- TaskRabbit which offers on-demand freelance services.
More are popping up every day, creating a growing work force that just keeps getting bigger, and in the process, is also becoming a bigger competitor to direct selling industry. Need proof? Here’s a quick comparison of US numbers from 2015, when the gig economy was just heating up, versus 2017.
That’s more than a 9% drop in both sellers and sales in just two years. Meanwhile, The Bureau of Labor Statistics (BLS) estimates that 55 million people, 35% of the work force, were gig workers for some or all of their income in 2017. So there were almost 3 times as many gig workers as direct sellers last year. And that’s only the beginning. The BLS expects gig numbers to rise to 43% of the work force by 2020, and possibly as high as 60% by 2030.
It’s no stretch to assume that direct sellers are already losing prospective recruits to other types of gig income opportunities. It’s also no stretch to imagine that if the BLS is right about the growth of gig work, we direct sellers are going to be in for an even more challenging competition with the companies of the gig economy.
All of which raises these questions:
- Can direct sellers successfully compete for workers attracted to the gig economy?
- More to the point, can direct sellers show our earnings opportunities rival those offered by Uber or DoorDash?
The likely answer is that some direct sellers will be able to do so and others won’t. The growing competition to attract people back to direct selling, and away from the opportunities of the gig economy, presents the biggest challenge that our industry has faced in the last 40 years! But almost no one is talking about it…. at least not out loud or at industry meetings.
And competition for people isn’t the only “elephant” in the room, either! In the title of this article I used the term “elephants,” as in more than one. And what is this other elephant? I’ll give you a clue, its initials are “IRS.”
If the BLS is right about the continuing growth of the gig economy, do we believe the IRS will be satisfied with 45% of all work-related income being paid via the current system of quarterly estimates rather than monthly withholding? I don’t! What will we do as an industry if the IRS decides to move to revoke the current legislative safe harbor that protects direct sellers, real estate agents and other independent contractors? It seems to me that we better start thinking about this now rather than waiting for the challenge to be thrust upon us.
Competition for sales people AND the threat of a changing tax code. These are just two of the great big elephants that have quietly snuck into direct selling’s room over the last several years as the gig economy has continued to grow. We need to recognize that they’re very much here with us, and then we need to undertake a serious discussion about them. And we need to do it very, very quickly.
Before we get trampled.