In 2020, the Chinese government implemented strict quarantine measures and prohibited any social gatherings for nearly two months due to COVID-19. As the direct selling business model relies heavily on hosting meetings or gatherings to introduce products and recruit new sales personnel, the adoption of social distancing measures had a strong negative impact on the channel.
Prior to the outbreak of COVID-19, direct sellers had already been moving towards digital channels for sales and marketing, as face-to-face meetings were subject to restrictions and scrutiny. Thus, COVID-19 accelerated rather than created this trend.
Amway remained the leading player in direct selling in 2021, and continued to see growth in its value share. In order to maintain its strong growth trend, the company plans to tap into the personalised nutrition segment, encouraging its independent business owners to act as nutrition and health consultants for consumers.
Direct selling is set to return to decline in the forecast period, mainly because it will continue to lose share to e-commerce, in particular social e-commerce. The entry barriers for direct selling are high, as players require a government permit to conduct direct selling in China.
The shift to digital was notable during the pandemic, and this will continue to play an important role in direct selling. The benefits of online events are the higher frequency of online gatherings than offline, and the fact that recordings can be played multiple times.
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Direct selling is the marketing of consumer goods directly to consumers, generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations. Direct selling occurs in two primary ways: -one-to-one basis (usually by prior arrangement a demonstration is given by a direct seller to a customer) or -party-plan basis (selling through explanation and demonstration of products to a group of prospective customers by a direct seller usually in the home of a host(ess) who invites other persons for this purpose). The prime example of a one-to-one method is Avon. Tupperware is famous for its party-plan method. Direct selling of services - such as insurance, telecoms, other utilities, financial services - are excluded.See All of Our Definitions
This report originates from Passport, our Direct Selling research and analysis database.
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