Billion Dollar Markets

Record global sales, China inches closer to eclipsing the U.S., and emerging markets gain strength.

Pick up your print copy of the August 2018 issue in which this article appeared.

In 2017, global direct selling recorded US$189.6 billion (2017 constant U.S. dollars) in estimated retail sales—a 1.6 percent increase over 2016. — and up nearly $20 billion since 2014, resulting in a 3.7% compound annual growth rate over the 3-year period from 2014 to 2017.

Twenty-four country markets reached sales over $1 billion and those Billion Dollar Markets comprised 94 percent total global sales, according to research by the World Federation of Direct Selling Associations (WFDSA), its partner DSAs and direct selling companies around the world.

Global growth was driven in 2017 by increases in three of four regions and 65 percent of countries around the world and set a new global record for total retail sales. Independent representative figures reached nearly 117 million, up 2.6 percent over 2016 and an increase of nearly 25 million since 2014. This is a 3-year compound annual growth rate (CAGR) of 8.0% for the 2014-2017 period, also a global record.

While the Americas year-over-year performance for 2017 was flat, all regions experienced sustained growth between 2014-2017 and Ecuador was welcomed as the newest Billion Dollar Market. Argentina marked yet another year of inflation-fueled growth (36.7 percent on the heels of 41.2 percent in 2016), Indonesia was up 20.3 percent following a 10.0 percent increase in 2016, and the emerging region of Africa/Middle East scored the highest 3-year CAGR percentage at 12.5 percent. But the year was not without challenges for Australia (-3.6 percent 2017, -4.2 percent CAGR), Colombia (-4.4 percent 2017) and Japan (-1.1 percent CAGR).

2018 Billion Dollar Markets Map

Shifting Market Share

While direct selling continues to offer opportunities to individuals in both advanced and emerging markets around the world, a shift has been underway for the past seven years. Where advanced markets once held 66.2 percent of sales share in 2010, emerging markets have shown solid growth and consistent capture of total global sales share since that time. Today, a 43.3 percent share of global sales is attributed to emerging markets and it is plausible that the upward trajectory of emerging markets will soon intersect advanced markets, which currently hold a 56.7 percent share.

“When you look at the whole world and the rise of the collaborative economy, more and more people are trying to be independent entrepreneurs. Direct selling gives people those opportunities,” Tamuna Gabilaia, executive director and COO, WFDSA, says.

Data shows that people in emerging markets are increasingly turning to direct selling (up 10 percentage points in the last eight years). “It’s not surprising because the need for additional income is always there, the products are very high quality,” Gabilaia says. “We have a lot of competition, of course, and it’s essential for companies to adopt all the modern technologies and use them well to promote their business and to conduct sales.”

Because more than 8 in 10 people across the world reside in emerging markets but live on just 4 in 10 global GDP dollars, the potential for direct selling within emerging markets is enormous for both those seeking opportunity and the industry as a whole.

Direct selling is in almost every country in the world and there are still many untapped opportunities in regions like Africa and MENA region, where Gabilaia says the industry has huge potential to grow.

Direct selling growth depends upon companies’ ability to adopt technology and grab market share from traditional retail. “In today’s world where you can buy anything, anywhere, anytime, you need to offer something different. Direct selling is an omni channel market which is a marriage of traditional direct selling with everything online,” Gabilaia says.

Yet, technology is only one component. Direct Selling Associations, of which there are 62 in different parts of the world, promote, protect and police the industry. “We work with governments, consumer groups, academia and other external stakeholders to promote the opportunities our industry has to offer and to amend or promote favorable regulations for companies to operate,” she says.

The South Africa DSA, working together with other regions of Africa without established DSAs, has been instrumental in growth of that emerging market, which reported $883 million in estimated retail sales in 2017, up 4.9 percent. This makes South Africa a market to watch in the coming years for its potential to break in as a Billion Dollar Market.

The MENA region is also an emerging market of note. While the largest players in the region Israel and United Arab Emirates recorded estimated sales just in the millions, growth in the UAE was up 15.3 percent. Regionally, direct selling produced $237 million in estimated sales in 2017, an increase of 6.7 percent and CAGR of 10.1%.

Because the direct selling business model exists in almost every country in the world and taking into account that there are other markets where DSAs are not yet established, Gabilaia believes the future will bring the creation of more DSAs and more inroads into those high potential emerging markets.

2017 Breakdown By Region

Americas 2017 Billion Dollar Markets

  • No. 1 United States (down 1.8%)
  • No. 6 Brazil (down 1.1%)
  • No. 7 Mexico (up 2%)
  • No. 15 Colombia (down 4.4%)
  • No. 16 Argentina (up 36.7%)
  • No. 17 Canada (up 1.4%)
  • No. 18 Peru (up 2.9%)
  • No. 22 Ecuador (up 9.4%)

The combined markets of North America and South/Central America reported upward of $64 billion in retail sales for 2017. Despite being flat year-over-year, 2014-2017 CAGR was 1.5 percent. The Americas comprised 34 percent of global retail sales and are represented by eight Billion Dollar Markets. Cosmetics and Personal Care products hold 38 percent of sales with Wellness at 26 percent. There are 33.1 million independent representatives, down 2.1 million from 2016.

While reported together for regional data purposes, the Americas must be split to gain greater perspective on the direct selling industry within each of these distinct markets.

North America

Billion Dollar Markets for 2017

Billion Dollar Markets for 2017

North American direct sales dipped in 2017, down 1.6 percent. While Canada posted 1.4 percent growth, a decrease of 1.8 percent in the United States brought sales performance down overall. Despite 2017 U.S. sales of $34.9 billion, U.S. market performance has been flat with a three-year CAGR of 0.4 percent. With nearly $2.0 billion in sales, Canada however reports a 5 percent 3-year CAGR from 2014-2017.

North American independent representatives number more than 19.9 million, with 18.6 million in the U.S. and nearly 1.3 million in Canada. Product category breakdowns reflect the similarities of the markets with Wellness (34 percent U.S., 40 percent Canada), Cosmetics and Personal Care (17 percent U.S., 30 percent Canada), and Household Goods and Durables (14 percent U.S., 15 percent Canada).

“While we live in an era of disruption, with major transitions in the economy, retailing and direct selling, we are poised to play an increasingly dynamic role in what is emerging as the future of retailing. Our independent contractors’ entrepreneurial spirit and companies’ innovations are what will enable direct selling’s continued adaptation and growth,” USDSA President Joe Mariano says.

Additional U.S. market details, Mariano says, will soon be highlighted in the third quarter release of the 2018 Growth and Outlook Report by USDSA. These segmented stats will reveal 18.6 million people in the U.S. were involved in direct selling during 2017. Of these, 5.6 million individuals were involved as business builders: 900,000 full-time business builders and 4.7 million part-time business builders. Some 4.1 million individuals were discount customers.

South/Central America

More than 13.2 million independent direct selling representatives produced $27.1 billion in retail sales in 2017, a year-over-year gain of 2.2 percent and 3-year CAGR of 2.8 percent. Cosmetics and Personal Care products comprise 67 percent of those sales, up from 64 percent in 2016.

South/Central America welcomed Ecuador as the newest Billion Dollar Market in 2017. Listed as a market to watch by DSN in 2016, Ecuador posted an increase of 9.4 percent pushing sales to $1.2 billion last year. Three-year CAGR stands at 8.9 percent and their field of independent representatives stands steady at over 900,000. “Ecuador is considered one of the countries in the region with a very high rate of entrepreneurship,” says María Fernanda León, Executive Director of Ecuador DSA. “Our people are extremely resilient and if they lose their job, they are immediately looking for a way to get ahead. This has opened the door for many to get involved with direct selling.”

Brazil, Mexico, Colombia, Argentina and Peru round out South/Central American Billion Dollar Markets. While Brazil and Colombia experienced downturns in 2017 (down 1.1 percent and down 4.4 percent, respectively), remaining markets saw increases, including an inflation-driven 36.7 percent from Argentina on the heels of a 41.2 percent in 2016, 2.0 percent in Mexico, and 2.9 percent in Peru. Cosmetics and Personal Care products comprise 67 percent of products sold in this region.

2017 Retail sales and CAGR for South/Central America Billion Dollar Markets are as follows: Argentina ($2.2 billion, 37 percent), Brazil ($11.9 billion, -0.9 percent), Colombia ($2.3 billion, 3.7 percent), Ecuador ($1.2 billion, 8.9 percent), Mexico ($5.9 billion, 1.3 percent), and Peru ($1.8 billion, 4.2 percent).

Asia Pacific 2017 Billion Dollar Markets

  • No. 2 China (up 3%)
  • No. 3 Korea (down 0.9%)
  • No. 5 Japan (up 0.4%)
  • No. 9 Malaysia (up 0.3%)
  • No. 10 Taiwan (up 2.1%)
  • No. 14 Thailand (up 1.7%)
  • No. 19 India (up 7.0%)
  • No. 20 Indonesia (up 20.3%)
  • No. 21 Philippines (up 11.5%)
  • No. 24 Australia (down 3.6%)

45 percent of global retail sales are generated in the Asia-Pacific region, which includes 10 Billion Dollar Markets. In 2017, Asia-Pacific sales totaled $85.4 billion. Growth, however, in this region leveled off to 1.8 in 2017. 3-year CAGR is 4.8 percent.

Some 65.2 million independent representatives—56% of all direct selling independent representatives in the world—sell products in ten categories. 50 percent of market sales are Wellness products and 23 percent Cosmetics and Personal Care products.

China is the largest market in the Asia-Pacific region with 2017 sales of $34.3 billion, up 3.0 percent over 2016. On its own, China accounted for 40 percent of the sales in the Asia-Pacific region and is currently ranked as the second largest Billion Dollar Market. While China’s growth has slowed in recent years, its 3-year CAGR is 7.0 percent and continues to outpace growth in the U.S. and will likely become the largest Billion Dollar Market in the world in short order. WFDSA estimates that some 5.3 million Chinese participate in direct selling.

By Beth Douglass Silcox

In addition to China, the Asia-Pacific region has nine countries on the Billion Dollar Market ranking whose retail sales performance for 2017 were as follows: Australia ($1.1 billion, CAGR -4.2 percent), India ($1.5 billion, CAGR 5.8 percent), Indonesia ($1.4 billion, CAGR 14.3 percent), Japan ($15.3 billion, CAGR -1.1 percent), Korea ($17.2 billion, CAGR 4.6 percent), Malaysia ($4.7 billion, CAGR 7.4 percent), Philippines ($1.3 billion, CAGR 7.7 percent), Taiwan ($3.9 billion, CAGR 6.2 percent) and Thailand ($2.8 billion, CAGR 1.9 percent).

Will China Top US

European Union 2017 Billion Dollar Markets

  • No. 4 Germany (up 3.7%)
  • No. 8 France (up 3.5%)
  • No. 11 United Kingdom (up 1.0%)
  • No. 12 Italy (up 2.5%)
  • No. 23 Poland (down 2.4%)

Rest of Europe 2017 Billion Dollar Markets

  • No. 13 Russia (up 5.9%)

Direct Selling companies consistently tap into the needs of European consumers with their products and sales approach despite the looming uncertainty of Brexit, the devaluation of the U.K. pound against the Euro, and regulatory challenges within the European Union. Europe, which for WFDSA purposes now includes reporting sub-regions European Union and Rest of Europe, posted $38.5 billion in 2017 retail sales, up 3.5 percent. The CAGR is 4.8 percent.

Wellness continues to lead with 32 percent of total European sales, while cosmetics and personal care products trail close behind at 26 percent.

Direct Selling in Europe not only continues to stay relevant in the face of fierce competition by both e-commerce and in-store retail, but also maintains a 20 percent global share of sales and increases growth annually.

Five European Union member countries make the Billion Dollar Market ranking. Germany ($16.7 billion sales) remains the top market with a 3.7 percent year-over-year increase and a 4.8 percent CAGR, followed by France ($5.0 billion in sales, up 3.5 percent, 3.1 percent CAGR), United Kingdom ($3.7 billion in sales, up 1.0 percent, 6.7 percent CAGR), Italy ($3.2 billion in sales, up 2.5 percent, 5.8 percent CAGR), and Poland ($1 billion in sales, down 2.4 percent, 3.2 percent CAGR)

There are more than 6.9 million independent representatives residing within the European Union, most frequently selling Wellness (33 percent of sales) and Cosmetics and Personal Care (21 percent of sales) products.

Direct selling is appreciated in Europe for being a very personal way to shop. “Despite the increased use of social media and other digital tools by the direct selling sales force, we see that face-to-face meetings and home parties are still by far the most popular ways to purchase products,” Katarina Molin, executive director, Seldia, says.

“The large majority of Italians live in low-density communities where everybody knows everybody. The cozy atmosphere of these villages has enhanced the Italian extroverted behavior driving people to foster contacts and trust. These are the features that have made direct selling so winningly successful in Italy,” says Giuliano Sciortino, executive director, Italian DSA, AVEDISCO.

“In the digital world we live in consumers tend to be very knowledgeable and well informed, hence also increasingly demanding in the sense that they expect shopping to be easy and access to products and services swift,” Molin says.

In France, Jacques Cosnefroy, executive director, French DSA FVD, says direct selling strives to improve the shopping experience and modernize the image of direct selling. “Some companies reinforce the attractiveness of their meeting concept by integrating the aspect of digitalization. Still others opt for differentiation through new services. Finally, more and more companies are developing toward new distribution methods thanks to multi-channel opportunities, even if direct selling remains their core business. For example, the opening of a Vorwerk store in Paris.”

France has also seen the entrance of companies in new product categories, like creative leisure, home decor and interior design, and board games. Seasoned direct selling companies are expanding product offerings to reach younger people and men.

Pick up your print copy of the August 2018 issue in which this article appeared.

Direct selling’s story in the United Kingdom is complex. Brexit is causing uncertain economics, but that uncertainty also appears to drive some people toward direct selling. According to Lynda Mills, executive director, UK DSA, the uncertain economics of the U.K. may be a reason for that country’s sustained direct selling growth. Also established brands report significant increases in online business, while newer market entries report growth due to successful engagement with younger audiences, both as direct sellers and end consumers.

In 2017 the only Billion Dollar Market within the Rest of Europe category is Russia with sales of $2.8 billion, up 13.0 percent with a CAGR of 5.9 percent.

The entirety of the Rest of Europe generated $4.8 billion in retail sales last year, an increase of 11.0 percent and CAGR of 6.8 percent. More than 8.1 million independent representatives participate in direct selling in five countries including Russia, Norway, Switzerland, Turkey and Ukraine, among others. Russia and Ukraine are the only two countries reporting product category statistics. Cosmetics and Personal Care products rank number one, comprising 47 percent of sales in Russia and 67 percent in Ukraine.