Direct sellers rake in over R10bn for SA economy

13 July 2016 | Economic factors

Direct sellers have managed to increase sales by 13.1%, to R10.93bn for the 2015 financial year, despite a tough economic environment.

The Direct Selling Association (DSA) represents 36 direct selling companies, which distribute goods and services through independent, face-to-face sales to consumers, away from fixed retail locations.

During difficult economic times, people often cut down on their consumption, Ernest du Toit, chairperson of the DSA said at the industry results announcement on Tuesday in Johannesburg. “They need disposable income and look for job opportunities.” Direct selling has become a viable option for employment.

Job creator

“More than 1.1m people are involved in direct selling,” said Du Toit. People are recruited “regardless of their background” and given training on the products, leadership, management, financial and presentation skills, he explained. Over 129 000 people were added to the network in 2015.

The direct selling industry is growing across the world, with a presence in over 170 countries. In the US, 1 400 direct selling companies have been established, and it makes up 20% of the global market, followed by China and Korea. Globally, retail sales increased by 7.7% to $183.7m in 2015.

Products often sold have a high perceived value, but are affordable, explained Du Toit. They are normally health or beauty products. “In the US they even sell electricity,” he said.

In South Africa, a wide variety of products are sold including jewellery, beauty, health and financial products.

Given that South Africa is a developing country, it has one of the leading direct selling industries among emerging markets, with sales for 2015 over R10bn, said Du Toit.

Sales grew by 13% in the past year and it is likely to continue growing in the double digits, he added. Personal endorsement adds trust to the message. “Face-to-face interactions show the benefits of the product which is more reliable than advertising, in some cases,” he said.

In South Africa, Gauteng delivers 42% of the sales volume, followed by KwaZulu-Natal at 12.8% and the Western Cape at 10%. “Direct sellers reach as far as they can deliver products - this includes rural areas,” said Du Toit.