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The New Face of Direct Selling

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Direct selling is booming once again. But what explains its comeback? Claire Lafon (E11) is founder of Apicia, a start-up whose business model is largely based on the direct selling channel. She gives us her take on the subject.

Direct selling is undergoing a transformation. Forget the slightly dated image of 80’s Tupperware parties. The new direct selling companies of today are modern, fun, based on digital capabilities – and highly successful.

Economic crisis? What’s that?

You don’t hear that much about it, and yet in 2015 direct selling in France employed more than 620,000 people full- or part-time, for an overall turnover of 4 billion euros. It’s the result of 20 years of uninterrupted growth, particularly since the creation in 1993 of the independent home sales representative (Vendeur à Domicile Indépendant or VDI) status. 80% of salespeople involved in direct selling have VDI status and numbers have multiplied six fold between 1995 and 2011 to reach around 400,000 sales agents in 2012.

Over the same period the number of companies in the sector with at least one employee more than doubled, and the value added – or wealth generated – increased by more than 30% between 2000 and 2009 – an average annual growth of 5.6% (data in value terms), compared with 3.3% annual growth in retail sales.

The results are all the more impressive given the economic situation, as the crises in the mid-90’s and in 2009 didn’t slow down growth. It’s even possible that the difficult economic situation favored direct selling, given that it provides part-time, temporary employment to job seekers or people in career transition. It is estimated that between now and 2020 some 200,000 jobs could be created in direct selling.

It’s what customers want

Increasing individualization leads to the development of hedonistic values: a rejection of limits, and the pursuit of instant gratification and “good times”, small pleasures or happy memories… Direct selling transforms commercial transactions into a positive experience. It’s what convinced famous brands such as Phildar or Bonduelle to promote their products through knitting or cooking workshops in people’s homes.

Creating opportunities for customers and sales reps to meet in a familiar place responds to a wider need for social contact, conviviality and proximity: the sales relationship is more human than in a store, it’s easier to build trust in a familiar environment, and the emulation effect increases buying intentions.

Through direct selling, customers also receive personalized advice that they wouldn’t have – or would be less likely to have – in other retail channels.

It’s therefore not surprising that one of the most successful drivers of direct selling is word of mouth: a satisfied customer will almost always talk about their experience and convince friends, family and colleagues more effectively than any communications campaign.

Win-win

Brands also benefit from direct selling at a time of limited budgets, and when standing out on the shelf is increasingly complex. Direct selling is therefore the best way of promoting quality, innovative products that need to be explained before the act of purchase, and of creating a strong consumer experience – much more powerful in terms of loyalty and brand image than mass marketing.

And it’s just the beginning…

Despite its dynamism, direct selling is far from reaching its development potential in France, where there are 1.5 times fewer sales representatives than in Germany or Italy and 2.1 times less than in the UK. In the United States, where the activity goes back much further, the ratio of direct sales to employment in general is 80 sales agents for every 1000 jobs, compared with 20 in the European Union and only 11 in France. It also represents a smaller share of consumption in French households compared with other countries. In other words… we ain’t seen nothing yet.

An ambitious new generation

Today’s direct selling companies are different from their predecessors in several respects. They apply tougher selection procedures to recruit profiles adapted to what are usually premium brands, or brands with a strong “consultative” culture. Apicia, a start-up specialized in beauty/well-being products based on active ingredients from the beehive, has made the quality of its sales network a strategic priority.

Our products are very specialized, so our sales reps need to have detailed knowledge of nutrition and cosmetics, and a strong affinity to natural, organic products.” This requires ongoing training, whether on presenting product benefits, sales techniques, the development of soft skills, digital marketing or people management.

Direct selling agents also embrace new technologies 100%. Their intranets are real sales tools, intuitive and effective, allowing sales reps to accurately monitor their activity and that of their teams. They also have integrated electronic payment terminals. Increasing numbers of companies are opting for a synergy between e-commerce and direct selling, following the example of US company Stella and Dot, which provides each sales consultant with a personalized replica e-commerce site.

The new arrivals on the direct selling scene make sure they adopt an image and messages that match the aspirations of 20-30 year olds. Start-ups such as Apicia or Chic des Plantes target and attract both young people – home sales rep contracts, very flexible and well-paid, are ideal student jobs – and women and men looking to supplement their income or simply have an activity they love, with products and a company philosophy that matches their values.

All signs that home sales are becoming part of French daily life again. Last summer French TV channel M6 aired Une boutique dans mon salon (“A boutique in my lounge”), a competition between sales consultants. French high schools recently celebrated “Direct selling spring” and, in 2015 the University of Paris in Créteil introduced a professional degree in Marketing and Management of Direct Selling. Any plans to follow suit, ESSEC?

 

What is direct selling?

Direct selling is the third retail channel, alongside in-store selling and mail order selling/distance selling. It can take place on a one-to-one, face-to-face basis, in a private sale in someone’s home, or in a place that isn’t usually used for selling goods, e.g. a café.
Face-to-face sales mostly take place in the home of the prospect who has been directly approached by the sales rep (e.g. someone recommended by a former client, or prospected on the phone), or via a sales operation, e.g. distributing personalized vouchers at a stand in a shopping center, or door-to-door.
The private home sale is the responsibility of the sales rep and a hostess who organizes the meeting in her home. It consists of presenting a range of products to the hostess’ friends, either through demonstrations or participation in workshops. Direct selling is not to be confused with mail order or distance selling (e-commerce, teleshopping or direct selling at production sites, fairs or markets).

 

 

You too are part of the ESSEC community and want to share your point of view with your fellows? Feel free to submit your article for our Alumni Blog here.

 

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