International Opportunity: Scaling Revenue Globally With Smart Platforms
While it may not always feel like it in the United States, the world is becoming middle-class and people are adopting healthy, prosperous lifestyles that will reshape decades of established market behavior. As digital technology proliferates, global expansion is the greatest revenue opportunity for established and new direct selling companies, which could even grab market share from retailers struggling to bring customers into stores around the world.
Growth outside the U.S. has accelerated, beating domestic economic gains by 44 percent over the past couple years, according to the International Monetary Fund. China’s embrace of direct selling, which generated $33.9 billion in 2016 sales, just behind the U.S. total of $35.5 billion, is representative of the explosion in international opportunity. Direct selling must adapt to different regulatory and cultural settings to step into the void between modern retail, which has not penetrated many regions nor the in-home market, before new consumer behaviors consolidate. Once set, these habits will be long-lasting.
Are companies in the United States ready to adapt to the global marketplace? They’ll need smart tools that assist in identifying market-appropriate content and sales messaging in each international market. Brand content libraries will swell with variations on existing programming, as well as market-specific training for distributors, who must blend brand and local culture to create great customer experience. The same tools that personalize a U.S. sales relationship will provide support for localization of services globally.
The “Metail” Opportunity Goes Worldwide
The direct selling model may be more suited to delivery of goods and services in many countries where mobile phones and wireless infrastructure were the first digital infrastructure available. In these regions, consumers are already used to ecommerce, but more complex sales and services are challenging to deliver without a personal relationship. Retailers face massive capital and marketing investments in each territory they enter. Global consumers, like younger Americans, want a “metail” experience in which products and services align with their personal preferences and they have a human contact with which to meet and exchange ideas and feedback — online or in-person.
It’s notable that direct selling is growing faster on an annual basis than retail across the world. Euromonitor International found that direct selling has seen higher annual growth than retail since 2012. While direct selling accounted for only 0.06 percent of global retail as of 2016, the industry has an opportunity to carve out one or more percentage points of retail sales by focusing on home-based relationships in emerging markets. That would more than double the size of the direct selling market.
Coresight Research adds a compelling idea: Using local influencers as hubs of direct-selling networks who market products fulfilled by distributors: “In the digital age, the rise of influencers, or key opinion leaders (KOL) as they are called in China, has been dramatic. Influencers gain popularity on social media, which they monetize by advertising and selling products.” It is not necessary that everyone in the network be a closer. Adjusting compensation models to enable influencer marketing is another unique opportunity, which may be captured by direct sellers, ecommerce, or, even, retailers who solve the problem of compensation. But direct selling’s business model is the most prepared for virtual-physical hybrid selling.
Brands, too, may be more open to direct selling relationships in overseas markets. They can be the first in regions that have never heard of their competition, establishing brand beachheads through personal relationships.
For instance, Lenovo, the Chinese-owned computer maker, pioneered small-store distribution in China in the ’00s by giving shopkeepers in rural communities an ordering app to quickly replace each computer sold. The on-demand approach minimized the shop-keepers’ inventory risk while giving Lenovo virtually real-time access to consumer data in China. Even a shack without a paved floor could carry Lenovo products this way, and it lead to widespread adoption by Chinese consumers of a PC originally made by IBM.
That early presence in villages outside Chinese cities gave Lenovo an overwhelming advantage in the PC market as it gained footing in the country. By 2010, Lenovo held a 28.8 percent market share, with Dell trailing in a distant second place at 10 percent. It was constructed on person-to-person relationships augmented by digital tools.
First-movers With Smart Tools
Applying this approach to direct selling, a brand can be represented by an individual distributor even in the most difficult economic circumstances. Distributors are in a position to hold inventory briefly, deliver personal service that establishes a customer relationship that increases likelihood of follow-on purchase, and provide feedback that can be used to better target products.
Being first, whether to offer wellness products, beauty products, or technology in a market is an undeniable advantage. Much of the world is waiting for better consumer products and experience. With half the planet using mobile phones, 4.93 billion people in 2018, according to eMarketer, there are many new distributors and customers waiting for opportunities to earn, learn, and enjoy products introduced by friends, family, and local entrepreneurs using direct selling tools.
Great tools also create engaged distributors. Mobile and personalized training and sales coaching, especially in emerging economies, will establish strong distributor networks in new markets. Once engaged and earning, these workers will be far less likely to leave the organization, because it may represent their first middle-class work. As the world settles into greater overall prosperity, the first work relationships people have may be, like the fading notion of a career, permanent for generations.
Smart platforms that analyze the distributor’s behavior, the customer’s buying signs or objections (recorded by the distributor), and adjust sales programming and steps appropriately, are the foundation of a new distributed approach to sales. The technology-enabled customer-centric approach to direct sales counters the weak trust relationships of ecommerce without the overhead of retail.
The era of customers flocking to stores isn’t over, but that model no longer exists in isolation from ecommerce and direct selling competition. The question remains to be decided: Will U.S. and other direct selling companies step into these uncharted sales environments with confidence? They can with tools that help them learn from every interaction and tune their established communications and sales rhythms to newly opened markets.