The multi-level marketing (MLM) industry has experienced significant changes in recent years, with some companies seeing a surge in profits while others have experienced a decline.

The COVID-19 pandemic has had a major impact on the industry, with some companies benefiting from the shift to home-based learning and others struggling to adapt to changing market conditions.

The global direct selling market is expected to reach $1,125.52 billion by 2027, with a compound annual growth rate of 11% and 10.2% from 2023 to 2027.

Key players in the industry, such as Herbalife, Amway, and Mary Kay Inc., are expected to continue to drive growth in the market.

However, the industry is not without its challenges, with corruption existing in the e-commerce live broadcasting industry and brands paying hundreds of thousands to anchors for exposure.

Some MLM companies have closed or are closing down, while others have switched to a simple direct sales model without a recruitment component.

The shift to online shopping has posed a significant challenge to the direct selling industry, with many companies struggling to adapt to changing market conditions.

In response to these challenges, some companies have shifted their focus to online sales, with Tiber River dropping its ambassador program and shifting to direct-to-consumer online sales.

Other companies, such as Radiance Gifts, have successfully transitioned to online sales, but have had to differentiate themselves online to connect with their audience.

The Russian advertising industry has also been impacted by the pandemic, with a 5% monthly reduction in the industry during the crisis.

As a result, some MLM companies, such as Amway, have left the Russian market due to economic circumstances.

Herbalife has also stopped shipping products in Russia, while Avon and Oriflame have faced hard times in the country.

However, domestic brands have filled the niches left by foreign companies, and Russian direct sales companies have shown crisis resistance.

The MLM industry has been criticized for its business model, which can lead to financial losses for participants, with 90-99% of new recruits experiencing losses.

The industry has also been accused of being a pyramid scheme, with most commissions going to the top 1% of sellers.

Avon and Tupperware, once prominent direct selling companies, have shifted their revenue from customers to salespeople buying inventory, characteristic of MLMs.

Avon's stock value fell from $30 to $3 in 10 years, while Tupperware's stock value dropped over 90% in 5 years, indicating a decline in their business model.

Low-income young employees are vulnerable to poverty and mental health issues, making them susceptible to the false promises of MLMs.

Financial difficulties and limited access to skill-upgrading training exacerbate the financial stress experienced by low-income individuals, particularly women.

Women carry a greater burden of financial stress than men, with 76% of financially stressed individuals experiencing work-life impact.

The long-term financial consequences of participating in an MLM company can be devastating, as seen in the case of LuLaRoe, which cost women their homes and savings.

LuLaRoe was found to be a pyramid scheme, selling empty dreams and leading to financial ruin for many participants, with consultants losing money, cars, and even marriages.

The psychological consequences of participating in an MLM company can also be severe, with participants experiencing emotional and psychological harm, as well as a decline in mental health.

Income inequality, which is often perpetuated by MLMs, causes depression in two-thirds of workers and increases anxiety in low-income families due to inflation.

Young adults aged 18-44 are most affected by mental health issues, which can be exacerbated by the financial stress and powerlessness associated with participating in an MLM company.

Some MLM companies, such as Mary Kay, have continued to operate despite the challenges posed by war-torn economies and double-digit inflation, with Ukrainian women selling cosmetics to support their families.

However, even in such cases, the average consultant earnings are often not publicly disclosed, making it difficult to assess the financial viability of participating in an MLM company.

The shift away from traditional MLM models is evident in the decline of companies like Avon and Tupperware, which have struggled to adapt to changing market conditions and consumer preferences.

In contrast, some companies have switched to a simple direct sales model without a recruitment component, indicating a potential shift away from the MLM business model.

Overall, the MLM industry is complex and multifaceted, with companies experiencing both successes and challenges in recent years.

The industry's business model has been criticized for its potential to lead to financial losses for participants, and the shift to online shopping has posed significant challenges to the direct selling industry.

However, some companies have successfully adapted to changing market conditions, and the industry is expected to continue growing in the coming years.

The use of data and analytics has become increasingly important in the MLM industry, with companies using data to target and retain specific demographic groups.

User segmentation, data-driven marketing, and AI-powered analytics are just a few examples of the ways in which MLM companies are using data to drive growth and engagement.

The industry's use of social media has also become more sophisticated, with companies using social media platforms to recruit and retain members, as well as to build brand awareness and drive sales.

However, the industry's use of social media has also been criticized for its potential to perpetuate false or misleading information, and for its potential to exploit vulnerable individuals.

Overall, the MLM industry is a complex and multifaceted industry that is subject to a wide range of challenges and criticisms.

Despite these challenges, the industry is expected to continue growing in the coming years, driven by the increasing use of data and analytics, as well as the growing importance of social media and online sales.

The multi-level marketing (MLM) industry has experienced significant changes in recent years, with some companies seeing a surge in profits while others have experienced a decline.

Title:

Content: [Street Industry Watch] In the Year of the Pandemic, many people joined the "marketing" to pull down the line, but nearly half of the revenue was used to pay "multi-level" commissions.
Photo Credit: Central News Agency
What we want you to know is
At the same time, the body product channel and product spokesperson can further bring the "offline", which is the start of expanding the business and crossing the threshold of receiving commissions.
But this threshold seems easy, but not everyone can climb, because whether it is old or new distributors, most of them only contribute to the commission of the supporting role......
In the summer of 2020, it is supposed to be the graduation season of college students and the time when social newcomers are pouring out of the cage, but I saw a youthful face at a few lively junctions in the business district of Banqiao, and started the work of “listing people ” for housing construction.
Single-handed advertising placard, carrying a backpack leaning against the road light pole, the other holding a thin, seemingly split reference book, on the hot sun, earning the card holder's hard hourly salary, and paving the way for future job hunting.
When a PT (Part Time, Part-time, Part-time, Part-time) job that was originally labeled as a middle-aged, second-degree employment face, there were many young faces, can not help but make people shiver in the heat of the day!
The virus has hit households and disrupted the job market, affecting youth employment.
We have to admit that the epidemic has disrupted the pace of new people entering society and seeking jobs. Although it is at a time when the virus has not really invaded the door, the job market has been chaotic.
According to the Ministry of Labor ’ s “Youth Employment Status ” report, there are about 280,000 college graduates in 2020, a decrease of 5.4% compared to 2019. This reflects not only the decrease in the number of children and the decrease in the number of college students, but also the explosion of life extension in 2020. If further deduction is further deducted, the number of people who can work (including military service) is a low of nearly 5 years (223,000), a decrease of 12% compared to 2019. And...
As of the end of January 2021, only 68.3%, about 152,000 people, of the post-secondary students who graduated in 2020 and are working people, joined the ranks of labor / agriculture / public insurance, which is not only a low point in the past five years, but also a decrease of 24% compared with the previous year.
In other words, there are many college graduates, after more than half a year of job search, still have not successfully entered the workplace; the pressure of job search and living economy, so that they have to make very choices in this extraordinary period.
The job market is cold, and marketing continues to expand its organization, becoming a potential employment option for new people in society.
In 2021, the virus officially "invaded the door" in May, before graduating from college in the new year.
The alert of the epidemic, so that this year's job market has a cold wind, but also the unemployment rate in July this year (4.53%), blowing up the same period of high in the past decade, recently graduated social fresh people, inevitably have to face the fear of graduation, namely unemployment.
However, there is a saying in the workplace: Despite the economic downturn, business jobs such as insurance and distribution are always recruiting.
If this is not true, we can try to turn off or turn on the query function of the above industries on the job search platform to achieve a full personal experience.
However, in 2020, the number of people registered for the personal insurance business survey (85,000) increased by 5% compared to the previous year, and the number of new entrants to the marketing business is also a million people.
This is the type of occupation that people need to earn life, some people are joining is no retreat, but some people are carrying a dream forward, but the dream is very rich, the reality is very bones, when we dream in the winter, do not forget to pragmatically understand the mode of operation of the industry.
Today, let ’ s talk about selling!
Most people's stereotypes of marketing remain in the "brainwashing" of marketing conferences, constantly inculcating that this is a "personal business," getting rid of being hired as social animals, and directly attacking the freedom of wealth, and in addition, trying to give individuals the self-esteem and ability to think independently, suggesting that "thinking for themselves, not having to discuss with others."
Perhaps, some people have experienced this process of marketing to pull members off the line, some people join, some people feel that it is a "cult", but making money, quality of life, and self-empowerment (Self-empowerment) these material and psychological skills, is indeed for most people have a certain hypnotic effect.
However, most of our understanding of marketing is just the “recruitment ” discourse, and we do not have a deep understanding of how it works.
Perhaps, when we understand the logic of the industry, we can better understand why the so-called brainwashing conference is a starting point for marketing recruitment.
Multi-level marketing requires multiple distributors as sales and marketing channels
According to the Fair Trade Commission ’ s “Multi-level Marketing Business Development Survey ”, nearly 3.5 million distributors (each“ individual ” who joined members or purchased goods is an independent distributor) of 314 marketing entities (such as Anli, Ruxin, etc.) in 2020 generated a turnover of 98 billion yuan, a slight increase of 5% over the previous year. In contrast to the population over 20 years of age (more than 19.4 million people), about one in six people join the ranks of distributors.
Since all distributors replace all types of retail channels, they not only have the function of the channel, but also have the function of marketing, that is, word-of-mouth marketing, so whether they emphasize themselves as retail (sales) orientation, product recommendation (head-pulling) orientation, or emphasis on membership, they are ultimately based on "people" and "organizational hierarchy".
And the product channel and marketing costs saved by the marketing business are converted into the commission of the distributor.
Therefore, when we contact distributors and ask them why they are involved in the marketing industry, they will almost unanimously reply, "The product is great!"
Distributors continue to pay for new members by pulling down the line, expanding the organization and expanding the commission
That being said, it ’ s one thing to see how great a product is in the domain of a distributor, and constantly adding new blood is the highest goal for continuous marketing, expanding the organization, and increasing revenue and commission revenue.
Similarly, according to the Fair Trade Association report, the number of new entrants to the market in 2020 is about 1 million, and for the past five years, the number of new entrants has remained at around 1 million each year.
And in 314 marketing businesses, 96% of the joining system is to take "conditional join", of which, the most important is "order goods" (62%), "pay a deposit or membership fee" (59%), so "conditional join" is not only contributing to the marketing business and the top level of the sales (the one who pulls you in), but also contributing to the level of the commission.
In contrast, if someone joins, someone exits. The number of MLM merchants who quit in 2020 is about 450,000, and the number of exits in each of the past five years has been around 400,000 to 500,000.
The main reason for exiting is “non-renewal of contract ” (83%), which means no longer operating, no longer consuming, and the product is no longer considered“ great ”.
However, in this process, there will always be new blood distributors who will contribute to the expansion of the organization and the commission generated after the consumption of the product.
Whether old or new distributors, most are only supporting players who contribute commissions
As has been mentioned, the distributor at the same time with the product channel and product marketing (endorsement) people, their own recognition of the product, use, and purchase, to become a new member of the body and teaching.
Of course, once you can further bring in new members, new distributors, or offline, it is the beginning of expanding your business and crossing the threshold of receiving commissions.
It seems that the threshold is easy, but not everyone can climb it.
According to a survey conducted by the Fair Trade Association, 222 of the 314 marketing businesses (about 70%), and more than 60% of its distributors will make stable orders to the company; however, only 27% of all marketing companies (about 960,000 people) receive commissions, and the average commission per person is 45,000 yuan.
Therefore, most distributors who order goods either maintain their status as distributors by buying products, or sincerely recognize and continue to use the products; and by bringing in new distributors, order sales, and achieve a commission threshold, and can earn a stable salary or even become rich in this industry, not only are rare, but also the successful cases seen in various conferences or education and training survivors. "The Beautiful Misunderstanding We Have".
It doesn ’ t matter if the product is worth the price
In addition to the threshold, this kind of personal marketing and sales channels, to achieve the "multi-level" (that is, constantly expanding the organization down the line) of the business of distribution, not only eat personal interpersonal skills, "multi-level" commission distribution will indirectly increase product prices.
According to a survey conducted by the fair society, the import cost of the pyramid scheme business accounts for only 28% of the turnover, but the commission accounts for 44% of the turnover, in other words, the real cost of selling a commodity of $100 is only $28, $44 is used as the commission of the pyramid scheme business, and the remaining $28 is the administrative expenses and profits of the pyramid scheme. Whether the essence of a product is value for money is one thing, the marketing business will compress its own profits, expand its commission expenditure, and recruit and expand the organization with a strategy of large is beautiful, so that we can find: there are so many people who have joined the ranks of marketing!
Marketing has always been a very special industry, in which a small number of people have been able to earn their fair share of commissions, and become the mainstay of business operations, but the vast majority of people are only a supporting part of this multi-level marketing structure, and by paying membership fees, buying and using products, they become a part of the source of commissions.
Back to the intention of writing this article, no matter how difficult the job search for new people in society during the epidemic, I hope that by understanding the operation mode of an industry, I can assess whether to use the marketing industry as the first job to enter the society.
Through the Fair Commission report, we have gained a profound understanding, no matter how many of these people successfully earn high commissions and create successful careers, this data is hinting at us: if this industry is the main occupation, not only requires a certain degree of interpersonal relationships and skills, there may be a period of social novices can not understand life or career experience.
Source: Ministry of Labor “Youth Employment Status ”, Fair Trading Commission“ Multi-level Marketing Business Development Survey ”
Extended reading
Editorial responsibility: Ding Zhaojiu
Editor ： Weng Shihang
Tags:

The COVID-19 pandemic has had a major impact on the industry, with some companies benefiting from the shift to home-based learning and others struggling to adapt to changing market conditions.

Title:

Content: Educational Development Corp.: Growth Risk Might Be Overblown

Moat Investing
1.46K Followers

Summary

  • EDUC is the exclusive US co-publisher of educational children's books produced by famous Usborne Publishing by leveraging multilevel marketing (MLM) strategy.
  • It has strong fundamentals, fair valuation, and a compelling growth story that is being ignored by the market.
  • We arrived at a target price of $12.4 to $14.6 without incorporating any future growth and expansion in operating margins.

Investment Idea

Educational Development Corporation (NASDAQ:EDUC) has an attractive value proposition, strong financials, and optionality of significant growth ahead due to structural changes caused by COVID. On top of that, the valuation is reasonable, and management has skin in the game (owns 23% of shares outstanding). For these reasons, we remain bullish.

Business Overview

EDUC is the exclusive US co-publisher of educational children's books produced in the UK by Usborne Publishing, and EDUC also exclusively publishes books through their ownership of Kane Miller.

The business operates in two segments:

Home Business Division (Usborne Books & More or "UBAM") -(95% of revenues) - This segment sells books through consultants directly to consumers using a multilevel marketing model (MLM). Consultants sell books by hosting home parties, social media, and hosting book fairs with schools and public libraries.

Publishing Division – (5% of revenues) - Sells books to bookstores, toy stores, and other retail outlets.

If you would like to get the gist of our thesis, you can watch our YouTube video below.

Value Proposition

The children's books market is very competitive and fragmented. There are more than 135 publishers of children's books in the US. EDUC is competing with Scholastic and Pearson, which have extensive resources to run marketing campaigns and are well-positioned in both online and offline distribution channels. Although EDUC has a little moat, they have some strengths to their business model that will allow long-term value creation.

They have an exclusive and long-term relationship with Usborne. Therefore, clients of the Usborne in the US must acquire their books via EDUC. Also, there is a consensus that Usborne books are high quality and among the industry's best.

Their sales are a function of the number of active sales consultants. Commissions paid to consultants are a variable cost, and they are only paid when sales are made. Although this makes SG&A grow as the top line grows, since it's not a fixed cost to the business, it allows EDUC to achieve significant operating leverage. Also, it allows them to scale quickly and have flexibility.

Direct sales strategies like multilevel marketing are commonly referred to as pyramid and Ponzi schemes. However, the table below shows that it does work sustainably and increases revenue growth over the long run despite the negative press.

Source: S&P Capital IQ

Why might EDUC be mispriced?

There are multiple factors. Firstly, it's a micro-cap. This usually means there is limited analyst coverage, and due to the stock's illiquidity, there is low institutional interest. These factors, coupled with others, leave the company under the market radar despite its business is doing well and has promising perspectives.

Second, there is negative press around the MLM business models. The MLM model deployed by EDUC is vastly different from dodgy tactics used by other players. For example, many MLM models require the seller to purchase the inventory from the company before selling. However, this reduces the risk for the company and puts extra pressure on the seller, which can be left with expensive inventory that cannot be sold or returned. In the case of EDUC, there is no requirement to hold inventory.

Third, markets might be believing that the business's tailwinds are temporary due to COVID. Amidst Covid, schools were closed, and parents were working from home; this drove home-based learning and benefited EDUC. Additionally, unemployment rates soared, and many were left looking for work. This allowed EDUC almost to double its consultant count from 33 to 60 thousand. We believe the post-pandemic work from home trend will persist, supporting their sales. Furthermore, the active consultant might not fall back to the pre-pandemic level as these roles are usually part-time work which fits nicely with the trending gig economy.

The evidence speaks louder than words

There are also some clues from the management that revenue generated amidst pandemics might be sticky.

Management increased its dividend per share from $0.20 to $0.32. A dividend increase should be seen as a signal that a business is in solid financial shape and management is confident about its future.

Management increased capital expenditures to $4.15 million from $0.64 in 2020. This expenditure was primarily associated with equipment purchases to increase daily shipping capacity. These are some early signs that management is expecting positive growth going ahead. Additionally, this also improves their margins as amidst Covid they paid a premium for extra shifts.

EDUC has increased its inventory; the inventory build-up is approximately 60% of its total assets. This has been in anticipation of an increase in the sales, as it takes a four to six-month lead-time to have a title printed and delivered to them.

Source: Koyfin

Value Investing Approach: Asset Value

To calculate the actual asset value of the company, we tried to replicate the business from scratch. Therefore, below you will find the last reported balance sheet, where we have made some adjustments.

The value of the land recorded on books was $4.1 million. They own a 40-acre complex at 5402 South 122nd East Ave, Tulsa, with 400,000 square feet of office and warehouse space. They also own a facility located at 10302 East 55th Place, Tulsa, that has 105,000 square feet of usable space. According to our channel checks with realtors, the average price per square foot of their land lies between the range of $100 to $115. To remain conservative, we took the average price square feet to be $85. Therefore, we estimate the value of its land to be $42.9 million.

They also have a network of around 55,000 active consultants. To construct such a network from scratch is both costly and time-consuming. We estimate the replication cost of this network to be around $27.5 million ($500 per consultant). This is also roughly five months of sales commission cost incurred by EDUC in the fiscal year 2021.

The rest of the items are taken on book value.

Based on the above adjustment, we arrive at the total asset value of 106.7, and the fair value per share to be $12.4

Source: Moat Investing

Value Investing Approach: Earnings Power Value

This approach allows us to value EDUC without incorporating any growth. Here, we consider the business's historical figures (last five years) to get the normalized earnings and operating margin. To calculate the sustainable earnings, we smoothed out the company revenues for the previous five years to $131 million and then calculated the firm's average operating margin (6.5%) to arrive at the sustainable Operating Income of $8.5 million.

We add back the expenses typically spent on growth, and we estimate around 4.5% of sales is spent on growth marketing, i.e., promotion, advertisement, and discounts. Hence, we add this back as this expense is not required if the firm was not aiming to achieve growth.

We assume the normalized tax rate to be 26% and the estimated cost of equity at 9%. Therefore, we estimate Earning Power Value of the operating business to be $134 million. To that, we add the non-operational cash ($1.8 million), and we subtract long-term debt (10.8); we arrive at an implied market cap of $125.6 million or $14.6 price per share, with 12.3% upside potential, without incorporating any growth or expansion in operating margins.

Source: Moat Investing

Risks to Our Investment Case

  • Stringent regulation regarding MLM companies. For instance, the requirement to treat consultants as employees. This could have implication when it comes to taxation, wages paid and welfare concerns for workers. This could, in turn, shrink the bottom line or, worse, business model tatters.
  • The most straightforward risk is consultants quitting or switching to find other employment as the US economy improves. However, within our valuation model, we have smoothed the growth of revenue in the last five years, which is a function of l consultants recruited. Even if there is some mean reversion in terms of consultants working with EDUC due to the COVID base effect, our thesis would be less impacted.
  • As highlighted earlier EDUC’s inventory level is a significant portion of its asset. Whatever reason they become unsalable (i.e., change in taste or controversy in terms of published content) could impact our valuation.
  • Oil prices have increased significantly since last year (see below). Shipping costs are amongst the most significant component of its COGS; further rise in oil prices (consequently increasing shipping cost) could make it difficult for EDUC to remain profitable.

Source: Trading Economics

Conclusion

EDUC has an attractive value proposition, strong financials, and optionality of significant growth ahead due to structural changes caused by COVID. On top of that, the valuation is reasonable, management has skin in the game (owns 23% of shares outstanding), and investors are not even paying for any future growth at current prices. For these reasons, we remain bullish.

This article was written by

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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The global direct selling market is expected to reach $1,125.52 billion by 2027, with a compound annual growth rate of 11% and 10.2% from 2023 to 2027.

Title:

Content:
Global Direct Selling Establishments Market On Trajectory Of Substantial Growth, Projected To Reach $1,125.52 Bn By 2027

(MENAFN- EIN Presswire)

Direct Selling Establishments Global Market Report 2023 : Market Size, Trends, And Global Forecast 2023-2032

The Business Research Company's Direct Selling Establishments Global Market Report 2023 – Market Size, Trends, And Global Forecast 2023-2032

The Global Market Report for Direct Selling Establishments by The Business Research Company, detailing market size, trends, and providing a global forecast for the years 2023 to 2032.” - The Business Research Company

LONDON, GREATER LONDON, UK, December 12, 2023 /EINPresswire / -- The global direct selling establishments market is positioned for remarkable expansion, characterized by a segmentation based on type, products, and price range.

Market Size and Growth Projection: The market size for global direct selling establishments is set to burgeon from $688.45 billion in 2022 to $763.85 billion in 2023, exhibiting a robust compound annual growth rate (CAGR) of 11%. Looking ahead, the market is anticipated to soar to $1,125.52 billion in 2027, sustaining a CAGR of 10.2%.

Driving Factors: The escalating demand for additional income avenues, particularly in developing and underdeveloped countries, stands out as a primary driver for the direct selling establishments market. The Associated Chambers of Commerce and Industry of India (Assocham) forecasts the Indian direct selling industry to reach $2,169 million by 2021, underscoring the growing significance of direct selling as a viable part-time income source. Promoting self-employment and financial independence, direct selling addresses the need for supplementary income opportunities, a trend expected to propel market growth.

Explore comprehensive insights into the global direct selling establishments market with a detailed sample report:

Major Players : Key players in the direct selling establishments market include Herbalife, Amway, Mary Kay Inc., Infinitus, Tupperware, Vorwerk, Natura, JoyMain, DXN, and Belcorp. These industry leaders play a pivotal role in shaping market dynamics through innovative approaches and product offerings.

Market Restraints: The surge in demand for online shopping poses a challenge to direct-selling establishments, as e-commerce platforms often entice consumers with discounts. To adapt, some direct selling platforms have shifted their business models to incorporate e-commerce channels, addressing the evolving market landscape. The competition from online portals and changing consumer preferences is influencing strategic shifts within the direct-selling industry.

Emerging Trend : Artificial Intelligence (AI): Artificial Intelligence (AI) is emerging as a transformative trend in the direct selling establishment market. AI applications are revolutionizing customer interactions, enabling personalized marketing strategies, and optimizing inventory management. Technologies like chatbots and AI-powered software, such as Ventaforce, are enhancing operational efficiency and customer service in the direct selling industry.

Regional Insights: In 2022, Asia-Pacific led the direct selling establishments market, with North America securing the second-largest position. The geographical coverage of the direct selling establishments analysis encompasses Asia-Pacific, Western Europe, Eastern Europe, North America, South America, the Middle East, and Africa.

Access the complete report for an in-depth analysis of the global direct selling establishments market:

Direct Selling Establishments Global Market Report 2023 from TBRC covers the following information:
.Market size date for the forecast period: Historical and Future
.Market analysis by region: Asia-Pacific, China, Western Europe, Eastern Europe, North America, USA, South America, Middle East and Africa.
.Market analysis by countries: Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA.

Trends, opportunities, strategies and so much more.
The Direct Selling Establishments Global Market Report 2023 by The Business Research Company is the most comprehensive report that provides insights on direct selling establishments market size, direct selling establishments market drivers and direct selling establishments market trends, direct selling establishments market major players, direct selling establishments market competitors' revenues, market positioning, and market growth across geographies. The direct selling establishments market report helps you gain in-depth insights on opportunities and strategies. Companies can leverage the data in the report and tap into segments with the highest growth potential.

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Elevate Your Lifestyle: Luxury Furniture Market Insights, Growth Drivers and Sustainable Elegance

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Key players in the industry, such as Herbalife, Amway, and Mary Kay Inc., are expected to continue to drive growth in the market.

However, the industry is not without its challenges, with corruption existing in the e-commerce live broadcasting industry and brands paying hundreds of thousands to anchors for exposure.

Title:

Content: Broadcasters need to fight corruption.
Font Size:
Source: "Lu Jiu Finance" WeChat public number
Author: Rain Ching
Where there is an e-commerce platform, there will be corruption.
Once the e-commerce platform has experienced painful anti-corruption, today's major broadcasters have become small platforms, and anti-corruption is imminent.
In order to let a major anchor with goods, in addition to the surface of the pit fees and sales commissions, may also need to pay hundreds of thousands of dollars to its business or selection personnel to "pack a red envelope".
Live broadcast goods industry into the rectification period, after a number of head anchors were taxed, this year's 315 party was also named.
But the problems in the industry, far more than those that have been singled out, there are problems, and they are not all the anchors who have been pushed to the front of the stage.
Recently, a brand direction Lu Jiufai broke the news that if the brand itself is not particularly strong, want to enter the head of the anchor's live broadcast room, to first "hit" business or selection personnel, either directly to cash, or according to the return of goods, "otherwise not even mention".
"I don't know if the broadcasters understand this situation or not, but this is the industry rule."
This is not what the hidden rules do not hidden rules, rare things are expensive, a willing to fight a willing to suffer. "Brand Mr. Zhang Lu JiuCai said.
In response to the internal business bribery and bribery, Lu Jiufen and Meiwang, modesty, hard selection, make a friend and other head agencies have exchanged, each agency has introduced anti-corruption provisions, or set up a compliance department and other departments, internal governance, but the effect is not satisfactory.
People familiar with the matter said that since some of the head anchors have fallen, the optional head has been less, resulting in a "price" rise.
Therefore, internal anti-corruption is on the one hand, can only cure the symptoms, on the other hand, more sufficient competition can make the industry environment better, and fundamentally alleviate and solve the problem of internal corruption.
01 On the broadcast room, may need to peel N layer skin
Do daily necessities Mr. Zhang recently encountered trouble, one of his products want to head on the anchor X of the direct broadcast room, according to the previous understanding, pit fees in more than 80,000, he is confident that his products can sell hundreds of thousands of a year, more than 80,000 (RMB, the same, 17100 Singapore dollars) pit fees affordable.
I did not expect that after contacting X's team, Mr. Zhang knew that "the market has changed."
"In fact, now is an unwritten rule, if your brand is not particularly strong, such as the third line brand, new brand, to give people the head of the anchor business benefits, either cash, or according to the flow back a few points, you must give him so much."
Now the beauty brand wants to be on the X anchor of the broadcast room, they have to pay 600,000 yuan first, a mouthful price. "Mr. Zhang said.
Another Mr. Cao, who once did procurement in the company of the head anchor L, confirmed that there was corruption in the selection process. "The smaller ones are generally samples, and then there are rebates, intermediate fees, and the return point of sales.
Many brands in order to be able to be on the anchor of the goods, in the face of business to take the card, there is really no way. "
Mr. Zhang ’ s product did not end up on the X anchor ’ s studio, but only because it was “too expensive ”, not because of“ a sense of justice. ”
Mr. Zhang believes that the scarcity of goods is expensive, and the brand is willing to fight for its own exposure to do business.
In addition to the exposure, Mr. Zhang further explained that the new brand or small brand would rather give away profits to the big anchor broadcast room, and the problem of pricing. "Because the head anchor (S level) has the pricing right, after they set the price, other channels can sell according to this price."
Otherwise, unless you can make a matrix of A-level anchors, so that the whole matrix to take the product, otherwise you want to let S-level anchors with goods, it is easy to be priced. "
"S-level anchors often feel that they must be lower than A-level prices, which is easy to destroy the entire price system."
For example, when we talk to the X team this time, he wants to break the price, and another is also an S-class anchor, but also to break the price, we will not do it.
Hundreds of thousands of pieces a year, each less than 10 yuan, a few million profits are gone.
But there is no shortage of customers, willing to pay the price to find X belt people have a lot. "
The head anchor holds the exposure and pricing power, which is indeed a scarce resource for new brands and small brands.
When the interests are large enough, those who control scarce resources have the motivation and ability to take bribes and demand bribes.
"Some people earn several times more than their wages because of corruption," Mr. Cao said.
02 Inadequate internal corruption
Lu JiuCaijing and Meiwang, Qian Xun, make a friend, Xin Xuan and other companies found that most of the head anchor companies have a corresponding compliance monitoring mechanism, and said that they have not heard of "giving business money to broadcast".
In the prominent position of the official website, the United States made a clean government announcement, reminding the brand company that there is no selection of green channel, did not authorize live investment agent business, and welcome to report, "the report can be verified to get a priority selection right and exemption from a live pit fee."
A friend said that there was an internal risk control team, and that "if caught, seriously sent to prison."
The Xin Xuan team responded that the company has a special "compliance inspection department", and the supplier can report to the compliance inspection department at any time, and the contact information of the compliance inspection department is also publicly disclosed to the supplier.
From the perspective of the beneficiaries, there is little reason for the anchor to condone commercial corruption, because the traffic fees collected by the business do not go into the company or the anchor's own purse, and they have to bear the blame for the corruption of the business.
Therefore, the major anchors of the company have made efforts in the aspect of integrity, but the actual effect is not obvious.
The first reason for the difficulty in fighting corruption is the imbalance between supply and demand in the market.
On the one hand is the emergence of new brands and want to improve the exposure of small brands, on the other hand is a very limited time and energy of the big anchor, and even the number of big anchor is still decreasing, under the role of free market regulation, the overall price of the big anchor (including normal commissions, pit fees and abnormal tolls, etc.), will naturally increase.
The second reason is that the number of businesses that have access to core resources is also low.
According to Mr. Zhang, "the final selection will still have several business meetings, the core business is those few, and then they are so."
The people who hold the core decision power are limited, and these people naturally have the bargaining power.
The third reason is that some anchors are responsible for docking the brand 's business, procurement and other teams, there may be several dial-ups, there may be an official team, there may be a team led by their parents or relatives, and the information between the teams and the brand side is asymmetric. For $300,000, I don ’ t think it ’ s expensive.
Whistleblower? I never thought about it. "A brand that did not want to be named said so.
Under the existing internal and external environment, Mr. Cao believes that the main anchor will definitely fight corruption, but it can't stop it.
If you control the supply chain, it will be easier to fill it up and fake it.
03 Adequate competition may be the right medicine
In the history of e-commerce anti-corruption, the most famous person is Jiang Fang of Alibaba, who personally sent seven executives to prison.
Once in control of Taobao resources disposal of the small two, after a series of anti-corruption rectification, the bad wind has been well contained, mainly the platform has increased the intensity of encouraging reporting.
And Jingdong also has the "Jingdong Group Anti-Corruption Regulations", Liu Qiangdong has publicly said that as long as the employees are corrupt 10,000 yuan, the company will be investigated even if it costs 1 million 10 million yuan.
Just as the law is to society, internal supervision is to the company, it is only the bottom line of the code of conduct.
The main anchor internal anti-corruption can only cure the table, from the surface everyone complies, but can not root out corruption.
At present, there are two objective factors that can affect the corruption of the main anchor selection.
The first is full competition.
According to the experience of Mr. Zhang and other brands that have communicated with Lu Jiu Finance, when there are multiple head anchors with roughly equal energy on each platform, the business of the main anchors is relatively "tranquil", because of competition, it will be limited.
The return of live goods to the essence of electricity supplier, in fact, can be compared with the development path of traditional electricity supplier.
In the early days, Jingdong and Taobao fought each other, spawning the Tmall mall that Ali used to oppose Jingdong, and also allowing third-party merchants in Jingdong to access and speed up.
Later, people once thought that the electricity supplier pattern has been fixed, that time the number of active users of various platforms increased, but there was no major innovation.
Until the emergence of a lot of money, directly pointed to the sinking market, the traditional e-commerce industry ushered in another big development, and the target customer group expanded significantly.
Not only the traditional e-commerce industry in China, the development of all walks of life around the world is almost always achieved in full healthy competition, because full healthy competition can promote business innovation, but also to maximize the level of poor information.
Back to live broadcast with goods, after undergoing major rectification, the order and pattern of the industry needs to be rebuilt for a period of time.
In this process, to absorb more participants, so that between the platform and the platform, between the anchors and anchors of each platform, there began to be healthy competition, to avoid resources are concentrated in the hands of one or two heads, which may be a good medicine to root out corruption.
The second is to improve the system.
With the rapid development of the epidemic and the management experience and level of practitioners, it is obvious that the model has not kept up with the development speed of enterprises.
A once in a famous head anchor company in Hangzhou to work in the procurement told Lu JiuCai, although the company has a variety of regulations, but making money is too easy, it is almost like a printing machine, every day the company is crazy entry and exit, no one has the mind to care about these details, everyone is overloaded in operation.
Making money is too easy, which leads to a decline in the degree of management granularity, and many businesses only want to sell a product, make money, and have to ask for people, so giving gifts has become the only way.
The lack of management cognition is not only corruption, but also breeds the problem of tax evasion such as Via and Sydney before, how to let yourself learn to legally operate a business in compliance, and truly be responsible for partners, which may be the ability that broadcasters should really learn.
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Some MLM companies have closed or are closing down, while others have switched to a simple direct sales model without a recruitment component.

Title:

Content: 'Direct Selling' - Avon, Tupperware - Is Extinct

Nov. 18, 2022 11:25 AM ETHLF, MED, NTCO, NUS, PRI, TUP, USNA3 Comments
Robert FitzPatrick
394 Followers

Summary

  • Direct Selling became obsolete generations ago. So how is it that millions today get recruited for "income opportunity" in "direct selling" and billions are traded on "direct selling" stocks?
  • Avon and Tupperware are cited by "multi-level marketing," or MLM, promoters as "proof" that MLM, e.g., Amway, Herbalife, is "direct selling."
  • Usable data on actual income and churn rates of MLM "direct sellers," market saturation, and retail sales to actual customers are not provided.
  • In fact, Avon and Tupperware for years have been walking dinosaurs, still trying to do "person-to-person" sales to end-users with commodity products, while MLMs hype "unlimited" income.
  • The shrunken and devolved state of Avon and Tupperware today reveals that direct selling is extinct. MLM is not, and never was, direct selling.

It is generally accepted that "direct selling" was killed off generations ago by mass merchandising, big box stores, mail-order and then the internet, among other societal changes. The "Fuller Brush man" is long gone. No one's at home. No one wants or needs or has time for a "personal" salesperson. Everything's in stores or online. And, even when "direct selling" still lived, no one ever went into that tough line of work thinking they would get rich from it.

Yet, each year, millions are recruited, and pay thousands, for the "opportunity" to work as "direct sellers," with promises and expectations of "unlimited" income. The number involved today is many, many times greater than ever worked in that "extinct" field decades ago. Billions are being traded on Wall Street for shares of "direct selling" companies. How can this be?

In my book, Ponzinomics, the Untold Story of Multi-Level Marketing, I document the death of "direct selling" and the 1945 invention of "multi-level marketing," or MLM. I describe how "MLM" falsely assumed direct selling's revered old identity. I trace MLM from its Adam, a little California-based company called "Nutrilite," to today's "industry" led by Amway, Herbalife (HLF) down 64% YTD, Nuskin (NUS) down 31%, USANA Health Sciences (USNA) down 49%, Primerica, Inc. (PRI) down 13%, and Medifast (MED) down 45%. MLM's financial solicitations for consumers to become "direct sellers" have reached into – and led to losses for – virtually every household in America.

In the newly invented "MLM," the main source of revenue shifted from end-user customers to the salespeople themselves who are incentivized to "be their own customer" by buying their own products. Obviously, no one makes money purchasing their own inventory, but MLM offered a unique reason to do so – "unlimited" income potential.

No More Need to Knock on Doors

All MLM "direct sellers" can potentially gain "unlimited" income by recruiting an "endless" chain of other "direct sellers." No need to pound the pavement and get rudely rejected at front doors any more. Each "direct seller" on the chain has to meet a quota to "qualify" for future rewards from their recruits who, in turn, are their "own customers" and recruiters too, ad infinitum. The chain can grow without continuous personal effort. The qualifying quota can usually be met by just making a personal monthly purchase of inventory. "Commissions" on all these transactions, all the way down to the "last ones in," flow up the chain. In the MLM pay plan, most of the total commissions go to the top 1%. So, all new "direct sellers" try mightily to recruit (and buy) their way to those top ranks. Of course, only a tiny few can ever be at the top.

Some people argued this is a pyramid recruiting scheme, inherently unfair and deceptive, and a counterfeit of direct selling. In the design and the pay plan, bottom ranks – the vast majority – will inevitably lose. They said constantly adding salespeople in any area destroys profitable retail selling potential, if any exists to start with. They cited data on 90-99% loss rates and huge churn rates among new "recruits" and asked, where are the retail "customers"?

While offering no data on retail customers or salespeople losses or market saturation, MLM promoters offered "proof" that MLM is direct selling by pointing to two long-established and respected direct selling companies in their ranks, Avon and Tupperware (TUP). Both companies were members of the Direct Selling Association, DSA, and both were "direct selling" icons, Avon for its "ladies" and Tupperware for its "parties." To any pyramid scheme accusations, MLM promoters indignantly countered: "Are you calling Avon and Tupperware pyramid schemes?"

Walking Dinosaurs

The truth for both companies is very different from the MLM-spin. Avon and Tupperware used to have differentiated products and real consumer demand. Their salespeople made money from their own retail sales. But moving into the 21st Century, Avon and Tupperware became walking dinosaurs, vestiges of the extinct era of "direct selling." They were still trying to base their businesses on their historical brands and on person-to-person retail sales to real customers, as direct selling companies always used to do.

Despite MLM's citing Avon and Tupperware, and thereby bestowing legitimacy on the "MLM" members of the Direct Selling Association, deep differences between those icons of the old era and MLM burst into public view in 2013-14. The two companies publicly quit the Direct Selling Association, charging ethics violations and DSA-member connections to pyramid schemes.

Avon's Long Good-Bye

Avon had been a true direct seller for decades before MLM was invented. But as the door-to-door model faded, Avon began a long decline. In 2000, Avon began shifting its focus to "incentivizing" salespeople to recruit more salespeople and getting them to buy inventory, MLM-style. In 2009, during the Great Recession, Avon ran its most expensive ad in history, on television during the Super Bowl. The ad never mentioned any Avon products! It only solicited "salespeople." Still, global revenue dropped continuously over the next 10 years. Avon stock value fell from over $30 to just over $3.

Finally, Avon split off its faltering North American business and sold it to the Korean company, LG Household & Health Care. Avon claimed to have 250,000 sales representatives in North America. The remaining global business was later sold to the Brazilian MLM, Natura (NTCO) down 50% YTD, which also owns the retailer, Body Shop. Though Avon global was much larger, Avon shareholders traded 3 shares of Avon for just one in Natura.

The Korean-owned segment of Avon in North America is now classic MLM, selling the proverbial MLM "income opportunity" along with "health" supplements, make-up, jewelry, clothing, scented candles, even toothpaste.

On the Canadian Avon website, Avon promotes the "income opportunity," urging prospects in large bold black type: "Think big. Sell Avon part-time, full-time, you decide how much! It’s your business, your way!"

A disclosure (legally required in Canada, but not in the USA) appears midway down a long webpage in tiny, barely visible gray lettering: "The 2020 earnings of a typical Avon Leadership Representative was between $0 and $2,620 in commissions and bonuses." That's $0 to $50 a week, before subtracting all costs! And the "disclosure" does not break out how much of that tiny return comes from personal sales or the "downline."

Avon quietly rejoined the Direct Selling Association. The Brazilian company, Natura, which took over Avon's global business in 2020, has lost over 60% of its stock value in the last year.

Tupperware on the Brink

Tupperware was one of the first "party plan" companies, which are technically a small subset of MLM. They employ an "endless" recruiting chain, but are more rooted in retail sales transacted at "parties." Tupperware used to have a popular brand with innovative, differentiated products. But, as true direct selling began to disappear, Tupperware went into decline. It added MLM-type "health and beauty" commodities to bolster recruiting appeal but then deleted them. This year, it began also selling its products in Target department stores. Its kitchen-related goods are generally not distinct from other brands. A 10-months "Income disclosure" for Canada (not published in the USA) showed that half the "party planners" were classified "inactive," earning less than $30 for the period on average. 94% of the "active" ones reportedly received about $12 a week on average, before expenses.

In the last 5 years, the stock value of Tupperware has dropped over 90%. Its latest financials warned investors the company may violate loan agreements, setting off speculation Tupperware might declare bankruptcy.

The shrunken and devolved state of Avon and Tupperware, the most famous brand-icons of "direct selling," makes citing them as a defense of "multi-level marketing" as extinct as their old business model.

This article was written by

394 Followers
Robert L. FitzPatrick is the author of the new book, Ponzinomics, the Untold Story of Multi-Level Marketing (2020),the first comprehensive history and analysis of the "MLM" phenomenon, addressing its political influence, propaganda techniques and use of cult persuasion. FitzPatrick is an expert in examining and revealing deception and fraud in Ponzi schemes, pyramid schemes and bogus home-based businesses. He served as expert or consultant in more than 30 court cases involving pyramid schemes and multi-level marketing. He is co-author of False Profits (1997), an examination of the values and beliefs that support the delusions of pyramid schemes. He was featured on NBC Dateline, ABC World News, and CBS 60 Minutes, the documentary film, Betting on Zero and the podcast, The Dream.He has been quoted in many newspapers around the world, including the New York Times and Wall Street Journal. His booklet, Pyramid Nation, has been translated to Chinese and used by government regulators in writing China's first laws on pyramid schemes. His booklet, "The 10 Big Lies of Multi-Level Marketing", has been translated into four languages and posted on numerous websites. His White Paper, "The Main Street Bubble", which details the extensive influence-buying of the direct selling industry was featured in a CNBC Documentary, Selling the American Dream. In 2005, he delivered a seminar to in Colombo, Sri Lanka to central banking representatives from that country as well as India, Bangladesh, Bhutan, Maldives and Nepal. Robert FitzPatrick has developed informational resources for consumers, journalists, academics and regulators including a multi-media PowerPoint presentation and a statistical analysis of the losses suffered by participants in pyramid selling schemes. He also published a widely read booklet on the landmark federal case brought against the Amway Corporation. He is a expert network member of GLG Research, and Coleman Research Group, as well as other networks of experts who are referred to clients for consultation, speaking and report writing. In this capacity, he has provided expert consultation to financial many analysts who sought information about multi-level marketing companies and pyramid and Ponzi schemes. Robert FitzPatrick co-founded and serves as president of Pyramid Scheme Alert, the first international organization to expose and prevent pyramid scheme fraud. He personally responds to hundreds of consumer and news media inquiries each year. He has served as consultant and expert witness for Attorney General or State Attorney offices in four states, the US Dept. of Justice, and in numerous cases involving distributor fraud and pyramid schemes. Robert FitzPatrick is not an investor in multi-level marketing companies. He has never owned and never plans to own stocks of multi-level marketing companies. He has never been compensated based on any stock's performance. He does not offer investment advice and he is not an attorney.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is for educational purposes only. It discusses fundamentals of the "direct selling" business model and the evolution of "multi-level marketing."

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The shift to online shopping has posed a significant challenge to the direct selling industry, with many companies struggling to adapt to changing market conditions.

In response to these challenges, some companies have shifted their focus to online sales, with Tiber River dropping its ambassador program and shifting to direct-to-consumer online sales.

Title:

Content: 'How can we adapt': Local businesses moving online amid rising challenges

Tiber River, known for its natural body care products, is dropping its ambassador program due to numerous business challenges.

The company said the program, where people sell products based on commission, is no longer sustainable.

"Our economy is heading into a recession, supply chain issues are numerous, interest rates are at an all-time high and people have to make choices between necessities and desires when making purchasing decisions," read a joint statement from Adriana De Luca and Michelle Lalonde, Tiber River's owners.

"Costs are going up, but the ability people have to pay for consumer goods and services is going down."

The company will now focus on direct-to-consumer online sales but will still have a Winnipeg store.

The Winnipeg Chamber of Commerce said many of the hardships Tiber River is experiencing are being felt by the wider business community.

"Part of that ongoing experience of being a business owner, you're always looking at your model and how you operate, saying, 'how can we adapt to an ever-changing environment,'" said Loren Remillard, the chamber's president and CEO.

In a recent survey of chamber members, two thirds say they are optimistic about 2023, but the majority are expecting slower growth and a much smaller profit margin.

Remillard said many businesses were already expanding their online presence prior to the pandemic, but COVID-19 and subsequent challenges accelerated the process.

"You're now able to sell your wares all around the world, but you're also competing on the internet with every business around the world," explained Remillard. "How do you differentiate? How do you make sure you're connecting to potential audiences?"

Even with more businesses moving online, Remillard doesn't see physical stores going away.

THRIVING ONLINE

Radiance Gifts decided to give up its brick-and-mortar location last year after 27 years on Corydon Avenue.

Lisa Tjaden, the store's owner, said she made the move due to increased overhead costs and ongoing safety challenges.

"The significant cost that sort of drove us to this was actually shrinkage, the shoplifting, so that made the decision more palatable."

Now operating out of a warehouse, Tjaden said the change in business model was a success, being able to offer more items at a reduced price.

She noted the transition was still bittersweet for loyal customers.

"It was sad for them and does take a bit of adjusting. To realize it is still us and it's still the same business," said Tjaden.

She said she offers same or next-day delivery, and customers can still use the chat feature if they want to communicate with staff.

"We are still a local business. That's the perspective that is sometimes difficult for people to understand," Tjaden said. "We're still contributing to our community."

Other companies, such as Radiance Gifts, have successfully transitioned to online sales, but have had to differentiate themselves online to connect with their audience.

The Russian advertising industry has also been impacted by the pandemic, with a 5% monthly reduction in the industry during the crisis.

Title:

Content: Moscow, Polkovaya str. 3, office 120
© Sostav independent project branding agency Depot WPF
The use of published materials is available only when the source is indicated.
Website design - Liqium
18 +
Victoria Shumilina, Avito: what will be the advertising market in Russia
The expert told how the crisis of 2022 will change the industry
Over the past two years, the crisis has become a common state for business, but it is impossible to do without advertising in the modern world, so it is necessary to revise marketing budgets and business processes.
How will the market change after the crisis and what will be the advertising, says the head of the media advertising department "Avito" Victoria Shumilina.
What Happens to the Market in 2022
Back in March, OMD OM Group estimated that every month, while there is a special operation, the Russian advertising industry is reduced by 5%.
However, at the end of the first half of 2022, the Association of Communication Agencies of Russia (ACAR) estimated that for all this time the market has decreased by only 6% compared to the same period last year.
Mainly due to the fact that large foreign advertisers have left and well-known Internet sites have stopped working.
Online advertising fell the most – by 34%.
In addition, according to ACAR and NMi Group, in August 2022, only 22% of advertisers thought to abandon advertising campaigns this year, and 40% planned to increase the budgets for promotion in the second half of 2022 and in 2023.
Another challenge facing the market is labour migration.
In addition, the job search service Facancy noted a decrease in jobs - according to the service, the number of vacancies decreases much faster than the number of people who left or left the industry.
The number of offers for marketers and creatives went into deficit from 0.4 to 9.6, according to the demand ratio (the ratio of the number of vacancies and relevant responses).
Now the demand for applicants is much lower than the supply.
This was influenced by the departure of Western companies, the closure of start-ups, budget cuts, restrictions on remote work and other factors.
Crisis is a point of growth
Traditionally, in the fall, companies increase advertising activity, because you need to spend the planned budgets in order to keep them next year.
2022 is no exception.
If the company did not spend the planned funds, a simple conclusion is usually made from this - the money was not needed in such a volume, which means that next year you can reduce them.
But due to the departure and prohibition of foreign platforms, communication channels, formats and tools are changing.
And if earlier it was possible to simply direct funds to advertising in the currently banned social networks, now we have to look for other marketing tools that are similar in effectiveness.
Also, today there are local brands that used to consider advertising an optional item of expenditure.
They begin to actively use marketing and turn to agencies for expertise in marketing and creativity.
Small and medium businesses are testing and experimenting with what works and what doesn ’ t.
According to OKKAM estimates, the market for large advertisers will fall by 25% or more by the end of 2022.
But this fall is partially offset by SMEs, as well as the state as “National Priorities ”.
All this makes it possible for the advertising market to grow, but at the same time makes it necessary to adapt to new working conditions and requests.
That is why next year we will see a very changed market.
First, there are always new tools, and the old ones stop working – so it was with the advent of online advertising and social networks.
Secondly, economic crises affect, because marketing budgets are usually the first to be cut.
Both in 2008 and in 2013, the economic situation in Russia affected any business that was present in the country at that time.
Perhaps it was not as noticeable as it is now – then the digital was not so developed, the budgets were more modest.
But in any case, everyone had to change.
In addition, the Russian advertising market lags behind the world.
On the one hand, foreign brands in our territory had large budgets and experience.
Now we are still looking at the best international practices, adapting them to our mentality and testing local ideas.
And on the other hand, there are more advanced advertising tools behind the West, and now we have the opportunity to pump our own platforms.
After February, a noticeable increase in the number of unique users (DAU) was in Telegram - by 35%, VK and Yandex also have a small increase in DAU - 12% and 9%, respectively.
In addition, there was interest in promoting on marketplaces and classifieds - this is actually a new performance marketing tool, which is now the main focus.
Among other things, it is an effective tool for small and medium-sized businesses.
We will see significant changes in the beginning of 2023 – they will be related to products.
Since then, companies that create advertising technologies have adapted to the situation and have chosen development vectors for themselves.
For example, marketplaces and classifieds will come up with new formats of advertising for business.
Very soon, sites will begin to declare more about new opportunities for advertisers, and agencies will promote them.
Role of agencies is changing
Now the market is coming to life, there are new players who turn to local and network agencies.
It is time for tenders, which will last until spring.
But recently, large agencies are lobbying for the idea of   refusing tenders, because they want to switch to direct contracts.
However, this is hardly achievable: advertisers need to effectively spend the allocated budgets, and for this they make requests to several agencies and choose the one that will offer the best conditions.
Perhaps, after working on the tender project, the customer will return to the agency with another project directly if he likes the cooperation.
But you can ’ t do without competitions.
Now working with agencies is an opportunity to get a great expertise without hiring a staff.
First, they have experience working with large and international companies.
Secondly, the expertise is higher when working with new tools – they have already tried them in different business segments and received results.
Even now, official advertising in Telegram is developing, but only the agency business has access to the tools (but not everything), so if you want to launch official advertising, companies will have to contact contractors.
Russian Creators Untied Their Hands
Working with international brands has always meant many stages of coordination, including at the head office level.
In addition, sometimes ideas came down from above, and Russian marketers had only to adapt them to the local market.
This to some extent limited the development of creativity, and now employees of the advertising market have more opportunities to create, experiment with tools and implement their creative ideas.
Small and medium-sized businesses are also actively developing – it is historically easier for these segments to test new opportunities and experiment with advertising.
In addition, we can still be inspired by foreign campaigns and learn the best world practices.
All this will have a positive impact on the development of the advertising market.
What in the end
Display advertising on marketplaces and classifieds (banners, videos, special projects and other formats) is a promising channel for marketing.
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As a result, some MLM companies, such as Amway, have left the Russian market due to economic circumstances.

Title:

Content: Russian Federation
Moscow
+ 21 °
Society27 July 2022 10: 40
Amway is leaving the Russian market.
Oriflame and Avon next?
The largest players in various fields continue to leave the domestic market.
Direct selling is no exception.
This opens wide horizons for domestic brands
Dmitry VASILIEV
Photo by Shutterstock
SNOW KOM
March 11, among the first who made a statement about the termination of work in Russia, was the American Herbalife.
62 sales centers stopped shipping their products.
Today, such news does not seem out of the ordinary – foreign companies continue to close.
Rumors that Amway (USA) is also about to join the ranks of “sinking ships ” went for four months and, finally, found confirmation.
At the end of June, the global board of directors announced the official decision: “We have reached a point where economic, technological, organizational and operational circumstances have made it impossible for us to continue our work. ”
Meanwhile, Amway is the number one direct selling company in the world and of course many companies follow it.
STORMITH!
It is known that two other foreign brand leaders – Avon (USA) and Oriflame (Sweden) – are also going through hard times today.
According to various sources, employees admit that they do not feel a sense of stability: “The decision to leave Russia is made by top management located abroad.
We are kept to the last in the dark, in limbo, ” admits an Avon employee, who wished to remain incognito in the framework of the publication. – Do my colleagues and I expect that the story of “Amway ” will repeat itself?
Yes, unfortunately, we are preparing for the worst. ”
According to the analysis of the sites, Avon and Oriflame products are in short supply, which may indirectly indicate problems with production.
And although neither Avon nor Oriflame made any official statements, their actions are in many ways reminiscent of Amway.
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As you know, a holy place is never empty.
The released niches are filled by domestic manufacturers: new Russian brands are actively developing, and already well-known market players are increasing their capacities.
The departure of foreign brands will definitely not cause a decline in the direct sales industry.
Moreover, business analysts indicate that Russian direct sales companies demonstrate high crisis resistance.
First of all, they will not be closed for political reasons.
Secondly, in the conditions of limited choice in the labor market, economic recession and rising prices, they offer people the opportunity to earn extra money, as well as the purchase of high-quality goods for personal use with a good discount.
Of course, the most affected are those who built a business in foreign companies and planned to transfer it to children.

Herbalife has also stopped shipping products in Russia, while Avon and Oriflame have faced hard times in the country.

However, domestic brands have filled the niches left by foreign companies, and Russian direct sales companies have shown crisis resistance.

The MLM industry has been criticized for its business model, which can lead to financial losses for participants, with 90-99% of new recruits experiencing losses.

The industry has also been accused of being a pyramid scheme, with most commissions going to the top 1% of sellers.

Avon and Tupperware, once prominent direct selling companies, have shifted their revenue from customers to salespeople buying inventory, characteristic of MLMs.

Avon's stock value fell from $30 to $3 in 10 years, while Tupperware's stock value dropped over 90% in 5 years, indicating a decline in their business model.

Low-income young employees are vulnerable to poverty and mental health issues, making them susceptible to the false promises of MLMs.

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Content: Young employees with low education income are vulnerable to poverty
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A large study of low-income young employees shows that local youth with lower education and income are less likely to be “busy ” in life and work because they receive less training to improve their skills, and their mental health is lower than those in the same age group with higher income and education.
Research conducted by the Centre for Social Services Research at the National University of Singapore (NUS) on In-Work Poverty shows that low-income young employees with financial difficulties are more likely to be cheated because of financial worries.
The team interviewed 1,905 and 1,389 local residents aged 21 to 39 in two phases between October 2020 and May 2022.
The study focused on young people with an education level of polytechnic and below, with a monthly household income of between $1,900 and $5,000, and living in HDB housing.
Wu Yuhong, associate professor of social work at the National University of China ’ s Academy of Literature and Social Sciences, who led the study, presented the findings Wednesday (March 29) at a seminar on “Working Poverty ” organized by the National University ’ s Social Service Research Center.
The survey results showed that the lower the education level of the respondents, even if they worked for many years, the salary level did not match the higher education level of the same age group.
For example, after working for seven years with a university degree, the median monthly salary is about 4,000 yuan, but those with a technical education college and lower education level work for eight to 12 years, the median monthly salary is still less than 2,000 yuan.
What ’ s more, respondents with higher levels of education, belonging to professionals, managers, executives and technicians (PMET) and working in large companies are more likely to attend various training courses to upgrade their skills and get a raise, causing the pay gap to widen further.
In an interview, Wu stressed that such young employees with low education and income need government intervention to help them, otherwise they may become poor elderly people in the future.
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Financial difficulties and limited access to skill-upgrading training exacerbate the financial stress experienced by low-income individuals, particularly women.

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Content: SA’s work-life balance affected by financial stress: DebtBusters

The data drawn from the responses of 26 000 registered users of www.debtbusters.co.za who were not in debt counselling also showed that younger people and those with less income were the most anxious, with particularly women carrying the burden of financial stress. Picture: Doctor Ngcobo/African News Agency(ANA)

Published Jul 25, 2024

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South Africans’ levels of financial stress have remained elevated for the past three years, thereby affecting their home and work lives as well as their health, according to the DebtBusters’ third annual Money Stress Tracker survey.

The data drawn from the responses of 26 000 registered users of www.debtbusters.co.za who were not in debt counselling also showed that younger people and those with less income were the most anxious, with particularly women carrying the burden of financial stress.

Older people and those in the higher income bands are least worried but have the highest levels of unsustainable debt and are less likely to seek help.

Benay Sager, executive head of DebtBusters, said the long-term implications of this was probably not great from a psychological perspective, as these individuals, particularly younger generations, would feel stress and anxiety not only towards finances, but also in many other facets of life for years to come.

“I think they’ll probably need to come to terms with their new normal – if there is such a thing – in managing these stresses, but certainly, we will only know the implication in 20 or 30 years’ time when they are older,” Sager said.

Sager said the survey indicated a slight decline in levels of financial stress over the past year, from 78% of respondents last year to 75% this year. However, this was up from 70% in 2022.

“While the data points to a marginal decline, it is still at an elevated level. The trend over the three-year period is upwards.”

The survey was conducted in June. Factors that contributed to consumers feeling slightly less stressed at the time were a significant period without load shedding and interest rates that remained unchanged for over a year.

Between last year and this year concerns about interest rate increases declined by 22%. Those concerned about load shedding declined from 17% to 7% over the same period.

“Increasing interest rates and not knowing if you’re going to wake up to stage 3 or stage 6 load shedding is stressful. Consumers like certainty. Although interest rates are high, consistency is less stressful than dealing with continuous rate hikes,” Sager said.

Of the 75% of people who said they felt financially stressed, 93% said this was negatively affecting their home life, 76% their work life and 74% their health.

Compared to men, women were 10% more stressed about finances, with almost four out of five women saying they suffer from financial stress. They were 20% more stressed about health and 30% more stressed about home life.

Psychologist, Andrea Kellerman, said women were more inclined to admit and express their stress. There was also a societal expectation for women to provide emotional support and nurture their families, rather than only providing financial stability.

She explained that men tend to compartmentalise stress by focusing on one issue at a time, while women were more likely to keep all their stressors open and constantly analyse them. This tendency to juggle multiple stressors simultaneously led to increased feelings of stress amongst women.

“Additionally, consider that today more women are taking on the dual responsibility of being mothers and breadwinners. This adds on another layer of pressure, and the double burden contributes to heightened financial stress,” Kellerman said.

Most people’s main money concerns were short-term. Running out of money before the end of the month and struggling to pay off debt were the dominant worries.

While ‘more month than money’ was a primary concern across all age groups, 70% of those under 55 said they worry about finances.

The 55 or older cohort were least worried about making it through the month and paying off debt, but understandably most anxious about retirement. Middle-aged consumers were most exercised by the dual pressures of not having enough to last the month and repaying debt.

Sager said a concern was that 68% of respondents said they were spending more than 30% of after-tax income on debt repayments.

“Of these 53% used more than 40% of their pay cheques to service debt. Generally, consumers were advised not to spend more than 30% of take-home pay on debt repayment – at most 40%.”

The older people were and the more they earned, the higher their debt levels.

Sixty percent of those aged 45 and upwards had unsustainable levels of debt. The same was true of people taking home R20 000 a month and more. These were the backbone of South Africa’s middle-class population.

“The research clearly reveals that older people with higher incomes are under the greatest debt repayment pressure, yet are most resistant to seeking help. They cite not knowing who to trust as the main reason for inaction. By contrast, 54% of younger consumers show intent in dealing with money stress although are not always sure of the options available to them. The under 35s say they are embarrassed, while the 35 pluses tend to procrastinate,” Sager said.

BUSINESS REPORT

Women carry a greater burden of financial stress than men, with 76% of financially stressed individuals experiencing work-life impact.

The long-term financial consequences of participating in an MLM company can be devastating, as seen in the case of LuLaRoe, which cost women their homes and savings.

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Content: Living

How LuLaRoe cost some women their homes, cars, savings, and marriages

In 2015, Roberta Blevins was a busy hairstylist, traveling between San Diego and Los Angeles for work — and struggling to find balance between her career and co-parenting a four-year-old and nine-year-old.

Then she heard about LuLaRoe from a Facebook mom’s group. The California clothing company — known for its brightly patterned leggings and dresses — offered sales consultants a way to “earn full-time income for part-time work” from the comfort of their own homes.

For Blevins, it sounded like a dream come true.
 “I could sell leggings,” Blevins, now 40, remembers thinking. “It’s so easy. Everyone wears them.

“What I know now is that it was a scam,” she told The Post.

From 2014 to 2019, LuLaRoe leggings were pervasive on social media — slavishly peddled by women seeking the holy grail: setting their own hours and working from home, with the promise of big money. It was a classic multi-level marketing set-up — or, as the Washington State Attorney General’s Office claimed in a 2019 suit against the company, a “pyramid scheme.”

It’s now the subject of “LuLaRich,” a four-part docuseries streaming on Amazon Prime that offers a look inside the brand’s explosive growth and how it led to fraud accusations, lawsuits and, ultimately, consultants losing money, cars, homes and even their marriages.

Directors Jenner Furst and Julia Willoughby Nason also made “Fyre Fraud,” a Hulu documentary about the notorious 2017 musical festival, and say the subjects have a lot in common.

Both stories are filled with “delusions of grandeur — and this type of incessant entrepreneurship that is promoted from influencers to [strangers] on Facebook,” Nason told The Post.

By September  2017, just a little over a year after she signed on, Blevins — who hosts the podcast “Life After MLM” (as in multi-level marketing schemes) — had seen the light. LuLaRoe was a pyramid scheme selling empty girl-boss dreams. She quit.

“There were red flags from the beginning,” Blevins said.

LuLaRoe sprang from humble beginnings. Around 2012, DeAnn Stidham — who previously organized clothing parties for retailers — started selling homemade maxi-skirts from the trunk of her car.

Within five months, the vivacious Californian had moved 20,000 pieces, she says in the docuseries. In 2013, DeAnn met a woman in Utah who said she could unload a bunch of the skirts to her friends.

DeAnn called her husband, Mark. “[I] said, ‘What can I do to make it valuable to her?’” she says in the docu-series. His advice: “You sell them to her … and she gets to make double the money [selling them to her friends].

“It was instant cash and instant opportunity,” she added.

That woman became the first sales consultant for LuLaRoe, which is named for  the Stidhams’ granddaughters Lucy, Lola and Monroe.

While old-school multi-level marketing brands like Tupperware or Amway were all about women — often, stay-at-home moms — hosting parties to push product and recruit other women as sales people under them, recent counterparts such as the skincare line Rodan + Fields  rely on social media. Even the actress Ione Skye got into multi-level marketing a few years ago, selling Doterra essential oils with her singer husband Ben Lee and promoting them on Instagram and YouTube.

Consultants took to Facebook to advertise LuLaRoe leggings parties and flaunt the financial freedom, big homes and fancy cars their new gig provided.

The message spread like a wildfire. By 2016, LulaRoe had raked in more than $70 million.

It worked like this: Once a woman’s — or, sometimes, a husband-and-wife team’s — application was accepted, they paid the start-up costs (as much as $15,000) and started hustling the clothes. Typically, they marked the leggings up to $25, after having bought pairs for $10.50 each wholesale.

When Blevins joined in February 2016, buying in for an initial fee of $9,000, there was a leggings shortage — so she had to shell out more money to buy them off other consultants.

At the time, eager wannabe consultants were waiting anywhere from 90 to 100 days for approval because the company didn’t have enough manpower to keep up with demand.
LaShae Kimbrough, 43, was part of the onboarding team. She’d collect new consultants’ money — which desperate women raised by any means necessary, including taking out loans, opening zero-interest credit cards and even selling their breast milk.

Kimbrough 43, told The Post that her team was bringing in at least a $1 million dollars a day.

Consultants were compensated for recruiting new sales people to their teams. They received a cut of onboarding costs paid by their protégés who, then, brought in people under them.

In the docuseries, married couple Tiffany and Paul Ivanovsky said that, at one point, they had 1,100 people on their team and raked in anywhere from $22,000 to $42,000 a month in bonuses over the course of a year.

While the gospel of LuLaRoe spread coast to coast, the company at large was flying by the seat of its pants. The Stidhams, who have 14 children between them, installed their inexperienced offspring in executive roles.

“Did any of them have a clue how to run a company of this size? No,” former employee Derryl Trujillo says in the film.

Blevins grew skeptical when she started receiving shipments with damaged leggings — including wet pairs that she described smelling like “chlorine and death.” On Facebook, more customers were posting about how their LuLaRoe clothing was ripping on the first wear.

Sources in “LuLaRich” say it was emblematic of larger issues  — like inexperienced leadership and growing too big too fast, which led to shoddy production.

“It was like flying the plane while you’re still building the plane. And you don’t even know how all the pieces of the plane work. And you don’t even know how to fly the plane. You’re not a pilot,” said Sam Schultz, DeAnn’s nephew and former employee. He was hired to produce company cruises and retreats where acts like Katy Perry and Kelly Clarkson performed.

On one cruise for top sellers, Blevins complimented a fellow consultant on how good she looked in a swimsuit. “She said she had gotten ‘the weight loss surgery’ in Tijuana,” Blevins recalled. “She called over a mentor leader who told me all about it.”

According to former consultant Courtney Harwood who appears in “LulaRich,” DeAnn pressured top performers to travel to Tijuana and undergo gastric bypass surgery performed by her own doctor.

For Blevins, who was growing wary of a culture that was similar to religious fanaticism, it was another reason to defect. “I was like, ‘How do I get away from this conversation? Do you really think I need [the surgery]?’. That whole trip was very culty.”

Kimbrough believes DeAnn was feeding off other women’s money, hard work — and their adulation. “[DeAnn] was able to come up with a recipe to have people groveling at her feet. I give them credit for it because it happened for a long time, and they made damn good money.”

Eventually, there were more consultants than interested buyers. The market was too flooded  to turn a profit.

And the lawsuits had started pile up — numerous ones over copyright infringement, claiming LuLaRoe stole artwork to print on leggings. A 2017 class-action lawsuit challenged the company’s return policy, with customers alleging the leggings were poor quality. The brand was also sued by a former supplier  over unpaid bills

As morale started to wane, the brand implemented a policy where consultants could send back stock for a  refund of their wholesale costs. The change led to an exodus.  “I believe LulaRoe paid over a hundred million in refunds during that time,” Blevins said.

She added that the cancellation of that policy, in late 2017, led to her breaking point because she couldn’t handle people on her team saying they were going to lose their homes if they couldn’t get refunds.

In 2019, the attorney general of Washington state filed a suit against LuLaRoe saying it was a pyramid scheme that bilked thousands of people out of millions of dollars. The case was settled in 2021, with the brand paying $4.75 million.

When all was said and done, Blevins shelled out over $78,000 for inventory and sold about $83,000 — a $5,000 gross profit. She earned about $65,000 in bonuses for signing up other women, something she now regrets. But she also took out a loan to buy the clothes and still has credit-card debt.

Harwood, who was one of the top consultants, had purchased a new house and matching Chevy Tahoes for her and her husband — all to keep up appearances and look successful on the LuLaRoe food chain, and because she believed the money would keep rolling in. When she left in 2018, she had to file for bankruptcy, losing her home, vehicles and even her marriage.

“I thought I was better than everyone else,” she tearfully says in the series.
Consultant Ashleigh Lautaha, who left the company, says in the doc that she got so wrapped up in the LuLaRoe culture that she only had time for either her family or her job. Her marriage broke up.

“The company got bigger than [the Stidhams], and what they could keep up with,” co-director Willoughby Nason said of the couple. “They were putting out fires left and right.”

But she also sees how desperate women got caught up in the drive for success.
“There was a corrosive element of greed that was beyond them.”

LuLaRoe was found to be a pyramid scheme, selling empty dreams and leading to financial ruin for many participants, with consultants losing money, cars, and even marriages.

The psychological consequences of participating in an MLM company can also be severe, with participants experiencing emotional and psychological harm, as well as a decline in mental health.

Income inequality, which is often perpetuated by MLMs, causes depression in two-thirds of workers and increases anxiety in low-income families due to inflation.

Title:

Content: It is common to hear office workers complain that “everything is rising, but wages are not rising ”, reflecting the economic pressure that inflation brings to the people.
Especially in the wake of the COVID-19 pandemic, layoffs and unemployment have been common around the world, which can be described as another wave of “economic disasters ” since the financial tsunami.
The increase in the cost of living, combined with the uncertainty caused by COVID-19, can lead to more mental stress, anxiety, and depression.
Lisa Strohschein, a sociologist at the University of Alberta in Canada, said in a media interview that there are two main reasons why socioeconomic factors affect individuals ’ mental health: one is “income inequality ” and the other is“ opposition and division between the rich and the poor. ”
Unemployment, the epidemic leading to income inequality, inflation, or the “last straw ”
Strohschein said income inequality means a widening gap between the rich and the poor, as well as higher unemployment.
According to a study published in the World Psychiatry, income inequality causes about two-thirds of workers to suffer from depression, and in countries with high income inequality, workers are 1.2 times more likely to suffer from depression.
Prior to this, a study in the Journal of Occupational Behavior also revealed that 34% of the unemployed experienced psychological symptoms, with blue-collar workers at the highest risk.
Inflation has increased the anxiety of low-income families.
According to a report by the Washington Post, low-income households in the wake of the COVID-19 epidemic have found it more difficult to pay for basic groceries and necessities.
By contrast, the wealthier segments of society, with more financial buffers to absorb rising costs, have little impact on the cost of living they have to bear.
Scott Schieman, a PhD in sociology at the University of Toronto in Canada, believes that before the pandemic, people spent less and saved more money; now this pattern has changed under the “double whammy ” of the epidemic and inflation.
“With declining incomes, anxiety and stress begin to spread, and ultimately anger and resentment, ” Schieman said. Such emotions can create conflicts between rich and poor and workers, and can increase the risk of mental illness. Strohschein cautions that stressor accumulation can be the last straw for low-income groups if appropriate interventions are not put in place.
● 18-44 years old is miserable!
Melancholy, manic depressions are common.
Previous studies have shown that in 2020, adults ages 18 to 44 in the United States had the most significant impact on mental health, while adults older than 60 had the least.
Researchers assess that young people are more affected by business failures and unemployment.
The Harvard study also found that economic crises and mental health problems are more likely to find younger people.
At the peak of the epidemic in the United States in 2020, the unemployment rate of youth aged 16-19 reached 33%, and that of youth aged 20-24 was 26%. Long-term unemployment and home isolation led to an increase in obesity and cardiovascular problems among young people.
How to mitigate hidden problems caused by inflation or the epidemic? A study at the University of Pennsylvania in the United States believes that “setting goals ” and establishing daily planning lists can help individuals regain their focus on life and shift their sense of economic powerlessness.
In addition, getting connections and help with family and friends may also alleviate loneliness or anger caused by mental illness.
“It ’ s about ‘ helping out. ’ ”
Mutual help from friends, changes in government policy making, or improvements in corporate systems can change the lives of young people at the most difficult times, ” Strohschein said.
Source: This article is reported by Tidal Health, and is prohibited from reproducing without consent. Click here to view the original article.
# Health # Inflation # Financial difficulties # Unemployment # Low wages

Young adults aged 18-44 are most affected by mental health issues, which can be exacerbated by the financial stress and powerlessness associated with participating in an MLM company.

Some MLM companies, such as Mary Kay, have continued to operate despite the challenges posed by war-torn economies and double-digit inflation, with Ukrainian women selling cosmetics to support their families.

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These Women Are Selling Mary Kay Makeup From Bomb Shelters In War Torn Ukraine

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As the country’s war with Russia rages on, thousands of Ukrainian women have turned to the multi-level marketing company’s pink-packaged offerings to support their families.

By Lauren Debter, Forbes Staff

In the weeks following Russia’s invasion of Ukraine in February 2022, Marichka Lukyanova was inundated with messages from family and friends checking in to make sure she and her two children were safe from the air strikes in Lviv, where she lives. They were safe, luckily, but Lukyanova feared that her business selling Mary Kay cosmetics would be one of the casualties of war.

“I said to myself, Marichika, who will need your cosmetics if there is a war in your country?” recalled Lukyanova.

But one message surprised Lukyanova: Even in those early weeks of the war, one of her clients wanted to buy more Mary Kay facial cream before she ran out. “She did not want to age, even if rockets were flying overhead.”

American multi-level marketing company Mary Kay has shown surprising staying power during the war, with a growing Ukrainian salesforce of an estimated 70,000 women hawking its makeup, even if it means navigating frequent air siren alarms, shelling and blackouts. According to interviews with 16 people selling Mary Kay products on the ground, the cosmetics have become a lifeline for some looking to support their families or make extra money as Ukraine’s economy has suffered from the war.

“For many, it is the only source of income. Many now have husbands, brothers or children fighting,” said Elena Krivchenkova, 58, who has been selling Mary Kay products since the 90s when the company first launched in Ukraine. “It is a way to distract themselves from the horror of what is happening.”

But it’s been tough going, and the salespeople have been faced with a war-torn economy and double-digit inflation — skincare and cosmetics sales in Ukraine fell 13% to $189 million last year, according to GlobalData — along with the challenges inherent in Mary Kay’s business model.

Like other multi-level marketing companies, Mary Kay relies on individual people not just to sell its products to their relatives, friends or others in their social circle, but to recruit them to sell the products, too. There is often an intense pressure to recruit because of the pay model: Consultants, as Mary Kay calls them, make more money when they recruit new people, and their recruits recruit new people. Most people make little or no money working for a multi-level marketing company, warns the Federal Trade Commission.

"They are not helping,” said Robert FitzPatrick, a critic of multi-level marketing companies who has researched the industry for more than two decades. He noted that these types of companies can prey on people who are desperate, “selling themselves as the last best hope” but not delivering, he added.

Mary Kay itself has suffered from skepticism about its business model: Sales worldwide fell to $2.5 billion in 2022, down from $3.6 billion five years earlier, according to Forbes’ list of America’s largest private companies.

“We converted the shelter into a beauty salon.”

Tatiana Korniychuk

“Like the rest of the world, we continue to actively monitor the situation in Ukraine,” said Mary Kay spokesperson Crayton Webb. “Our leadership in Ukraine is actively engaging with employees and the independent sales force, doing everything they can to ensure their safety and supporting the viability of the business.”

Dallas-based Mary Kay, famous for giving out pink Cadillacs to its top salespeople, arrived in Ukraine three decades ago, where it found a burgeoning workforce of women eager for income. While it has a strong presence there, Russia remains an even bigger market — its fifth largest — with 180,000 consultants. But unlike major brands like Starbucks and McDonald’s and other prominent multi-level marketing companies like Herbalife and Amway that closed up shop in the country after the invasion, Mary Kay still operates there. It has had to traverse a tangle of sanctions by staying.

“We have many Independent Beauty Consultants in Russia who also rely on Mary Kay, in many cases, for their livelihood. Again, we remain committed to our mission,” Webb said, adding the company ensures “complete adherence to all laws and sanctions.”

Most of the Ukrainian consultants that Forbes spoke to say they oppose Mary Kay’s decision to remain in Russia, but seem resigned to it. “I try not to dwell on it because I cannot influence it,” said Krivchenkova. “In Russia, there are many women who have survived only thanks to their Mary Kay business. They did not want this war.”

The company’s operations ground to a halt in Ukraine after the war started because of the intense bombing in Kyiv, where Mary Kay’s main warehouse is located. In those first few months of war, consultants resorted to selling whatever products they had on hand to support themselves and their families. Some consultants have hosted charity beauty marathons where a portion of sales are donated to the war effort.

Tatiana Korniychuk, 50, began hauling her Mary Kay products into the bomb shelter during air alerts, letting women try new cosmetics while they waited for the time to pass. “We converted the shelter into a beauty salon,” said Korniychuk, who lives in Zhytomyr.

Maryna Chaikivska, 29, sold tubes of eye cream, cleanser and charcoal face masks she had stocked in her office after the war broke out. She said that netted her about $1,000 a month, paying the bills for six months. Her husband had lost his job at a pharmaceutical company after bombing in Kharkiv severely curtailed production capacity and was heading to the frontlines to put his medical degree to use treating injured soldiers.

“Mary Kay brought colors to a difficult period of life.”

Olga Boysyan

“There was no other way out,” said Chaikivska, who continued to pitch Springtime skincare regimens and bottled-up concoctions that could help combat stress-induced breakouts and wrinkles to her 1,500 Instagram followers.

Chaikivska, who lives in Lviv, used to keep some $15,000 worth of inventory on hand, but now she worries about something happening to it. She heard about another consultant who lost all her inventory after her house was hit by explosions and went up in flames. Now she keeps a third of that amount of inventory on hand.

Three months into the war, Mary Kay began delivering the cosmetics it had in its partially destroyed Kyiv warehouse. By late 2022, it was slowly beginning to ship new products as its consultants rebuilt their customer bases after millions fled the nation in search of safety. More than six million Ukrainians remain outside the country’s borders. (Mary Kay’s Webb says the company shipped products “as soon as possible.”)

That’s had a dramatic impact on businesses built on top of the multi-level marketing company. Because so many customers and consultants have left Ukraine, Elena Krivchenkova said that the incomes on her 2,000-person team have fallen by an average of 30% during the war.

Consultants have also been impacted by rolling blackouts, which make it difficult to get online to pitch products. Six months into the war, Natalia Sokratova, a 35-year-old former teacher, bought a generator so she could continue posting to Instagram, hosting online tutorials and checking in with her team. Others have bought SIM cards from different wireless providers, so that if one provider struggles to provide Wi-Fi they can try another provider.

Some have struggled to make much money from selling Mary Kay cosmetics. Natalia Marynets, a trained lawyer who began selling in 2023, spends two or three hours a day on Mary Kay and has recruited 16 consultants, but still only makes about $200 a month.

Mary Kay did not respond to questions about how much the average consultant makes in Ukraine. It does not release earnings figures except in Canada, where it says the average consultant makes $200 a year.

For many of the other women Forbes spoke to, the additional income, however incremental, wasn’t the only benefit of working as a Mary Kay consultant during the war.

“Mary Kay brought colors to a difficult period of life,” said Olga Boysyan, a former pharmacist who joined the company last year. She told Forbes selling cosmetics is a welcome distraction when she’s waiting to hear from her husband and son, who are serving in the army.

“I have an opportunity to distract our women from negativity and at the same time give them a good mood,” Marynets said. “Even during the Second World War, red lipstick was like an antidepressant for women.”

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However, even in such cases, the average consultant earnings are often not publicly disclosed, making it difficult to assess the financial viability of participating in an MLM company.

The shift away from traditional MLM models is evident in the decline of companies like Avon and Tupperware, which have struggled to adapt to changing market conditions and consumer preferences.

In contrast, some companies have switched to a simple direct sales model without a recruitment component, indicating a potential shift away from the MLM business model.

Overall, the MLM industry is complex and multifaceted, with companies experiencing both successes and challenges in recent years.

The industry's business model has been criticized for its potential to lead to financial losses for participants, and the shift to online shopping has posed significant challenges to the direct selling industry.

However, some companies have successfully adapted to changing market conditions, and the industry is expected to continue growing in the coming years.

The use of data and analytics has become increasingly important in the MLM industry, with companies using data to target and retain specific demographic groups.

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User segmentation
User segmentation, in the context of application monitoring and analytics, is an essential process for efficient application management, particularly in the field of software development in the AppMaster no-code platform.
User segmentation refers to the process of categorizing app users into different groups based on their distinctive characteristics, such as demographics, preferences, behavior, usage patterns, and engagement levels.
It enables developers, marketers, and product managers to optimize and customize their app features, communication strategies, user experiences, and overall performance in order to improve user satisfaction, retention, and monetization.
In the field of application monitoring and analytics, user segmentation is particularly critical for measuring and tracking application usage by different types of users in order to identify performance bottlenecks, improve error tracking, generate useful insights, and ultimately improve application functionality.
Furthermore, user segmentation can help the development team prioritize bug fixes, rolling out new features, and app improvements based on the specific user segments that are affected or targeted.
Developers using the AppMaster platform can benefit from its powerful analytical capabilities and integrations with other monitoring tools and platforms, enabling them to effectively segment users of their applications and derive actionable insights about user behavior and application performance.
Apps created by AppMaster are compatible with many analytical tools and services, providing a wide range of data points that can be used to create valuable segmentation for users.
There are several basic methods of segmenting users within the context of application monitoring and analytics, which can be used individually or in combination with each other to gain a more detailed and comprehensive understanding of user behavior.
1.
Demographic segmentation: This approach involves grouping users based on their demographic traits, such as age, gender, location, language, education, and income level.
Analyzing app performance across different demographics can help reveal trends, patterns, and preferences that may vary between these groups, providing valuable insights to guide app improvements and targeting and personalization strategies.
2.
Behavioral segmentation: In this approach, users are segmented based on their in-app behavior, such as the features they use, their engagement levels, session duration, and frequency of use.
Behavioral segmentation helps identify common and underutilized features, potential usability issues, and critical areas that need improvement and improvement, ultimately boosting user retention and satisfaction.
3.
Technological segmentation: This method of segmenting users focuses on the technical attributes of users, such as the types of devices, operating systems, browsers, and third-party integrations they use to access the application.
Analysis of application performance in relation to different technology sectors can reveal compatibility issues, device-specific errors, and potential opportunities for application optimization, ensuring that all users have a smooth and enjoyable application experience regardless of their technical environment.
4.
Psychological segmentation: This segmentation approach is centered around the psychological traits of users, such as their attitudes, values, lifestyles, and personal preferences.
While it ’ s difficult to discern and measure accurately, psychological segmentation can provide valuable insights into users ’ motivations for using your app, which features they find most appealing, and their overall satisfaction levels, which can benefit marketing, communications and targeted product improvement initiatives.
By leveraging the power of user segmentation in the context of application monitoring and analytics on the AppMaster platform, developers can make informed decisions and enhance their applications to meet the needs and requirements of their diverse user base.
This in turn leads to increased user engagement, loyalty, and overall app success, making user segmentation an indispensable component of effective app management and development.
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User segmentation, data-driven marketing, and AI-powered analytics are just a few examples of the ways in which MLM companies are using data to drive growth and engagement.

The industry's use of social media has also become more sophisticated, with companies using social media platforms to recruit and retain members, as well as to build brand awareness and drive sales.

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Content: Leveraging digital marketing for community engagement and impact

Harnessing the power of digital marketing is an indispensable tool to enhance community engagement and impact. Picture Shutterstock.

This is branded content.

Digital marketing plays a significant role in enhancing community engagement and creating a lasting impact. It transcends traditional boundaries, allowing organisations to reach and engage with their communities in innovative ways.

Through targeted strategies and creative approaches, digital marketing opens a myriad of opportunities for fostering connections, driving social change, and building a more involved and informed community.

Digital marketing in the community context

Digital marketing aims to build sustainable relationships and engage in meaningful dialogues with the community. It's deeply rooted in creating a two-way communication channel, where not only is information disseminated, but feedback and insights from the community are actively sought and valued.

Utilising platforms like social media, interactive forums, and community blogs, organisations can foster a sense of involvement and co-creation, allowing for a more connected and responsive relationship with the community.

Aligning digital marketing efforts with the community's core values and interests is crucial for resonance and relevance. This involves crafting content and messages that reflect the community's concerns, aspirations, and culture. Inclusivity is also key, ensuring that the digital marketing strategy is accessible and engaging for all community segments.

By using storytelling, prioritising inclusivity, and employing data-driven insights to adapt strategies, organisations can effectively bridge the gap between their objectives and the community's expectations, leading to a more harmonious and impactful engagement.

Search engine optimisation

Search engine optimisation (SEO) is an essential tool in amplifying a community's voice, ensuring its message not only reaches but also resonates with the intended audience.

A comprehensive SEO strategy, developed in partnership with a proficient SEO agency, involves keyword implementation and a meticulous understanding of search algorithms, trends, and user behaviour to optimise content in a way that enhances online visibility and engagement.

Such a strategy ensures that the community's message is heard and positioned prominently in the digital landscape, creating a lasting impact and fostering deeper connections with the audience.

Social Media

In the vibrant world of social media, it's all about creating a space where the community feels heard and valued.

By hosting live Q&A sessions, the organisation steps into a real-time interactive space, inviting community members to voice their opinions, concerns, and ideas. This direct engagement is crucial in building trust and rapport.

Additionally, using interactive polls and surveys on these platforms gives the community a sense of participation and ownership. It's a way to gather insights while keeping the audience engaged.

Storytelling on social media also plays a pivotal role. By sharing stories that mirror the community's experiences and values, a deeper emotional connection is formed. This ongoing interaction, through regular posts and active responses to comments, creates a living, breathing digital community space.

Email marketing

Email marketing, when tailored for community engagement, becomes a powerful tool for personalised communication.

By segmenting email lists, organisations can tailor their messaging to specific groups, ensuring that each email feels personal and relevant. This segmentation can be based on interests, past engagement, or demographic data.

Regular newsletters can then be used not just as a means of disseminating information but as a tool for storytelling and sharing community achievements and upcoming events, all while maintaining a personal touch.

Integrating feedback mechanisms into these emails, such as surveys or interactive links, invites community members to share their thoughts and opinions, making these communications a two-way street and deepening the sense of community involvement.

Content marketing

Content marketing in a community context is about creating a tapestry of content that informs, educates, and inspires the audience. This means producing a variety of content forms-from in-depth blog posts exploring community issues to videos and podcasts that bring a human touch to stories and discussions.

Each piece of content is crafted to resonate with different segments of the community, making them feel seen and understood. It's about sparking conversations, encouraging critical thinking, and motivating community members to take action.

Embedded within this content are calls to action, which encourage community members to get involved, whether it's through participating in community events, volunteering, or simply spreading the word.

Collaborative efforts and partnerships

In the digital marketing landscape, collaborative efforts and partnerships are about pooling resources, expertise, and networks to achieve a greater impact.

When organisations collaborate with others-be it other non-profits, local businesses, influencers, or community leaders-they tap into new audiences and bring fresh perspectives to their initiatives.

These partnerships can take various forms, from co-hosting events to joint marketing campaigns or content collaborations. Each partnership serves as an opportunity to broaden the organisation's reach and deepen its impact within the community.

Such collaborations often lead to innovative projects that directly benefit the community, creating a ripple effect of positive change. These partnerships not only strengthen the organisation's presence within the community but also foster a sense of unity and collective effort towards common goals.

Data analytics

Data analytics in the realm of community engagement is about turning numbers into narratives. By closely monitoring engagement rates, audience growth, and interaction patterns, organisations can gain a clear understanding of what content performs well and what resonates with the community.

It focuses on interpreting these numbers to understand the community's preferences, interests, and behaviours. This insight allows for a more targeted and effective approach to community engagement, ensuring that efforts are not based on assumptions but on actual data.

The analytics provide a roadmap for continuously refining strategies, ensuring that every campaign, post, or email is as effective as possible in engaging and growing the community.

Takeaway

Digital marketing is an indispensable tool in enhancing community engagement and impact. From harnessing the power of social media to partnering with an SEO agency for better outreach, each strategy plays a critical role in connecting with and mobilising communities.

By leveraging these digital tactics, organisations can create meaningful change and foster a sense of unity and involvement. The key lies in understanding the community's needs, using the right tools, and continuously adapting to the digital landscape.

However, the industry's use of social media has also been criticized for its potential to perpetuate false or misleading information, and for its potential to exploit vulnerable individuals.

Title:

Content: Your negative financial feelings actually come from social media, follow the trend of the net red debt, impulse consumption
Personal Value Added 10: 30 2023 / 08 / 13
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Open Instagram, Twitter, TikTok, and see the popular posts of influencers showing luxury hotel vacation experiences, designer clothes, do you want to live their lives, or buy the same handbag? These social media has become a powerful force shaping people ’ s ideas, behavior, and money aspirations, and are implicitly affecting our financial lives.
Social media makes 34% of people feel negative about their finances
Research has shown that social media can affect financial stability and success expectations, and when users are constantly exposed to stories of overnight riches, extravagant lifestyle KOLs and profligate behavior displays, they will have a negative view of their own financial situation and strive to emulate the lifestyle they see online.
As a result, they may fall into bad money habits, such as impulsive spending, that make it difficult to develop healthy financial measures, such as budgeting and saving.
According to the Bankrate Social Media Survey, 34% of U.S. adults who use social media say that social media has caused them to have a negative view of their financial situation.
Younger people are most affected, with 47% of Gen Z and 46% of millennials feeling negative about their financial situation after seeing someone else ’ s post.
Leading to a comparable imitation of life beyond affordability
These negative emotions include jealousy, lack of confidence, anxiety, shame and anger. Bankrate says that such dissatisfaction can lead to unreasonable financial decisions, such as overspending or taking on too much debt to cater to what others see as “success. ”
According to CNBC, research has shown that social media users who see influencers and even friends out for dinner, vacation or shopping can develop an irresistible attitude of comparison.
And comparison often leads people to pursue a lifestyle that is beyond their means, adding to personal financial stress.
Rent a mansion, shoot in disguise, rich life.
Social media tends to record only the “best ” parts of life and rarely show the unpleasant side of life.
And in these so-called "beautiful", many ostentatious posts are actually not true, and some influencers are by posing or modifying pictures to fake a seemingly bright life, in order to cheat the number of clicks.
For example, Lil Tay, a wealthy Canadian girl who was recently reported dead (later referred to as still alive), became popular on Instagram in the early years for showing off designer clothes, expensive sports cars and luxury apartments, and was later torn down by her mother ’ s boss, and the mansion was listed for sale by her mother ’ s real estate company.
The HBO documentary “Fake Famous ” also reveals the tactics of online celebrities: some of the photos were actually shot in their backyard, but located in the Four Seasons Hotel, while others rented luxury homes and fake private jet studios on an hourly basis to fake their affluent lives.
There are also lower-cost apps and websites that specialize in making fake vacation photos for social media.
Half of consumers are driven by social media
When users take the life letters shown by these dazzling rich influencers as true and follow the example of the wind, it is easy to lead to excessive consumption.
According to Bankrate, 49% of social media users make impulsive purchases after seeing a product on social media, and 64% of them regret it.
Financial stress, guilt, and dissatisfaction after impulsive purchases all lead to widespread remorse among buyers.
Emerging BNPL exacerbates poor financial habits
The BNPL (Buy Now Pay Later) service, which has emerged in recent years, often advertise on social media or cooperate with influencers, further exacerbates impulse spending. The BBC reported that the UK Financial Conduct Authority warned that some influencers failed to highlight the potential risks of BNPL products online, which may lead to people being unable to repay debts, overdue payments, and even credit scores. And...
According to a study published by the Consumer Financial Protection Bureau in March, users of BNPL services spend a median of about $1,000 on BNPL in a year.
The research also shows that these borrowers are more likely to have no savings: 25% of BNPL users have zero savings outside of their pension, compared to 16% of non-BNPL users.
Bankrate said the BNPL service, combined with the popularity of social media shopping, will make it easier for consumers to buy items that they may not need or can ’ t afford for a long time, hampering healthy savings habits.
Related articles:
KOLs with debt, Yukuang who want to get married: Documentary reveals common financial pitfalls
6 Bad Habits for the Poor How to Avoid the Poor
Young Gen Z wants to retire early, 7% want to retire at 30, but 32% still have no retirement savings
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Overall, the MLM industry is a complex and multifaceted industry that is subject to a wide range of challenges and criticisms.

Despite these challenges, the industry is expected to continue growing in the coming years, driven by the increasing use of data and analytics, as well as the growing importance of social media and online sales.