Blending the Digital and Physical, Direct Sellers Step up Fight in All-channel Retail Market
Gone are the days when direct selling consultants showed up on customers’ doorsteps, hawking products ranging from jewellery and cosmetics through nutraceuticals and cookware. Armed with new technology and expanding into new sales channels, they’re stepping up the fight against slowing revenue growth, amid changing consumer behaviour and deepening trends of globalisation.
Often called “social sellers”, because they build out their businesses by relying on personal relationships to offer merchandise to a small circle of friends, family members and the nearby community, direct sellers are swapping traditional door-to-door handshakes for chats with their customers through social media platforms, and presentations during web conferences. The industry’s top companies, which include Amway, Avon, Herbalife and Tupperware Brands, are spending heavily to develop online shopping platforms, and even adding physical stores to the mix of their sales channels.
Direct sellers have been forced into a multi-front war for the retail client, which has heated up over the last decade as e-commerce platforms boomed, shaking up the consumer goods markets and forcing traditional players to take aggressive steps to adapt to the new reality. The battle has left plenty of scars on the global direct sales industry. Annual revenue growth reached a meagre 1.9%, to $183 billion, in 2016, compared with yearly increases ranging from 6.1% to 7.6% in the previous three years, according to the latest data from the World Federation of Direct Selling Associations. In the United States, the world’s biggest direct selling market, the situation was even worse than the global average: Revenue there posted a surprising decline, by 1.6% year-on-year, to $35.5 billion.
So the expansion into new channels should come as no surprise: direct sellers have no choice but to adjust their techniques and expand their repertoire to prop up growth. With the border between online and offline sales becoming blurred in recent years, with traditional retailers coming under pressure to add online services, and e-commerce giants, including Amazon, opening physical locations to lure in new customers, direct selling companies are putting themselves through radical changes to take advantage of new selling tools. Even though they don’t place their products into the standard e-commerce channels, allowing customers to go online and place an order, the same new technologies that are driving Amazon are allowing direct sellers to showcase their products globally and increase their business reach, as they are no longer limited by geography.
This approach, of making their products “only available through a consultant,” is helping direct sellers retain their air of mystery and desirability, which of course is part and parcel of their business model. Herbalife, for example, says on its website that its products are sold exclusively through Independent Distributors. A customer who visits the site looking to make a purchase is asked to fill out a form, and is later contacted by a distributor. An online customer of beauty company Avon can browse through its product offerings and make a selection, but later needs to search for a representative to actually complete the purchase. The same goes for competitor Mary Kay. By offering a service that is in some ways the polar opposite of Amazon’s controversially patented “1-Click” shopping, the direct sellers are reimagining their relationship-based business model for the digital age.
As direct selling is the most relational of all sales methods, social media plays a key role in preserving and even highlighting that dimension. Facebook, Twitter, LinkedIn, YouTube, Pinterest and Instagram are all potent tools that companies and consultants are learning to use as they build connections with customers and grow sales. Social media supports salespeople in reaching their circles of friends and acquaintances regardless of physical location, extending social selling beyond the traditional living room and strengthening the person-to-person connection at the heart of direct sales. The web also allows for instructional videos on how to use a product, personal testimonials, and business coaching and training, which build personal relationships between sellers and their leaders, sellers and clients, and even consumers and a company’s brand—whether they’re just down the street or continents apart.
Direct selling companies are also heavy users of live streaming – another way to personalise their approach. Speaking into a camera live can create an intimate atmosphere that makes viewers feel they’re connecting with the speaker much more than they ever could through a pre-recorded video. Mary Kay has attracted hundreds of thousands of views by live streaming events such as their fashion shows and even the ground-breaking ceremony for a new facility. Other direct sellers feature their CEOs sharing the latest inspirational success stories, or top consultants conducting weekly sales training sessions. Many live streams include tutorials on using the latest products, or even just humorous glimpses into what company executives do in their free time.
Asking consultants and customers to submit questions, images, or stories, and then addressing them in posts, also helps build a sense of connection. Sharing helpful tips and tutorials can be an effective way to show followers that their needs are being considered. Avon’s “This is Boss Life” campaign, in which consultants tell the story of what it means to be their own boss, was an excellent example of creating strategic content that tells a story and involves the audience in the narrative.
After two decades when the rise of e-commerce has got customers used to the idea of being able to shop anywhere, anytime, perhaps the most surprising recent retail trend is the proliferation of physical stores opened by companies that started out as online-only enterprises. Amazon, which dominates the world of online shopping, started opening bookshops in 2015, with analysts arguing that real stores help boost brand awareness and allow customers to browse through books and test-drive its tech products.
And just like online retailers, some direct sellers are starting to see physical location as key to building market position. Amway, which operates hundreds of storefronts in China – the world’s second-largest direct selling market – says those outlets don’t compete against the company’s consultants. Instead, consultants use these “experience centres” as places to bring prospects and showcase their products. The brick-and-mortar storefronts serve many purposes: To talk about and demonstrate products, train consultants on how to sell products, and even prove to doubters that a real company stands behind the products. Similarly, Avon recently opened a physical location in a high-end shopping mall in the Polish capital of Warsaw, after experimenting with bricks and mortar during a ban on direct selling in China in the 1990s. While personal contact remains at the heart of the direct selling industry, it’s becoming increasingly clear that online and physical shopping experiences are necessary to help nurture those relationships.
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