South Africa remains challenged by high unemployment and a constantly rising cost of living, but despite the unemployment rate increasing to over 25 percent in the first quarter of 2013, the Direct Selling Association of South Africa (DSA SA) announced positive results for the 2012 financial year.
With growth averaging 10.3 percent over the last three years, direct selling reported sales exceeding US$8 billion in 2012 with 12.4 percent growth in 2011.
Direct selling currently provides income earning opportunities to over 1.3 million South Africans. It is anticipated that another 300,000 new direct sellers will join over the next three years. The low barrier of entry has enabled people without education to start a business, and through enthusiasm and hard work, earn enough to sustain themselves and often even pay for their children’s university education.
The majority of direct sellers in South Africa are part-timers, many of whom are from low-income families. If a family can supplement its income by even a small amount, that money makes a huge difference to their quality of life.
As is the case in most of the world, women continue to be most affected by poverty and unemployment despite strides made in employment equity policies. For many unemployed women in South Africa, direct selling presents a viable earning opportunity that has great potential to positively alter their lives. Currently, 86 percent of active sales people are women, although more couples are becoming involved and successfully growing their business together.
Many professionals are attracted to network marketing or directs sales, recognizing the excellent potential for business development and growth.
The average age group for direct sellers is mid-forties. There are also many direct sellers who are heading toward retirement age and view direct selling as an ideal opportunity to continue generating an income whilst working flexible hours.
Through its work with students at various universities, the DSA SA is also promoting the business opportunities to the younger generation.
Author: RICHARD CLARKE
Companies and Products
The DSA SA was formed in 1972 with six founding member companies. Membership continued to grow and today there are thirty-six member companies with additional membership applications currently being processed. For the 2012 financial year, eight of the member companies reported sales of over $300 million.
In terms of product categories, health and wellness saw an increase of 31 percent in total sales bringing this sectors total market share to 24 percent of products sold in 2012. Personal care grew by 20 percent capturing 15 percent of market share, while household goods retained the largest market share at 29 percent. Fragrances also remained fairly constant at 14 percent of market share.
Gauteng being the highest producing economic hub has the largest percentage of direct selling activity at almost 41 percent (up by 14 percent over the previous year) with KwaZulu Natal following at 13 percent and Western Cape with 10 percent.
Direct selling is not only about the sale of products but also the business opportunity. Experiencing the quality and reliability of the products they have purchased, customers become sellers themselves, and are given the entrepreneurial platform they need to start their own business.
Like elsewhere in the world, people join direct selling companies for different reasons. Some join for short periods as a stop-gap to earn enough to cover the bills while they look for another job, while others join as part-time distributors to increase their disposable income. Then there are those who join for the long-term and carve themselves a successful career out of direct selling and can earn a substantial income.
Achieving acknowledgement and recognition for accomplishment is the greatest reward amongst distributors in direct selling, far more than any financial incentive. While financial goals play a big role, it is the awards, accolades, and recognition amongst their peers that direct sellers value as the highest achievement.
Technology and Infrastructure
Like all business in South Africa, direct selling is enjoying the advantages of ongoing advancements in technology, particularly in the communications field. The increasing use of social media such as Facebook and Twitter is an interesting trend that is providing a cheap and easy way for distributors to communicate with consumers. The challenge will be to use the technology to enhance rather than replace the face-to-face interaction so integral to the direct selling experience. Cell phone technology also takes direct selling into the many rural areas of South Africa, benefiting consumers, direct sellers, and companies.
Major infrastructure improvements in South Africa have seen the high-speed Gautrain rail project launched, enabling fast and convenient airport transfers as well as a commuter link between Gauteng’s main centers, Johannesburg and Pretoria. The highways have been upgraded and are of a world-class standard. International airports have been expanded to cope with growing numbers of local and international travelers. Courier, road transport, logistics, and warehousing services are readily available and of a high standard.
While direct selling is a mature business sector in South Africa, it still has much potential for growth, as the statistics show. South Africa tends to be the point of launch for direct selling companies venturing into Africa. Botswana, Swaziland, Lesotho, Mozambique, and Zambia have long been established markets for direct selling companies expanding into Africa. In East Africa, Kenya, Tanzania, and Uganda are strong markets, while expansion into the West African countries of Ghana, Nigeria, Cameroon and, most recently, Ivory Coast, is showing much potential.
Entry to the South African market is not complicated as long as the entrants are up to date with current legislation and work with experts who can assist with global expansion.
Africa is one of the largest untapped markets in the world economy, and its high unemployment and a thirsty entrepreneurial spirit make a fertile foundation for direct selling. Start in South Africa and open the door to the rest of Africa.
RICHARD CLARKE is DSA Chairman for South Africa.
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