Consumer Goods Trends & Forecasting

3 things businesses can learn from the direct selling industry

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Though media has popularized the rise of the peer to peer economy through the lens of Silicon Valley tech-fueled juggernauts, the direct selling industry – arguably the granddaddy of networked personal selling – is thriving in America. At the Direct Selling Association’s annual meeting last month, we had the opportunity to discuss the industry’s key fundamental practices that can be applied to any business’ strategy for success.

Adapt to a more flexible workforce

According to the Direct Selling Association, over 20 million Americans were involved in direct selling in 2015, with roughly 90% working part-time.  Direct selling is an increasingly appealing opportunity as four in ten Americans already work in “non-traditional arrangements,” that is to say, part-time, self-employed, temporary or contract work. As recent results from GfK Consumer Life indicate, our attitudes towards employment are changing. Only one in four Americans now aspire most to the traditional full-time job outside the home. On the other hand, 54% are interested in going into business for themselves, while 74% of aging Boomers readily admit that they want to “work off and on when they choose to” in retirement.

As Americans increasingly seek flexible job opportunities and/or secondary income opportunities, expect corporations to foster the entrepreneurial spirit, while employer/employee relationships become increasingly driven by productivity over loyalty.

Streamline the shopping journey

Expedite product experiences – One of the key tenets of direct selling is personal interaction. In our age of information transparency and convenient e-commerce, 63% of Americans still do not like shopping online because they can’t see, touch or try on before they buy. Further, by providing a more curated selection of brands and solutions, the direct seller is a welcome alternative for the rising population of Americans (now over 52%) who are suffering information overload when making purchases. It’s not surprising that traditional retailers are revamping their stores into experiential centers.

Build trusted influence – 80% of Americans claim that there are so many ads, they don’t even pay attention to them anymore. And with only 1 in 3 trusting advertising messaging, cutting through clutter and building trust are perennial marketing challenges, ones that most direct sellers can leapfrog by interacting directly with the end user. So, it’s no surprise when family members and friends are consistently the most trusted sources for product information or ideas. Our consumption choices may be increasingly influenced through social networks, but personal networking for direct selling not only delivers product intimacy, it also allows for customized selling experiences tailored down to the party or individual audience member by someone they know or have come to trust.

Online retailers are beginning to adopt this approach. Trunk Club, a men’s e-commerce clothier, assigns members a personal assistant who develops a targeted understanding of their clients’ needs with the goal of delivering an increasingly bespoke selection of products.

Capitalize on consumer trends

Today, Americans value their health more greatly than a secure retirement or even a happy marriage. It’s also the #1 thing they want to improve on, with over 50% willing to spend the time AND money to do it. It’s no coincidence, then, that over 1/3 of direct selling revenue in 2015 was generated in the health and wellness industry, the fastest growth area in the past 3 years.

Additionally, 56% of Americans (and two in three Millennials) are increasingly looking for novelty and fun in their shopping experience, even for everyday products. Rodan + Fields, for example, developed an interactive skincare solution tool, providing consumers with customized product recommendations based on their key skincare issues and unique situations.

As consumers seek out the next big thing, marketers can take a lesson from agile direct sellers who recognize the need to innovate faster than the pace of change in order to thrive against their competitors and compete against the general market.

Summary

As new business models continue to emerge, marketers need to continuously reevaluate their alignment with a changing American workforce, reconcile the need for both analog and digital selling models, and innovate along with both macro and nascent consumer trends.

Eric Wagatha is a Senior Vice President of the Consumer Life division of GfK. Please email eric.wagatha@gfk.com to share your thoughts.

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