Though hit by COVID-19, direct selling stays sixth in beauty and personal care with 8% of value sales in 2020. Flat results in Latin America and good growth in North America balance double-digit decline in Asia Pacific and Australasia. The pandemic-boosted shift to digital will test direct sellers, the business model of human interaction and relationships inevitably turning virtual. Opportunities await those brands willing to reinvent themselves to remain competitive in a post-pandemic world.
This report comes in PPT.
It is well known that direct selling performs well when the economy struggles as consumers shift to more affordable options due to budget constraints, and because it turns into an employment opportunity.
Colour cosmetics and fragrances, key categories for direct sellers, were hit hard by the pandemic, but despite this the channel accounted for 8% of beauty and personal care sales and remained positioned as the sixth largest channel globally.
Direct sellers had to adapt their way of doing business and take the leap to digital in record time. From using social media to promote and sell their products, to opening their online selling platforms, to livestreaming their conventions, brands across the globe responded to the challenges brought by the pandemic.
In Asia Pacific, direct sellers lose ground to e-commerce pushing them to invest heavily in their digital strategies. Mobile apps and digital tools for consultants were critical to compete with e-commerce. The region was also the first to test livestream events.
The Americas has the largest direct selling penetration, ranging from 4% in Paraguay to 34% in Bolivia. The relational model works well in the Latin American culture, explaining the success of regional brands like Natura, Yanbal, or Belcorp’s Esika, L’Bel and Cyzone.
Western Europe continues to be the most challenging region for direct sellers. However, the success of newer companies like Farmasi in Turkey suggests that the model still has room to grow.
In a digital world, direct sellers face two challenges: to attract customers – especially among younger cohorts – and shape their shopping experience around their own convenience which nowadays means online, while ensuring consultants retain the key role they play, but in a virtual world.
The model appeals to the human need to connect and relate; the task is then to turn these connections virtual.
Direct sellers have traditionally been highly adept at understanding and adapting to cross-cultural norms which can be an advantage in this new environment.
In less developed countries, and in second- and third-tier cities in developed ones, the shift to digital will take longer and direct selling will remain a fundamental selling structure.
This is the aggregation of baby and child-specific products, bath & shower, deodorants, hair care, colour cosmetics, men's grooming, oral hygiene, fragrances, skin care, depilatories and sun care. Black market sales and travel retail are excluded.See All of Our Definitions
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