Direct selling in the UK is a thriving business sector that contributes the equivalent of over £2 billion ($3 billion USD) to the national economy each year. It’s also the country’s largest provider of part-time independent earning with over 400,000 direct sellers involved.
The industry’s recent growth is partly due to the country’s economy: around 20,000 new direct sellers have entered the market since the recession began. Direct selling offers an alternative to traditional employment, offering people the opportunity to be their own boss and work flexibly.
The Direct Selling Association (DSA) was established in the UK in 1965 to guide the industry forward and continue to further strengthen its image and reputation by promoting a better understanding of the business model.
The first direct selling company started operating in the UK in 1959. Other companies followed suit and the industry now offers consumers a broad range of product lines, from fashion and beauty to home care and wellness. The UK DSA has fifty-seven member companies which account for 59 percent of total direct sales.
The industry’s flexible nature attracts people from all walks of life and it is no longer the core demographic of mothers who make up the majority of the UK’s direct selling community. Although this group still represents a significant portion of the industry, it is now attracting other groups such as retirees, students, and an increasing number of men, who make up nearly a quarter of the direct sales force, representing a 26 percent increase in the average number of men in direct selling.
Recent figures have also shown a 29 percent increase in the number of over-50 year-old direct sellers; there are currently 120,000 direct sellers in the UK aged over 50. This could be due to the fact that these almost-seniors are struggling to get back into work, with 44 percent of the unemployed who are over 50 having been out of work for over a year. Recent polls also tells us that many in the plus-50 age bracket enjoy the social side of direct selling, which allows them to continue to work and network with a variety of people.
On the other side of the spectrum, there has also been a boom in the number of young people in direct selling, with the average number of under-25-year-olds at member companies increasing by nearly a third (29 percent). There are now over 75,000 direct sellers under the age of 25 in the UK. These youngsters now make up 19 percent of the direct sales force and 30 percent of direct sellers in the UK are educated to degree level.
The UK DSA has revealed that there has been a substantial rise in revenue generated through “party” sales, where direct selling consultants demonstrate products in a client’s home before offering them for sale to the assembled group. DSA members have reported a 120 percent increase in revenues generated this way and home selling parties now account for 27.8 percent of the DSA’s member companies’ £1.4 billion ($2 billion USD) revenue, which is worth £390 millon ($585 million USD) to the UK economy annually.
Direct selling is also becoming increasingly multicultural. One of the UK’s largest direct selling companies estimates that over 90 percent of its new recruits in 2012 spoke English as a second language, with British-based Chinese recruits topping the tables. The company largely attributes this increase to the rise in interest from Chinese natives living in the UK. China is a $4 billion market for this multinational and the success of its brand in China is feeding through to a new wave of success for the brand in the UK, where a strong work ethic alone can yield success, as opposed to other industries where who and what you know play a much more important role.
Likewise, another DSA-member company and direct selling giant has seen a growth in new consultants in the UK who are originally from countries such as Russia, Poland, Hungary, and Romania, a trend which directly correlates with some of the company’s top markets.
Benefits and Caveats
Direct selling is a way for budding entrepreneurs to gain experience in being self-employed and running a micro-business, at a time when the UK government is heavily investing in supporting entrepreneurialism, for example by establishing the All Party Group for Entrepreneurship, a parliamentary group set up to encourage and support entrepreneurship.
The UK law only allows companies to charge a maximum of £200 ($300 USD) to join and become a distributor. This limitation is part of the “7-day cooling-off period” rule which prevents new distributors from placing an order over £200 the first seven days. In addition, and concurrent with the European law, if a company is not selling over 50 percent of its product or service to the general public, it may become under scrutiny. A buyers club that sells only within the network or charges fees that are paid in commission is questionable under the UK law.
The UK DSA offers significant networking opportunities for direct sellers in addition to formal training and ongoing support to enable businesses to thrive. It also provides a hub of support to benefit direct sellers. One example is the recent development that member companies have tailored an innovative online payment system to specifically meet the needs of direct sellers. This technology enables direct sellers to make transactions while out in the field, without having to carry cash and avoiding the high-fees associated with traditional card payments.
Thanks to the collaborative efforts of the UK DSA and its member companies, public perception about direct selling and multilevel marketing is improving, but continued positive press is needed to make people aware of the nature and legitimacy of the business model.
LYNDA MILLS is deputy director of the UK Direct Selling Association (UK DSA).