Malou T Caluza
August 10, 2020
The World Federation of Direct Selling Associations (WFDSA) published the global statistics summarizing the annual performance of the industry for the year-ending December 31, 2019. The global retail sales through the direct selling channel generated revenues of USD 180.5 billion this past year. This shows a year-on-year increase of 1.4% with annual growth contributions coming from all regions across the globe vis-a-vis 2018, and a healthy industry growth pace of 2.3%, 5-year Compound Annual Growth (excluding China) *.
It is not surprising to note that the industry has held steady despite global upheavals. It’s a trend we have been noticing for the last 5 years and is also reflected in the way our own business has grown during this period. What is significant though, is Africa’s position in this global matrix. At QNET, we saw the potential in this market over a decade ago when we first ventured into the continent and pioneered the industry in many new and emerging markets.
Africa the new frontier?
The African continent recorded sales of 1.66 Billion USD, which is 13.5 % above its 2018 performance. This not only outperforms the global trend; it also considerably outperforms every other region in 2019. Africa’s 3-Year Compounded Annual Growth Rate (CAGR) of 8.4% is also pegged much higher against every other region during this period.
|2019 Retail Sales (USD Millions)||% Sales Change (YOY) in Constant 2019 USD||3-Year CAGR in Constant 2019 USD (2016-19)|
|Middle East||247||0.4% ▲||3.50%|
It is expected that the growth trend for the Direct Selling industry will continue through 2020 as well, given the looming economic uncertainty around the world caused by the COVID-19 pandemic which has left many people without a stable source of income. The International Monetary Fund’s (IMF) World Economic Outlook Update, June 2020 projects a 4.9% drop in World GDP for 2020 over 2019. Sub Saharan Africa is predicted to take a 3.2% drop.
Non-traditional employment – the new norm?
It is only natural for people to gravitate to alternate sources of income generation, when conventional patterns of employment are disturbed. And over the last 4-5 months, we have witnessed a definite shift in such patterns. As many traditional businesses take a hit, and unemployment levels soar, a greater acceptance of remote and part-time work opportunities over conventional full-time job preferences, is emerging.
The Global Public-Private Knowledge Sharing Platform’s World Employment and Social Outlook: Trends 2020 (WESO) report, initiated by the International Labour Organization (ILO) states that almost half a billion people are working fewer paid hours than they would like, or lack adequate access to paid work. In addition, the WESO shows that unemployment is projected to increase by around 2.5 million in 2020.
For any Direct Selling company this represents a distinct opportunity, as our industry presents the least possible entry barriers for anyone seeking an alternative source of income. A closer look at the WFDSA figures indicates that Africa may already well be on this curve. Though the region accounts for just under 1% of the global revenue share, of the 119.9 million people who are involved in the industry globally, around 5.5 million are in Africa. It’s a clear indication of the industry’s growing popularity as a sustainable source of income in the continent.
The rise of Digital Africa
As per a study on Digital Commerce and Youth Employment in Africa, commissioned by the Mastercard Foundation in 2019, digital commerce is expected to continue to grow in most of Africa over the period to 2030 and may even generate more than US$500 billion a year by 2030, equivalent to close to 10% of expected continental gross domestic product. Key factors contributing to this would be a growing labour force with rising youth share; continued urbanization; rising internet connectivity; increasing access to digital payments; and the growing power of super platforms.
With an estimated that 200 million young people being added to Africa’s workforce, an urban population of about 770 million, and 70% internet connected mobile subscriptions by 2030, the implications for digital commerce is clear as a large number of people will be able to search and transact directly online through the convenience of smartphone.
The outlook for 2020 and beyond
Historically it has been noted that periods of economic uncertainties have always given a fillip to the Direct Selling industry. 2020 should be no different; governments the world over are struggling to create sustainable employment opportunities for youth, the emergence of the gig economy, a preference for anywhere-anytime work models, and a general trend towards entrepreneurship and small business ownership provide the direct selling industry with an ideal platform for growth.
It’s not just the industry factor that will propel direct selling companies this year, but also how relevant companies stay to their customers’ needs. In 2019, Wellness, and Cosmetics & Personal Care product categories accounted for almost 65% of the total global retail sales. If this is any indication of a continuing buyer behaviour pattern for 2020, companies with an emphasis on such product lines should be excited. With the broad and varied product portfolio offered by QNET which include products in Home & Living, Personal Care, Wellness and more, we believe we are ideally poised to address varied customer preferences in different parts of the world, and more so in Africa.
For many businesses, 2020 may have started on a quiet note, but for those with a finger on the pulse of current realities, and nimble enough to quickly adapt to change, the future seems bright.
*During Q1 of 2019, the Chinese Government implemented a 100 Day Review of the nutrition supplement industry. While this action was not related specifically to the direct selling industry, it had a significant impact on certain sectors of the industry. The disruptive nature of this event affected the availability of some data, therefore the WFSDA estimate of China sales is based on the data sources available and is directional only.
“Malou T. Caluza, is a change maker at heart, with over 2 decades of experience in customer service, business growth, operations and marketing. She has been awarded Best Executive in both Asia Pacific and Global categories in the Top-Ranking Performers Awards of Contact Centre World held in Singapore and in the United States respectively. She was also awarded as CRM Director of the Year by Asia Pacific Customer Service Consortium (APCSC) and is presently a CRE Community Leader, Speaker and Panellist in a number of APCSC events. She is currently QNET’s first woman CEO and was recently featured in “Asia’s 15 Over 50” – a publication that recognises the most successful women in Asia.””