Overview of Global Direct Selling Industry

Tamuna GabilaiaExecutive Director

April 17, 2013 Delhi, India

Month/Year

Overview

Founded in 1978, voluntary, non-governmental organization

60 Member National DSAs Around the World: Asia – 12, Europe - 30, Latin America – 16, North America – 2

Governing Mechanism: CEO Council

Regional Federation – SELDIA

Doing Business in 170-plus Countries

To build understanding and support for direct selling worldwide. TheFederation supports direct selling companies and associations by:

– Developing, maintaining and promoting the highest global standards for responsible and ethical conduct.

– Advocating the industry's positions and interest with governments, media and key influencers.

– Serving as a trusted global resource for information on direct selling.

– Facilitating interaction among direct selling executives on issues of importance to the industry.

Mission

WFDSA Programs

• Women’s Economic Empowerment

• Socio-Economic Impact Studies

• Reputation Building Studies

• Corporate Social Responsibility/Philanthropy Surveys

• APEC Consumer Education and Protection Initiative

• Global Code of Ethics Initiative

• Regional Association Performance Seminars

• Media Outreach/Public Affairs

Socio-Economic Impact Studies

Ernst&Young IPSOS Mori Partner

Since 2004 WFDSA 24 socio-economic impact studies:

•Brazil, Canada, Japan, Korea, Mexico, Russia, Taiwan, the US (2005)

•Czech Republic, France, Finland, Germany, Poland, Italy, Turkey, UK (2007)

•South Africa, Thailand (2008)

•Colombia, India (2009)

• Canada, Chile (2010)

•Brazil and Ecuador (2011).

•Australia, New Zealand and Peru (2012)

Global Conditions

Growth expected to dropt to 3.5% in 2013

Gains expected to 4% in 2013

Source : International Monetary Fund

Advanced Economies2012 – 1.5 %2013 – 2%

Emerging and Developing Economies2011 – 6%2012 - 5.34%2013- 6%

Source : International Monetary Fund

Global Conditions

Asia still projected at 7.5% on average in 2012-13

Economic Activity in Middle East and North Africa expected to accelerate

Sub Saharan Africa expected to expand at about 5.5%

Central and Eastern Europe most affected by Euro-crisis

Source : International Monetary Fund

Global Annual Retail Sales

(USD Billion)Global Salesforce Size

(In Millions)

Global Statistical Data

Global retail sales increased 9% year-over-year

•Global retail sales increased 9%, from US$141.2 billion to 153.7 billion.

•The number of Direct Sellers increased 9% from 84.3 million to 91.5 million.

0

20

40

60

80

100

120

140

160

2010Sales

2011Sales

2010Sellers

2011Sellers

2010 $141.2 billion

2011 $153.7 billion, 9%

84.3

91.5, 9%

Selle

rs =

Millio

ns

Global Sales & Sellers 2010 - 2011

11

Sales were UP in all major regions

2011 Retail Sales (US$) 2011 Seller Count

Asia Sellers *

52 million, 15% 57% of total

Americas Sales$60.4 billion, 8%

39% of total

Africa / Mid-East Sales

US$ 1.4 billion, 6%1% of total

Europe Sellers11.4 million, 4%

12% of total

Europe SalesUS$ 25.0 billion, 4%

16% of total

Americas Sellers

26.7 million, 4% 29% of totalAsia Sales

$ 66.9 billion, 12% 44% of total

Africa / Mid-East Sellers

x

Global Total Sales

US$ 153.7 billion, 9%

x

Global Total Sellers

91.5 million, 9%

8%

4%

12%

* Not including China

In 2011, 2 new countries joined the Billion Dollar Club: In 2011, 2 new countries joined the Billion Dollar Club:

Indonesia and Turkey

    Country

2011 Retail Sales [US$

billions]

Number of Sellers (millions)

% Sales Growth (Local

Currency)1   United States $29.9 15.6 4.6%2 Japan $23.9 3.4 -4.7%3   China $16.3 not available   16.2%4 Korea $12.9 4.2 4.7%5   Brazil $12.0 2.8   5.2%6 Mexico $6.3 2.2 10.2%7   France $5.1 0.5   2.2%8 Germany $3.7 0.3 -5.1%9   Russia $3.6 4.1   4.6%

10 Italy $3.4 0.4 -- 0.0%11   Malaysia $2.9 7.4   30.9%11 Venezuela $2.9 1.2 75.5%13   Taiwan $2.8 4.7   3.0%14 Canada $2.2 0.7 -- 0.0%15   Thailand $2.1 15.6   8.3%16 Colombia $2.0 1.2 14.1%17   United Kingdom $1.9 0.4 -2.0%18 Argentina $1.6 0.6 23.0%19   Australia $1.4 0.4   -12.4%20 Peru $1.2 0.4 8.0%20   Turkey $1.2 1.2   17.6%22   Indonesia $1.0 8.3   10.0%

India $982 3.9

13

DSA CODE OF ETHICSDSA CODE OF ETHICS

Who must comply with the Code?

DSA‘s

2

4

5Member

Companies

SalesDistributors

CompanyEmployees

CodeCompliance

WFDSA and DSA Code of Ethics

14

DSA CODE OF ETHICSDSA CODE OF ETHICS

GUIDELINES FOR CODE COMPLAINTS

Complaints should be in writing and should Include the following information:

• The date and details of the incident

• The individuals involved

• The code violation (if possible)

• Efforts made to resolve the matter

• The cost of the product (including invoices or other documentation)

• The current status of the complaint

• Resolution being sought

Contact the

Company

Resolution

Directly with the

Company

15

DSA CODE OF ETHICSDSA CODE OF ETHICS

GUIDELINES FOR CODE COMPLAINTS

Complaints should be in writing and should Include the following information:

• The date and details of the incident

• The individuals involved

• The code violation (if possible)

• Efforts made to resolve the matter

• The cost of the product (including invoices or other documentation)

• The current status of the complaint

• Resolution being sought

Contact the DSA Code

Administrator

Resolution with Assistance of Code

Administrator

If not resolved…

16

DSA CODE OF ETHICSDSA CODE OF ETHICS

KEY PROVISIONS—COOLING OFF

What is cooling off?

• If a consumer agrees to purchase an item and changes her mind, she has the right to cancel within a specified number of days

• The number of days varies by country

This is called

COOLING OFF

17

DSA CODE OF ETHICSDSA CODE OF ETHICS

KEY PROVISIONS—COOLING OFF

• The Code of Ethics allows consumers to cancel an order:

• Without any specific reason

• Within a specific time limit

• Your order receipt should clearly state what the policy is in your country

18

DSA CODE OF ETHICSDSA CODE OF ETHICS

KEY PROVISIONS—EARNINGS CLAIMS

• Companies and direct sellers cannot provide false or misleading statements about the earnings opportunity

• Statements made must be documented by facts

Source: IPCC

19

DSA CODE OF ETHICSDSA CODE OF ETHICS

KEY PROVISIONS—PRODUCT BUYBACK

• Company must not encourage inventory purchases in unreasonably large amounts

• If you terminate your business, the company will buy back product you haven’t sold

– if it is still marketable

– less any costs such as handling and commissions

20

DSA CODE OF ETHICSDSA CODE OF ETHICS

KEY PROVISIONS—PRODUCT CLAIMS

• Companies or direct sellers must not make untrue claims about a product

The skin cancer treatment

21

Global Code of Ethics Program

WHAT?

•Global Code Promotion/Communication Initiative

•Approved by the CEO Council

•Demonstrates commitment to your direct sellers and their customers

•Proactively Communicates Standards of Excellence to External Audiences

•Raises the Bar on Performance

•Encourages Ethical Behavior

•Increases public awareness of the Code

WHO?

•DSA’s

•Member companies

Global Code of Ethics ToolkitGlobal Code of Ethics Toolkit

Ethics ToolkitEthics ToolkitEasy to read copy of CodeEasy to read copy of Code

Short pamphlet summarizing CodeShort pamphlet summarizing Code

Separate materials outlining key takeaways Separate materials outlining key takeaways for consumer as well as distributorfor consumer as well as distributor

PowerPoint presentations for use by local DSAsPowerPoint presentations for use by local DSAsand companiesand companies

Q&A document for training purposesQ&A document for training purposes

Wallet sized card for use in the fieldWallet sized card for use in the field

ToolkitToolkitOutlines key takeaways for Consumers and Direct Outlines key takeaways for Consumers and Direct SellersSellers

The toolkit also contains training materialsThe toolkit also contains training materials

Q&A Document

Thank you!

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