5 Ways Direct Selling Boosts the World Economy
The direct selling industry may be a homegrown American phenomenon, but it has grown to have a significant impact on the economy globally. Globally, the direct selling industry generated almost $184 billion in revenue in 2015, not counting China, which is on track to pass the U.S. to become the world’s largest direct selling market. Here’s a look at five ways the direct selling industry contributes to the world economy.
Supporting Small Business Owners and Workers
One important way the direct selling industry impacts the global economy is by promoting small business growth and employing small business owners and workers. Over 100 million people outside China work as direct sales representatives, according to WFDSA data.
The number of additional workers in China is not known, but it can be gauged by comparison to the United States, where over 20 million people worked in the direct selling field in some capacity in 2015. In the United States alone, there are over 700,000 companies that employ almost 800,000 workers, IBISWorld research data indicates.
Promoting Business Education
In the process of promoting small business ownership, the direct selling industry also performs the important function of promoting business education. Successful direct selling companies succeed by providing training support for their representatives.
For instance, the world’s most successful direct sales company, Amway, provides extensive training materials for its independent business owners. This includes an online business reference guide, direct mentoring support from a sponsor, training and business support materials, and training course opportunities, such as an 80-course online video training series. Additionally, the experience of working in direct selling teaches hands-on skills to entrepreneurs, including marketing, sales, customer service and bookkeeping.
Direct selling also helps support global and domestic manufacturing. The majority of direct selling industry sales involve manufactured products. For instance, in 2015, the U.S. direct selling industry recorded $36.12 billion in retail sales. The majority of this consisted of manufactured products in categories such as wellness, home and family care, durables, personal care, clothing and accessories, leisure and education.
Some manufacturing plants that produce direct selling products are located in the United States, while others are located abroad. For instance, Avon has maintained manufacturing facilities in China and other parts of Asia for several decades.
Boosting the Shipping Industry
The direct selling industry also provides significant business for the shipping industry in the U.S. and abroad. Many of today’s large direct selling companies do significant international shipping. For instance, Mary Kay produces approximately 50 percent of its products at its main manufacturing plant in the Dallas area, but it sells 75 percent of its products overseas.
Running this kind of international operation requires a significant logistics investment. Amway ships approximately 1,700 air shipments and 10,000 ocean freight containers annually, according to Amway chief supply chain and R&D officer George Calvert.
Promoting International Trade
By promoting international manufacturing and shipping, the direct selling industry contributes to international trade. This has helped break down international trade barriers. For example, as part of its WTO commitment, the Chinese government has agreed to permit market access for direct selling wholesale and retail services away from a fixed location. International direct sales companies also do over $4 billion in business in Russia annually.
Overall, global direct trade sales grew 7.7 percent in 2015 to reach $183.7 billion, with 80 percent of countries around the world experiencing growth in both sales and independent sales force volume, the WFDSA reported. The Asia-Pacific region accounts for 46 percent of this trade, a figure projecting to continue increasing.