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					Seventh Academic Symposium on
         Direct Selling
         Direct Selling Research Center
        National Sun Yat-Sen University

                  By: Neil H. Offen
 Secretary, World Federation of Direct Selling Associations
                President & CEO, USDSA

                       November 14, 2002
               Taipei, Taiwan, Republic of China
                           Direct Selling: A Definition
             The sale of a consumer product or service, in a person-to-
              person manner, away from a fixed retail location, where
              the company offers opportunities to an independent
              contractor salesforce.




Source: Direct Selling Association
              Multilevel Marketing/Network Marketing
             A compensation system within direct selling, where a
              distributor/salesperson can earn money not only on their
              own personal sales, and not only on the sales of a person
              personally recruited by them, but also on sales of persons
              recruited by their personal recruits.




Source: Direct Selling Association
              How to Identify a Pyramid Scheme
              Ask two questions
         1.    Do you risk financial loss by joining the company?
               (If yes, be careful. Most direct sales firms do not
               require or encourage any substantial investments.)




Source: Direct Selling Association
               How to Identify a Pyramid Scheme
               Ask two questions
         2.     Is the money you will earn primarily coming from the
                sale of the product to the ultimate consumer of those
                products?
                   (If no, stay away. It is most likely a fraud.)




Source: Direct Selling Association
                        One Additional Question
            Would you buy the company’s product or service if you
             weren’t a member of the salesforce?
                  (If not, why not?)




Source: Direct Selling Association
                          Seven Types of Salespeople
          1.     Wholesale/Discount Buyers
          2.     Short-term, Specific Objectives
          3.     Part-time/Quality of Life Improvement
          4.     Career
          5.     Social Contacts
          6.     Recognition
          7.     Sharing the Benefits




Source: Direct Selling Association
         Statistical Overview of North America
                Year       Retail Sales (in U.S. $)   Exchange Rate   Number of Salespeople


Canada          2001   $   822.96 million             1.59            937,000
United States   2001   $   26.7 billion                               12,200,000
Total                      27.522 billion                             13,137,000
                         Statistical Overview of Asia
                          Year          Retail Sales(in U.S. $)       Exchange Rate   Number of Salespeople
           Australia      2001      $   1.2 billion               *                   650,000
           Hong Kong      2000      $   128 million               *                   80,000
           India          1999      $   191 million                        44         695,000
           Indonesia      2001      $   343.1 million                     8500        4,277,000
           Japan          2000      $   22.8 billion              *       108         2,000,000
           Korea          2001      $   2.9 billion               *       1310        3,050,000
           Malaysia       2001      $   465 million                        3.8        3,000,000
           New Zealand    2000      $   77.40 million             *                   97,000
           Philippines    2000      $   298 million                      49.998       2,000,000
           Singapore      2001      $   117 million               *        1.6        57,000
           Taiwan         2000      $   1.2 billion                       31.2        2,900,000
           Thailand       2000      $   444.4 million             *        45         3,200,000
           Total                        33.7 billion                                  22,006,000




*Retail Sales Figures Include DSA and Non-Member Companies
             Statistical Overview of Latin America
                          Year          Retail Sales (in U.S. $)       Exchange Rate   Number of Salespeople
            Argentina     2001      $   1.135 billion              *                   468,000
            Brazil        2001      $   2.496 billion              *   2.37            1,211,111
            Chile         2000      $   279.6 million              *   541.8           167,500
            Colombia      2000      $   450 million                *                   310,000
            Costa Rica    1997      $   20 million                                     2,500
            Guatemala     1997      $   60 million                                     50,000
            Mexico        2000      $   2.650 billion              *                   1,765,500

            Panama        1997      $   15 million                                     5,000
            Peru          1999      $   240 million                                    136,000
            Uruguay       2000      $   29.9 million                                   31,171
            Venezuela     2000      $   681 million                                    502,000
            Total                       8.057 billion                                  4,648,782




*Retail Sales Figures Include DSA and Non-Member Companies
                        Statistical Overview of Europe
                 Year           Retail Sales (in U.S. $)       Exchange Rate   Number of Salespeople
Austria          2001       $   209.6 million              *                   11,946
Belgium          2001       $   59.9 million                                   15,077
Czech Republic   2001       $   72.7 million                                   116,900
Denmark          2001       $   40.3 million                                   52,011
Finland          2001       $   71.6 million               *   6.7             37,373
France           2001       $   2.884 billion              *                   300,000
Germany          2001       $   2.557 billion              *   2.22            337,000
Greece           1998       $   70.5 million                   299.85          134,214
Hungary          2001       $   88 million                                     140,667
Ireland          1997       $   60 million                                     14,000
Israel           1997       $   50 million                                     14,000
Italy            2001       $   1.736 billion              *   1.106           260,000
Netherlands      2001       $   94.8 million                                   38,000
Norway           2001       $   84 million                 *                   68,000
Poland           2001       $   457.5 million                  3.99            510,000
Portugal         2001       $   48.2 million                                   44,595
Russia           2001       $   264.2 million                                  585,926
                                                                                                *Retail Sales Figures
Slovenia         1996       $   58 million                                     15,500           Include DSA and Non-
Spain            1999       $   516.641 million            *   4.46            109,000          Member Companies
Sweden           2001       $   85.1 million               *                   98,500
Switzerland      2001       $   295.946 million                1.66            8,543
Turkey           2001       $   50 million                                     174,000
United Kingdom   2001       $   2.024 billion              *   1.424           501,000
Total                           9.850 billion                                  3,488,251
               Statistical Overview of Africa
               Year       Retail Sales (in U.S. $)   Exchange Rate   Number of Salespeople

South Africa   2000   $   184 million                8.005           300,000
Estimated Global Retail Sales 1992-2001
        in billions of US dollars
90                                                85.44 82.26
                              79.32 80.47 81.87                 78.65
80                     74.9
70 62.91       67.57
         61.67
60
50
40
30
20
10
 0
     1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Estimated Global Salesforce 1992-2001
             in millions
45                                                                     43.49
40                                                             38.71
                                                       35.94
35                                             33.56
                                        30.9
30
                                24.88
25
                           21
20                 17.67
           14.91
15 12.93
10
 5
 0
     1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
      Salesforce Recruiting
   Over 400,000 per week
   200,000,000 more by 2012
    10 Largest Markets by Retail Sales (in US $)
   USA      $26.7 billion      Germany     $2.6 billion
   Japan    $22.8 billion      Brazil      $2.5 billion
   France   $2.9 billion       UK          $2.0 billion
   Korea    $2.9 billion       Italy       $1.7 billion
   Mexico   $2.7 billion       Argentina   $1.40 billion
        10 Largest Markets by Salesforce Size
   USA         12,200,000      Taiwan        2,900,000
   Indonesia   4,277,000       Japan         2,000,000
   Thailand    3,200,000       Philippines   2,000,000
   Korea       3,050,000       Mexico        1,765,500
   Malaysia    3,000,000       Brazil        1,211,000
             Trends in Direct Selling
 Multilevel/Network “Marketing” Growth
   Companies
   Sales
   Distributors
   Direct Order
   Direct Shipment
   Direct Compensation
   Party Plan Resurgence
   Auto-Ships
   Web site Usage
             Trends in Direct Selling
 International Expansion
    Cross-Border/International Sponsoring
    Seamless Compensation Plans
    Internet Usage
    80% of DSA Members
              Trends in Direct Selling
 Self-Consumption/Family Consumption
    Buying Clubs
    No Retail Sales Outside of Sales Organizations
    Special Collectors’ Clubs
    Preferred Customers
              Trends in Direct Selling
 Internet Applications
    Ordering
    Sales
    Recruiting (Domestic/International)
        Zip Code Lotteries
    Customer Service
               Trends in Direct Selling
   Mergers and Acquisitions
   Going Public
   Conglomerates
             U.S. Salesforce Earnings

   59% under US $10,000
   33% under US $1,000
   29% between US $1,000 and US $10,000
U.S. Salesforce Earnings
   Full-timers (9.8%)
      47% over US $50,000

      35% over US $75,000

      25% over US $100,000
                         Problems
   Inventory Loading, Including Sales Aids
   High Fees, Including Training
   Outrageous Earnings Claims
   Mandatory/High Cost Auto-Ships
   Multiple, High Cost Web Site Sales to Distributors
   Outrageous/Unconscionable Pricing
   Old Consumer Abuses in Emerging Markets

				
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