Thought Leadership

A New Day: Direct Selling in the New Economy (Part One)

TL;DRIndependent work is the new black. Hyperwallet’s DSO editor explains why direct selling is poised to take this new economy be storm.

Is 2016 the year that direct selling gets the mainstream recognition it deserves?

I’ll forgive you if you scoffed at the question. Direct selling has never been bigger than it is today. A quick look at the numbers shows that direct selling is a massive industry both in the United States and abroad. U.S. retail sales surged from $28.33 billion in 2009 to $34.47 billion in 2014, and the number of Americans involved in direct selling climbed from 16 million to 18 million over that same period. Globally, the industry is worth somewhere in the ballpark of $183 billion, and it’s still growing.

That’s all very impressive, but by and large, direct selling remains an industry on the fringes of social consciousness. Sure, most people are probably familiar with some of the biggest names in direct selling (e.g., Amway, Mary Kay, Avon), but for an industry comprised of roughly 100 million global independent earners, you’d think we’d be hearing more about it. Meanwhile, it seems we can’t go a day without reading or hearing something about Uber. What gives?

Changing the Conversation

We often hear that Uber gets headlines because it’s disruptive: it’s sent other industries scrambling, got regulatory bodies scratching their heads, and—perhaps most importantly—has demonstrated that nine-to-five jobs aren’t the only way for individuals to earn an income. Of course, direct selling companies have quietly been doing that for years, only without all of the hoopla and hullaballoo that pervades conversations about Uber.

This year, I think that changes. As flexible earning becomes increasingly commonplace and the world continues to trend away from traditional work arrangements, I believe that direct selling will achieve a level of public recognition that it has never experienced—not just as an avenue for flexible earning, but as a leader in the space of independent work.

Consider what’s happening in the world around us. Right now, we’re experiencing a revolution in the world of work—a shift towards what has been called the new economy. A report from software company Inuit predicts that, by 2020, 40% of the U.S. workforce will be contingent workers—independents, freelancers, contractors, etc. On-demand companies like Uber, DoorDash, and TaskRabbit are utilizing modern technologies (and the growing number of independent workers) to fundamentally change the ways that we get the things that we need. The old one-to-many models of communicating and transacting are rapidly being replaced. More and more, people are buying and selling and renting their products and services directly to and from one another, and the relationship between producer and consumer is no longer fixed—in this new economy, you can simultaneously be both.

New Economy, Old Ideas

Obviously, the idea of people transacting with people is far from revolutionary. For decades, the direct selling industry has demonstrated that its one-to-one business model works, laying the groundwork for what we’re now calling the new economy. Many of the lessons that on-demand companies are just now learning—the regulatory complications of an independent workforce, the value of trust and reputation, and so on—have been understood by direct selling companies for a long time. Yet, for a combination of reasons, on-demand companies are largely viewed as pioneers in the space of flexible work.

Naturally, then, the arrival of the new economy has been met with mixed reactions from the direct selling industry. Some organizations see on-demand companies as valuable partners in the future of flexible earning, while others view them as a major threat to the direct selling business. What can’t be debated, though, is that the new economy has thrown independent work into the spotlight in a way that it has never been before—and that’s a very good thing for direct selling.

…Long Live Direct Selling

You may have read my recap from the Direct Selling Association’s Sales and Marketing Conference earlier this month (if not, you can still check out the highlights from days one and two or day three). During the marquee session, titled The Rise of the Gig Economy, Rodan + Fields’ President and CEO Lori Bush emphasized that the emergence of on-demand businesses presented a tremendous opportunity for direct selling organizations. Bush explained that the broader discussion around companies like Uber has contributed to the growing public awareness of—and appreciation for—the benefits of independent work. “Direct selling,” Bush argued, “couldn’t be more relevant than it is right now.”

Of course, new opportunities to earn a flexible income aren’t the only factor improving direct selling’s relevance. Things have been changing in direct selling for a long time. The industry has worked diligently to update its business model, adopting new technologies to streamline operations and maximize distributors’ success. Year after year, direct sellers have taken a more proactive approach towards regulation, working alongside policymakers to introduce stronger consumer protection laws and guidelines. This isn’t the same direct selling industry that we knew twenty, ten, or even five years ago, and it’s not perceived the way that it used to be. It’s been reborn. Today, direct selling is a thoroughly modern business model.

If we understand the new economy as the subversion of traditional models of earning and transacting, direct selling is most certainly a part of it —and, with roughly 100 million distributors globally, it fields the largest independent workforce in the world. This business dwarfs all other new economy industries both in size and revenue, and the margin isn’t small. Direct selling is a leader in this space, whether others have recognized it or not. If 2015 was the year that the outside world acknowledged on-demand, then 2016 will be the year it acknowledges direct selling.

What does that mean for your direct selling business? We’ve got some ideas. Look for our thoughts on the evolving direct selling climate in A New Day: Direct Selling in the New Economy (Part Two).

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