As the year draws to a close, it would be interesting to hear from some of the prominent persons of the direct selling world what they see coming in 2015.
“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 see below the diversity in the responses, that in my opinion, reflects the richness of this industry.
Oscar Cano Arias, Managing Director of Direct Selling Europe:
“2015 will be another crucial year for the sector, for many reasons. From the legal perspective, we are expected to see the results of the investigations opened by the FTC, FBI and SEC against Herbalife. The investigations will not ignore the recent class action settlement in the US whereby Herbalife had to pay $15 million and was forced to change substantially its corporate policy, including how it defines its distributors while clarifying its membership agreement. From the regulatory perspective, the EU is expected to amend the Directive on Misleading and Comparative Advertising, aimed at strengthening anti-misleading practices amongst B2B transactions. Last but not least, the EU has new Commission and Parliament, which will be fully operational as of beginning of 2015. Direct Selling Europe is working with all new 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 2014, the year ended with the pivotal BurnLounge decision by the Ninth Circuit Court of Appeals, recognizing the legitimacy of personal use purchases in pyramid legal analysis; ending 20 years of debate between the industry and the FTC. Now is the time to move forward to support the brand of direct selling by unifying and finding common ground where a ‘model’ schism seems to be surfacing with ‘party plan/classic direct sellers’ challenging the direct selling credentials of ‘person to person consumables MLM companies’. In order to bridge the gap and recognize the business legitimacy of both branches of direct selling, perhaps it is time to reexamine the nomenclature of the direct selling channel of distribution to use overarching branding definitional terminology, referencing direct selling as comprised of two branches, person to person selling and referral selling.”
Anne Butler, Managing Partner at Butler Advisors:
“Of all the threats that will not be mentioned for 2015, the most insidious will continue to be the erosion of relevancy of the attractiveness of the earning opportunity. From the entrepreneurial origins of a company, to the copycat stage by retail and direct sellers, to the external innovation that renders the direct seller’s value proposition less relevant and the resulting erosion of the attractiveness of the earning opportunity, the steady march of a changing environment, and the propensity of a direct selling company to comfortably ‘stay the course’ instead of striving to obsolete itself to bring forward innovation to energize the earning opportunity for the existing field, will continue to be the norm rather than the exception.”
Marinda Chaplin, Vice President of SUCCESS Partners Europe:
“Gone are the days of inviting a couple over for dinner and then ‘surprising’ them with a product or opportunity presentation. We are now in the world of social media, sponsoring even without meeting someone in person, and the reality that our industry is easily a global business for any company. Today’s world is driven by transparency in communication and a vast selection of direct selling companies for a consumer to join. Many surveys of direct selling company executives tell us that our industry’s biggest concern is image. Being part of the industry for almost 20 years now, I know our industry is amazing and offers a new life to those who choose to put forth the effort, and this is the image that we want the general public to have about us as well. The best way to address any image concerns is to ensure that the positive stories we have far outweigh any negative stories or experiences. There are countless stories that awe and inspire – we just need to be great at flooding the market with these stories of success.”
Tamuna Gabilaia, Executive Director of the World Federation of Direct Selling Associations
“WFDSA’s World Congress IV which was held in Rio De Janeiro in November was attended by more than 400 people. We believe this attendance is indicative of the level of energy and enthusiasm that people have for direct selling. During 2011 – 2104, under the leadership of Alessandro Carlucci, the industry experience 6.8 CAGR. We expect that during 2015, under the leadership of Doug DeVos, President of Amway, we will continue this growth pattern and will remain a vibrant industry bringing economic empowerment to people all around the globe.“
Jonathan Gilliam, Founder and President of Momentum Factor:
“Online reputation on search engines and social media will become a core communications and compliance challenge over the coming year. The industry model has shifted toward digital and online; consequently the need for comprehensive digital listening, monitoring and online reputation programs will grow in importance. No longer solely dependent on events and conference calls for field communications, the ‘center’ of direct selling communities is now digital. As networkers and companies increasingly utilize online technology to market the business, the trust factor will further shift from real life relationships and endorsements toward online research and reviews. A company’s results in the search engines has become a de facto decision point for a significant percentage of those considering joining a direct seller. Therefore it is vital that direct sellers get a handle on their digital environment and learn to master it.”
Miroslaw Lubon, Executive Director of Poland Direct Selling Association:
“Looking ahead to 2015 I can think of one issue, of global significance, that can be both – a threat and an opportunity. And it’s ethics. Transparent and fair market practices, currently employed by so many legitimate and well established companies, will be vital to any further expansion of the industry, especially since a number of external factors like economic growth, purchasing power of the population or the abundance of innovative and high quality products in the companies’ offer, augur extremely well for the branch. And not merely in the coming New Year. At the same time the industry will certainly have to cater to the urgent need to educate the public at large about the true nature and merits of direct selling, a no easy task by any means, what with the continued mistrust towards MLM companies enhanced by short sellers on some markets, and by the continued activity of rogue companies elsewhere in the world.”
Alan Luce, Founder and CEO of Luce, Murphy, Fong and Associates:
“The greatest opportunity and threat to direct selling in 2015 are one in the same… It is how to think about and react to the influence of social media and on line selling on traditional direct selling. Those who resist these influences do so because they say that ‘direct selling is about building personal relationships!’. In their mind that means face to face. For today’s customer and sales prospect, you build and maintain personal relationships online and only augment that relationship in a face to face situation as time permits. The direct selling companies that will succeed understand that in the coming years the terms ‘online’ and ‘in person’ will come to mean the same thing.”
Joseph Mariano, President of the U.S. Direct Selling Association:
“Direct selling’s greatest asset has always been its people, which now total more than 96 million globally. We must continue to make sure their stories are heard and appreciated by those with the power to legislate or regulate against our community so they understand more fully the value associated with this entrepreneurial opportunity. Telling a positive story about our economic impact and the consumer protections afforded by our Code of Ethics will help ensure that direct selling remains an attractive, growing channel for many years to come.”
Kevin Thompson, MLM Attorney, Founding Member of Thompson Burton PLLC :
“The future direction of direct selling will be established, for better or worse, within the next 12 months. The concept of “self-regulation” has failed miserably, leading regulators to reassert themselves into the MLM marketplace. This was made clear when the FTC initiated an investigation on long-time MLM power player, Herbalife. The results of that investigation will very likely be revealed within the next 12 months. Whether the FTC decides to initiate a lawsuit, levy fines or let Herbalife completely off the hook… their decision will ultimately impact the future of the industry. In my opinion, the FTC is likely going to levy penalties on Herbalife due to aggressive earnings claims made by leaders in the field. This sort of fine, if it occurs, will send a clear signal to the industry to get its act together when it comes to field compliance.”
Once again, I would like to thank here those who responded for taking the time to share their views.