Direct Selling’s “Re-Defining Moment”

Direct Selling Association

Some years ago, on this page, I wrote about a “defining moment” for direct selling. And during last year’s DSA Annual Meeting, I spoke of the changes that were taking place in direct selling, and those changes I predicted we could see over the next few years.

Now, as we move full ahead into 2019, those changes are beginning to take shape, and the reality of a new “defining moment” for direct selling is becoming apparent.

Every day, it seems, I receive calls from passionate industry leaders who want to explore the dynamics of social media, e-commerce and social and political shifts influencing their business strategies. How will they compete in a burgeoning entrepreneurial economy? How will they compete with low priced goods delivered almost instantaneously? What will the move to a freelance based/independent worker economy mean for direct selling? How will we collectively improve the reputation (and behavior) of direct selling in a way that allows us to effectively compete in this changing market? These are the questions these executives explore with me, each with their own perspectives and experiences, concerns and enthusiasms. Similarly, outside observers–investors, reporters, academics, regulators–are asking me the same questions.

My answer is the same to all questioners. In this new defining moment, both the industry and DSA will transform themselves. Direct selling itself will no doubt adapt, as it always has, to a changing marketplace. We will learn from other retailers (even as they have learned from us) and perfect our opportunity with better compensation plans, better suited for the maximum flexibility sought by a younger salesforce looking to blend their social, personal, and professional lives. Customer servicing, always a strength of ours, will become even more important moving forward with prompt delivery and reasonable product pricing.

The relationship between direct selling company and ultimate customer (beyond the individual direct seller) is becoming even clearer as direct selling companies set up preferred customer programs to better identify, define, and service those consumers, even as we better target our message, marketing, and compensation to the “business builders” in our salesforces. DSA’s data gathering and educational programs are focusing on this shift.

“We will learn from other retailers and perfect our opportunity with better compensation plans, better suited for the maximum flexibility sought by a younger salesforce looking to blend their social, personal, and professional lives.”

In this new defining moment, with a new activist Congress coming into power, it will be even more vital that direct sellers work together on the critical issue of the independent contractor status of our salesforce. The sharing and gig economies have transformed the working status of many in the workforce, and that transformation has given rise to new threats and questions about independent contractors. Recent developments in California have thrown worker status into great question, and the same issues are being debated in many states, and even at the national level. Our “defining independent contractor moment” may be on the horizon as we respond collectively to this continuing challenge. It will be vital for us to define ourselves as a political grassroots powerhouse in the halls of Congress and state legislatures, fighting on behalf of millions of people with facts, logic, and sound public policy on our side.

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And most significantly, direct sellers have come to together in what might best be called a “re-defining moment.” Leaders from network marketing companies, door to door sellers, party plan companies–from every business in DSA’s membership–have come to the understanding that we all must do more to address the criticisms of our business model–when those criticisms are valid, and we must also deal with the misperceptions that sometimes drive those criticisms. DSA must take a leadership role, and individual companies must do their parts as well.

Accordingly, DSA has partnered with the Council of Better Business Bureaus to create the DSSRC–the Direct Selling Self-Regulatory Council–to deal with issues of income and product claims throughout the direct selling channel. The independent, funded, credible and transparent DSSRC will identify marketplace problems–through proactive social media monitoring, competitor challenges, and consumer and salesforce complaints–and deal with them. When problems arise, companies must comply or be publicly reported as non-compliant and referred to directly to law enforcement–DSA member or not.

Industry leaders have unanimously recognized that we will be able to most effectively compete in this new marketplace once we have dealt with the real and perceived problems that have dogged our business channel. DSA and the DSSRC can and will take the next important step in this re-definition, but it is only one step. Ultimately, the competitiveness, the reputation, the viability of direct selling will be determined not by these actions alone (important as they are) but by the commitment of all direct selling companies to find their “re-defining moments.”

Joseph N. Mariano is the President of the U.S. Direct Selling Association and the Direct Selling Education Foundation.