A Complete Guide on Direct Selling Business - Trends, Growth & Forecast in 2022

 

Updated on Jun 14th, 2022
10 Mins Read

In an uncertain world filled with a great income divide and unforeseen markets, diving into a part-time career challenging the notion of conventional business is scary. However, the perks of direct selling are hard to ignore. Imagine a supply chain run directly by company associates and without outsourcing or marginalising profits. Still, many people often confuse them for pyramid schemes without understanding the clear distinction. Direct selling is entirely legitimate and presents promising opportunities for big corporations and private individuals alike.

Throughout this article, you’ll learn about the current state of affairs for any direct selling company, challenges, solutions, and what the future holds for the industry.

What Classifies as a Direct Selling Business?

Unlike a conventional business, a direct selling company has no dedicated stores or permanent office spaces. The associates within the firm are responsible for the marketing, sales, and distribution of the products/services. Any required inventory makes its way to the associates directly from the manufacturer.

In the case of a service, like hardware repair or home improvement, the associates may receive the requisite training themselves or recruit the necessary workers for the job locally. Thanks to robust sales software on hand, personnel at any level can track the sales up the chain. The inventory can be considered as an MLM stock for the end consumer.

Latest Trends with Direct Selling Businesses

Direct selling has come a long way from suburban realtors ringing your doorbells and trying to sell you diet products. Few other careers offer a direct selling business's freedom and income flexibility.

For those looking for a break from their 9 to 5 job, freelancing has become the new employer. In the case of sales, direct selling has quickly risen as the preferred activity. With the changing times, experts have noticed the following changes that are here to stay:

1. More Focus on Digital Technologies

The pandemic has created a focus on the digital frontier that shall remain strong for years to come. Direct selling businesses have followed through. Gone are the days of manifests and brochures. Today, it is all about competitive websites and social media marketing.

In the wake of the referral programs that even mainstream enterprises are adopting, direct selling businesses are already ahead of the curve. Referrals for direct selling products occur with coupons and hyperlinks. Every direct selling company is trying to customise its software dashboard to account for the grapes. Many often opt for an MLM software solution to track the requisite monthly statistics.

2. Diversification of Direct Selling Products

As more direct selling businesses established themselves, a wide variety of products became available. Earlier, these were limited to cosmetics and healthcare. While those are still going strong, clothes, appliances, home improvement, and even wines are part of the list. You can get these from your local business associate with fewer intermediaries to share the profit or tax the supplies.

3. Better Security

Cyber attacks cost an average of $3.86 million in damages per data breach in 2021. Thus, direct selling companies focus more on the security of their domains and software access. Things like 2-factor authentication and cloud-based servers are becoming the norm.

To hinder hacker activity further, there is an increased focus on decentralised storage and encryption for data packages. Many MLM companies overlook the critical investment in IT security. In turn, they incur heavy losses due to data breaches and unauthorised transactions.

4. Variety in Payment Methods

Today, several payment methods can work in place of wire transfers. Electronic payments through international payment gateways offer more flexibility for the associates in receiving commissions.

Cryptocurrencies are also becoming common in the industry. Instead of bank accounts, the required amount in Ethereum can go straight to a wallet without needing currency conversions. It is why many MLM companies invest in crypto MLM software to make their associate commissions fast and convenient.

Challenges Faced By a Direct Selling Company

The challenges faced by a direct selling company, especially a young one, have changed substantially with evolving times. Yes, there are specific problems that such a model has an advantage over the conventional business. But, a few hurdles make it difficult for any direct selling business to surpass the five-year mark.

Some of the most significant challenges faced by direct selling companies today include the following:

1. Maximising Transparency and Reliability

Direct selling companies utilise network marketing. It is a process that depends upon the need to show the true face of your company to help possible leads understand the business. As such, it can be hard to come by bona fide case studies that support your firm shine out in a crowd of numerous others.

To minimise this issue, a direct selling company can give prospects deeper insight into the organisation. The web portal can show the top performers, sales milestones, and new versions of products and services on the horizon. When prospective customers realise how much your company has achieved, only then they can trust you to deliver more in the future.

2. Increased Focus on CSR

Conventional supply chains have been under intense scrutiny recently for their impact on society and the environment. Businesses focusing less on Corporate Social Responsibility (CSR) will likely suffer significant losses in the coming months. Many direct selling companies face this issue since they forget to tell their prospects about how their products are sourced.

To counter the issue, you can create a marketing plan that describes the impact of your supply chain on the environment. It should explain how you save on emissions and material by not having long chains of stores. Overall, the demand-and-supply ratio of direct selling business is much more efficient than a conventional one.

3. Appropriate Training and Retention

Another considerable challenge faced by direct selling companies is that they fail to understand the role of digital resources in recruitment and training. Without the relevant resources, you can’t expect fresh recruits to carry out massive digital campaigns. A digital transformation is the need of the hour for network marketing, which is why an older selling company has trouble retaining associates.

A robust feature-loaded MLM software can help you turn the tide. It can have a simple interface that makes it easier to operate for those lacking a technical background. You can plan separate training modules and develop a ticketing system should they run into any trouble.

Current and Projected Growth of Direct Selling Businesses

If you've not already convinced of the true potential of direct selling businesses, maybe a few definitive numbers can help you understand the situation. If you wish to examine the previous year's statistics and current projections for direct selling companies, simply read on.

1. Direct Selling Growth Post Pandemic

With the onset of COVID-19, many traditional businesses cut short on their workforce. Some even made it permanent for employees to work from home with severe salary reductions. With a bleak future ahead, many turned to alternative income sources to retain their financial stability.

According to Statista, the direct sales market racked up revenues amounting to USD 189.7 billion in 2021. Amway reported the most income, with global annual revenue of more than $4 billion. Currently, more than 10 million people are employed in the direct selling industry in the US alone.

2. Progress in the Coming Years

MLM and direct sales are among the fastest-growing business enterprises in the world. Expert analytics predict direct selling global revenues to cross USD 200 billion in 2022. By 2025, 2 out of 5 products that you purchase might be through direct sales instead of conventional supply chains.

As the industry expands, many businesses are recognising the potential. You might often come across referral programs that grant you a small commission for a successful conversion. Future companies can even include influencers and trusted clients as part of their sales network, something that direct selling businesses already follow. By the next decade, the number of people employed by the industry can double.

Conclusion

A direct selling company holds a lot of promise for individuals who are slowly realising the faults in conventional job practices. The scale of expansion till now has been massive, and the future looks brighter than most other enterprises can deliver.

Yet, the vastness of the market is not without a few malevolent opportunists. Before you join a direct sales company, it is best to understand the difference between an MLM and a pyramid scheme. Sure, the chance to create a brighter future on your terms seems fun. But, a thorough study of paperwork and the software can help you make an informed decision. If you wish to start a venture on your own, Global MLM can assist in developing the perfect software as per your requirements.

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