Direct Selling in Brazil

2020 IMPACT

Sales growth accelerates in direct selling as the COVID-19 situation pushes demand

2020 saw sales growth in direct selling accelerate substantially as the COVID-19 pandemic proved beneficial for the channel. The main factor promoting consumer acceptance of direct selling was the quarantine lockdown that was imposed upon the population of Brazil for several weeks during the second quarter of the year.

The leading names in direct selling make greater use of digital channels

With direct selling benefiting from the COVID-19 pandemic situation during 2020, the leading names in the channel chose to take steps to minimise in-person interaction, wherever possible, to maximise the appeal of the direct selling model within the context of social distancing. In particular, Brazil’s leading direct selling companies encouraged their sales agents to go as digital as possible, with leveraging social media platforms such as Instagram and Facebook seen as an ideal way to promote sales and keep their customer bases engaged.

The spike in unemployment means a huge potential base of direct selling agents

Another factor supporting growth in direct selling during 2020 was that the huge spike seen in unemployment at the peak of the COVID-19 pandemic. This meant that there were very many people prepared to engage with direct selling as sales agents.

RECOVERY AND OPPORTUNITIES

The adverse economic environment set to be a blessing and a curse for direct selling

The forecast period is expected to see Brazil’s economy under some degree of pressure due to the lingering adverse impact of the COVID-19 pandemic on commercial activity in key sectors of the national economy. In particular, the high unemployment that is expected to remain in effect in the country until at least the end of 2023 can be expected to continue acting in favour of direct selling by ensuring a vast network of unemployed and underemployed people looking for extra sources of income in order to ease their straitened financial circumstances.

Digitalisation and the shift online set to define the development of direct selling

One of the key takeaways for the Brazilian retailing industry from the COVID-19 situation during 2020 is that digitalisation has come a long way in a short time and is definitely here to stay. In terms of direct selling, it can be expected that digitalisation and the shift towards online channels will continue to drive the development and the performance of direct selling throughout the forecast period, with the channel’s leading brands likely to continue taking full advantage of the benefits offered by social media platforms and messaging apps.

If direct selling cannot beat e-commerce, it might as well join it

In the not-so-distant past, the conventional wisdom was that the rapid and seemingly inexorable development of e-commerce presented a mortal threat to the future of direct selling. However, reports of the demise of direct selling at the hand of e-commerce have proven somewhat premature as the experiences gained during 2020 have clearly shown that direct selling and e-commerce have the potential to create symbiotic relationships for companies that are willing to invest in developing a dual-channel approach to their retailing operations.