More than one year since the start of the coronavirus pandemic, the international finance market is still in upheaval. The International Monetary Fund (IMF) estimates that the global economy shrunk by 4.4% in 2020. In addition, most world economies are struggling with rising unemployment. Yet, despite those dismal figures, the direct selling industry is thriving. QNET, a Hong Kong-based direct selling industry leader, is experiencing double-digit growth amid the economic downturn.
According to the latest Direct Selling Report findings, published by the World Federation of Direct Selling Associations (WFDSA), global direct sales increased by 2.3%. That is up from USD 175.3 billion in 2019 to USD 179.3 billion in 2020. Furthermore, the report finds that the three-year compound annual growth rate (CAGR) of 3% (excluding China) means that direct sales are flourishing when most other commercial sectors are experiencing a downward trend.
What Is Direct Selling?
It is the modern evolution of the traveling salesmen, which was a staple of the American economy in the early 20th century. Direct selling is a way to promote products straight to the end consumer outside of a brick-and-mortar retail location. In addition, word-of-mouth from existing customers is an effective method for businesses and salespeople worldwide to promote their unique services and products in a range of categories such as health and wellness and nutrition, personal and beauty care, and home goods.
Scheduling is flexible with direct selling, making it appealing to many people juggling multiple responsibilities during the pandemic. Plus, it is an excellent way to become a microentrepreneur by promoting direct selling companies or by being a distributor.
The Pandemic Effect
Historically, the direct selling industry has always experienced growth during economic recessions. During unstable financial times, as unemployment rises, people create new businesses while looking to generate more income. Instead of paying for retail space, direct selling offers these entrepreneurs the ability to open up shop with much less capital, operational and logistical hassles.
The foundation of successful direct selling business is built on the relationship distributors construct with their customers. During the early days of the pandemic, the direct selling industry did take a hit due to the uncertainty of international lockdowns and isolated consumers. For an industry traditionally tied to in-person interactions, embracing new technology has been critical. The companies that were able to adapt and shift to digital tools and or embrace virtual events managed to recover and or thrive.
The 23-year-old e-commerce giant QNET quickly learned that digital business is, indeed, big business in the wake of the coronavirus pandemic. They saw a record-breaking growth of up to 65% in some African markets. The increased demand for online shopping and the transition to digital played to QNET's strengths: high-quality personal relationships and a high-performing e-commerce platform.
QNET's European business is proud to have earned the Digital Business award. They were recognized for QNET's swift implementation of digital solutions, including online business presentations, social media workshops, and training sessions. In addition, they embraced virtual communication tools to support the network of distributors.
The pandemic has also ushered in an increased awareness of personal health concerns, which has given an added boost to the health and wellness industries. As a result, companies with health and wellness products experienced significant growth in their sales as these products took the lead in global direct sales worth USD 64.8 billion.
Social commerce and cutting-edge technology-driven tools are excellent for companies to utilize, in conjunction with traditional direct sales, which offer the opportunity for personal and professional growth. There has never been a better time to embrace direct selling, though direct selling companies must adapt to the changing world and accept the paradigm shifts that will shape the future.
Two Markets to Look out for in the Future
Asia is the most significant contributor in global sales for 2020 with a whopping USD 76.5 billion, which is 43% of overall sales. Despite the drop in year-over-year sales by 3.6%, Asia maintains its position as the biggest market for direct selling. Asian Development Bank estimates Asia's economic outlook to rebound, with its GDP hitting 5.3% by 2022. This report indicates that direct selling in Asia will see growth trends in the coming year as movement restrictions ease and traditional retail regains momentum. Southeast Asia's online sector alone is expected to reach USD 300 billion by 2025.
Though the most significant increase is happening in Africa. The region can become the new frontier of direct selling via remote work because Africa has one of the highest three-year compound annual growth rates (CAGR) at 6%. That's a result of drastic numbers of denizens adopting digital technologies to boost productivity and employment opportunities—all a very welcome wellspring for QNET's growing outreach.
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