Direct selling is a method of bringing goods and services to market and selling them directly to consumers, whether it is in their home or at another location that is not a fixed point of sale. The selling usually takes place face-to-face, with the products demonstrated individually or in groups, and sometimes leaving behind a catalogue of products that can be ordered later. In contrast with other marketing channels, direct selling is based on personal contact with the customer.
A timeless approach
Direct selling is the oldest way of distributing goods. It has existed since the Middle Ages, when hawkers traveled from village to village selling their wares. In the twentieth century, big brands still used direct selling. In fact, Hoover sold the first vacuum cleaner this way. And we can’t forget about Earl Tupper, who started out selling his Tupperware boxes to neighbors from his garage. Why has direct selling never disappeared? Because no sales method works better than demonstrating the advantages of a new product in person.
Today, direct selling represents a growing market segment. It offers a unique and cost-effective way of marketing products and services without having to rely on the traditional marketing circuit or on existing retail outlets.
The European market
In spite of a struggling European economy, the market for direct selling is doing well and revenues are on the rise1. With a total turnover of 23 billion euros in 2013, Europe is the third largest region in the world when it comes to the volume accounted for by direct selling. The global revenue from direct selling is estimated at 167.5 billion euros2.
The three largest markets in Europe for direct selling are Germany (6.3 billion euros), France (4 billion euros) and Russia (3.2 billion euros). In Germany, the figures for direct selling are still on the up, although direct selling organizations are receiving more and more competition from other sales channels, namely e-commerce. In response to this, some direct sellers, such as wine merchant Bacchus, have also started their own web shops. In France, direct selling continue to rise, both in terms of figures and the number of people working in the sector. One contributing factor to this growth is said to be the popular parties at which consumers are able to test out products on the spot3. Russia’s rate of growth has reached double figures, mostly due to lower penetration of other retail channels in the countryside regions4.
The UK and Italy are also doing well in this industry, with respective revenues of 2.5 and 2.3 billion euros. The gap between the five European leaders and other European countries is huge: the sixth largest market is Poland, with a turnover of 661 million euros5.
In direct selling, cosmetics and care products take first place, with one third of the total revenue from direct selling coming from these products. However, this picture changes across the different regions. In Sweden, direct selling organizations sell more wellness products than anything else, while in the Ukraine and Turkey, beauty products account for two thirds of the market6.
The main direct sellers
In the European Union, around 5 million people are involved in direct selling, with 12 million across the entire continent. Direct-selling organizations employ approximately 25,000 people in Europe7.
The largest direct-selling organization in Europe, and in the world, is Amway. Avon and Herbalife take the second and third positions. The largest European player is the German company Vorwerk, and the Luxembourg-based Oriflame can also count itself among the main global players. In Russia, Faberlic is a powerful force8.
For many organizations, direct selling is the perfect channel through which to expand their business. But they must find the right balance between the protection of their brand identity and the observance of local preferences. Generalization is seen as one of the main pitfalls in direct selling. There are many cultural differences between Eastern and Western Europe, not to mention differences in essay writing help the legislation, economy and business practices of local populations9.
When it comes to logistics, direct selling demands a specific approach. Direct-selling organizations have a large number of fixed customers that place orders each month. The entire process, from ordering to delivery, is crucial to get right. Some logistical service providers, such as Landmark Global, offer IT solutions to make sure everything proceeds as smoothly as possible.
Many direct sellers focus on supplying healthcare products or food supplements – products for which shelf life and traceability are important factors. For direct selling-organizations that deliver globally, it is best to choose a logistics partner with an international presence. Good service is also critical. Direct-selling customers demand impeccable service for themselves and for their end customers, because word of mouth is what drives their business, even more so than in other retail channels.
1 Europe Direct Selling Report 2013, ystats, November 2013.
3 Direct selling in France, Euromonitor, February 2015.
4 Europe Direct Selling Report 2013, ystats, November 2013.
6 Europe Direct Selling Report 2013, ystats, November 2013.