Direct Selling Industry records 13.1% growth
Johannesburg — In an economy suffering depressed consumer confidence, Brexit threats, escalating energy costs, growing formal unemployment and a currency that’s been on a downward slope for around 18 months, an estimated 1.1 million independent business owners are making good, growing their businesses and annually, contributing more than R10 billion of sales (and growing), to the national economy in the form of sales to consumers.
The Direct Selling Association of South Africa (DSASA) announced its industry results in Johannesburg this morning at a gathering of the Association’s 36 direct sales business entities. Sales to consumers across the association were up 13.1% from R9.66 billion last year to R10.93 billion for the 2015 financial year.
DSASA represents 36 direct selling companies that distribute goods and services through independent direct sellers, directly to consumers, in a face-to-face model, away from fixed retail locations.
Chairman Ernest du Toit says direct selling is not only an important contributor to the economy, but also a key contributor, at a time when jobs are scarce and disposable income is declining.
“Direct sales adds value to peoples’ lives, giving them opportunities to create wealth and achieve financial independence. It is a credible and viable mechanism for generating income and growing the economy, governed by a robust code of ethics and quality controls,” says Du Toit.
At the start of 2015 the number of independent direct selling business owners had increased by 129 803 over the previous year – a growth of 13.3%.
It’s an industry that’s taken off, not only in South Africa but across the world, he says. In the USA, for example, more than 1 400 direct selling companies have been established, offering every imaginable product and service including selling electricity in a direct selling model.
“There is no limit to what you can sell – you can sell virtually anything as long as the value-add is clear and evident,” says Du Toit.
While direct selling is well established across South Africa, it is clear that Gauteng remains the engine room – delivering 42% of the total sales value, followed by KZN at 12.8% and then the Western Cape at 10%.
“Direct selling has a much greater reach than retail outlets have. Retail outlets have a fixed footprint in specific geographic locations, whereas direct selling can reach as far as any individual can travel or have their product delivered. It offers far better penetration into the distant rural markets, but without the costs evident in the more urban markets,” says Du Toit.
A very positive development is that the industry as a whole, already reflects the population profile of South Africa. This is evident in the racial ratio of independent business owners – the 2014 statistics demonstrate that 83% were from the black community, 14% were white, 2% were Indian and Asian and 1% were coloured. In 2014, independent business owners collectively earned R3, 929 million with 23,2% of active business owners operating in a fulltime capacity and 76,8% working part-time.