The Industry
Direct Selling is simply another method of distribution to get products
into the hands of consumers. It is a very large global industry with sales
in 2004 expected to exceed $85 billion. The two largest direct-selling
markets are the U.S. and Japan, each with sales of approximately $25
billion. The industry is also extremely successful in Asia and Latin America
and has had 19 consecutive years of growth.
Direct selling is a more efficient way to deliver products because it
eliminates several steps in the distribution process. The products are
developed and sold directly to the consumer without the need for brokers,
wholesalers and retailers. Additionally, direct selling is also a more cost
efficient and safer way to launch new products. New product launches
typically cost traditional businesses millions in advertising and marketing.
In direct selling all the money that would normally be paid to brokers,
wholesalers and retailers as well as the money spent on advertising and
marketing is paid directly to distributors. That is the biggest difference
between the income statement of a traditional company and a direct-selling
company. Traditional companies spend 40-50 percent of their revenues on
distribution and marketing, and in direct selling we spend those same
dollars on distributor commissions.
Many large traditional companies are realizing the power of direct
selling. Warren Buffett and Berkshire Hathaway now own three direct-selling
companies, Time Warner owns two direct selling companies and Citigroup, the
world's largest financial services company has a direct selling company. The
secret is out, the industry is beginning to mature and big traditional
companies are beginning to get involved.
Go to my website for more information:
NaturalWealthPlan.com
