For the general consumer, the battle around Herbalife has thrust the direct sales business model to the media spotlight. We all know someone that has recommended a great product from a company in this industry -- weight loss, skincare, accessories, cleaning products, vitamins -- the list is almost endless. The sales model has been around for hundreds of years. Selling directly to consumers generates referrals and creates demand; technology accelerates and amplifies it.
Unfortunately, most companies that produce these products have been slow to establish their value proposition with the general consumer, as a majority of these companies are mid-size (sales under $1 billion) and are privately-held. Parallel to consumer package goods being sold by retailers and advertised to the public, direct selling companies rely on distributors for sales and product promotion. The marketing departments of these firms traditionally focus efforts on its distributor base.
That is changing.
Direct-selling companies are now focusing on general consumer transparency, leveraging new technologies to reach beyond distributors to general consumers, and developing a Wall Street and investor sophistication. The truth is that 74 percent of U.S. adults have purchased products from a direct seller and given the trends in social commerce, that number is expected to increase. Most product purchases have been from part-time distributors looking to make a few extra dollars in addition to other household income.
The current industry spotlight is an opportunity for the industry, and its companies, to differentiate their products, programs and people, as well as demonstrate their credibility and business model viability. As we say in PR, if you don't tell your story, then someone else will.
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