Direct Selling in Mexico

2020 IMPACT

Economic downturn increases number of sellers, offset by lower customer purchasing power in 2020

Direct selling has historically been more resistant to economic downturns, occasionally even posting sales gains in tough economic times. A struggling economy often means job losses and financial struggles for individuals and families, and thus people begin to look for ways to supplement their income.

Cosmetics and fashion slightly more resilient in the direct selling space during 2020

Personal accessories and eyewear direct selling as well as apparel and footwear direct selling were some of the hardest hit sectors during 2020 as a result of the COVID-19 pandemic. Double digit sales declines occurred as demand dropped.

Health products see growth amidst health concerns caused by the pandemic

While beauty and personal care as well as apparel and footwear direct selling categories in addition to most other direct selling categories saw a decline due to lower demand amidst lockdowns, consumer health and other direct selling products saw a surge in demand surge in 2020. Companies that sell supplements and other health items, especially those that could claim immune boosting benefits, capitalised on the general fear surrounding COVID-19 during the year.

RECOVERY AND OPPORTUNITIES

Direct selling set to grow over the forecast period as slow economy draws new sellers

The Mexican GDP decreased sharply in 2020 and millions of people either had their work hours reduced or lost their jobs completely. While most of these losses in 2020 were due to the pandemic, Mexican economic structural problems that existed before the pandemic are likely to cause the recovery to be slower than in other countries.

Direct selling makes important move to e-commerce and delivery options will be important to attract customers over the forecast period

The inability of sellers to host in person events or sell in person to friends, family, and neighbours as well as companies being unable to host larger sales events pushed direct selling companies to focus their efforts online. Companies expanded and improved e-commerce platforms in 2020 hoping to draw in new customers and offer existing customers a new method of purchasing their products.

Recovery of apparel and footwear as well as beauty and personal care will be key for direct selling expansion over the forecast period

Apparel and beauty products were some of the hardest hit categories during the pandemic in Mexico, as people saw little need to pay attention to their appearance when spending most of their time at home especially as many households had lower disposable incomes in 2020. These categories within direct selling were slightly more resistant to a decline in sales as buying from direct selling companies allowed consumers to avoid the risk of shopping at a physical store, but these companies still saw a marked decrease in sales in 2020.