Technology has a huge impact on the direct selling industry in terms of changes both to the industry’s operating environment and its business model. Interestingly, this influence is visible in relation to external factors as well as to internal conditions in direct sales.
Author: Marek Sodolski
The World Federation of Direct Selling Association’s 2017 World Congress in Paris focused primarily on modern technologies and their impact on the industry.
Uber, or the Dispersion of the Labour Market
A key theme of the conference was the dispersion of the modern labour market and growing role of the sharing economy. This combination has a direct impact on the modern labour market, especially the younger generation. More and more people (not only the young) are bypassing the traditional work model, in which employees have one permanent employer, in order to work for a variety of companies, thus diversifying their income.
Adecco data shows that as much as 30% of all employees in the US and Europe are so-called “freelancers” who do not have a permanent source of income . The “uberization” of the labour market is partly responsible for this situation. A person can solicit work almost immediately, without having to overcome the typical entry threshold. An example is Uber, which allows a driver to transport people around the city without any special license or corporate association.
In this new business environment some conference participants saw a threat to the traditional direct selling model. It is much more time-consuming to (independently) develop your partner network, maintain long-term relationships, and seek out your own customers than to connect with customers through Uber (or a similar platform). Because of the reduced time investment, Uber (or a similar platform) makes it possible for a provider to generate almost immediate profits.
Strength of Loyalty
Most participants agreed, however, that the new working methods do not pose a threat to the growth of direct selling, since this industry - by its very nature - facilitates the generation of revenue for the long term.
Revenue generated by Uber-like platforms is virtually impossible to scale. After a few years in a specific position with a traditional employer, an employee receives a pay raise or opportunity for promotion. In direct selling, revenues increase with the work input. Meanwhile, Uber-like platforms do not offer any pay raises. What's more, income directly depends on the number of hours spent at work, while in direct selling it is possible to gradually reduce the amount of time spent at work in order to enjoy life. Thus, the growth of direct selling is not jeopardised by such technologies.
The direct selling industry should therefore view the technology not as a threat, but as an opportunity. Importantly, this opportunity is not only for people who are already involved in the business and are looking for tools to increase their turnover, but also for those who want to join in and try this model of making money.
With the availability of online materials and platforms you can easily explore this business on your own. You can browse all the products and rules that apply to the cooperation and to think them over carefully. Moreover, online platforms can be used to regularly monitor commodity prices, your own progress and further growth opportunities. The price structure of goods, their composition and availability are also transparent.
One of the key elements of direct selling is its own direct distribution channel. These goods cannot be bought in normal shops, which can arouse various emotions. Today, thanks to the internet and mobile each customer In real time each customer can conveniently verify a product price with a few clicks and view the composition, concentration or volume of the bottles sold.
Take for example Amway, which presents its Satisfaction Guarantee in a clear and transparent way. The customer can return purchased products - even if used - if they do not meet his/her expectations. All information, rules and necessary documents are available on the website and can be viewed by any user or potential customer.
We are now living in the period of the 4th Industrial Revolution, during which the barrier between man and machine is slowly disappearing . Consequently, we can anticipate tremendous changes in business operations at every level, secondary to changes both to the external environment and internal conditions. This will be as well a time of testing for business models. Traditional models for doing business - and therefore traditional expectations about the job - are ever more quickly giving way to new solutions. As recently as the 1990’s professionals were yet being trained in machine typesetting, and today the profession is completely obsolete, as all printed materials are prepared digitally. Automation always puts at risk another generation of professions.
Past experience shows, however, that direct selling is not threatened by technological changes. Quite the contrary. Successive innovations (and the resulting changes to our way of doing business) serve only to strengthen the position of direct selling and positively influence the dynamics of this industry’s growth.
Author: Marek Sodolski