Direct Selling's Annual Economic Impact Reaches $72 Billion

Wednesday February 15, 11:11 am ET

American Retail Tradition Rises to New Heights

* Annual sales increase to $29.7 billion

* Industry's 10-year growth rate nears 80 percent

* Direct selling representatives enjoy significant social benefits

NEW YORK, Feb 15 /PRNewswire/ -- The direct selling industry contributed $72 billion to the U.S. economy in 2004, according to an economic impact study conducted by Ernst & Young and released today by the Direct Selling Association (DSA). The $72 billion includes direct, indirect, and induced impacts from $27.8 billion in wages, commissions, bonuses, and other compensation earned by the more than 13.6 million Americans who work in the direct selling industry, as well as impact from sales to customers, production activities, capital investments and tax revenue.

"The economic impact study confirms the ongoing growth of direct selling as a shopping option for millions of American consumers," said Neil Offen, DSA President and CEO. "In ever-increasing numbers, Americans are choosing direct selling because they enjoy personal contact with knowledgeable sales representatives. Consumers enjoy service, selection and social interaction that's hard to match with other shopping experiences."

Direct selling involves the sale of a consumer product or service, person- to-person, away from a fixed retail location. The industry includes global companies with household names, including Avon, Herbalife, Mary Kay, The Pampered Chef and Tupperware, as well as hundreds of small- and medium-sized businesses.

Direct selling offers a wide variety of products, ranging from cosmetics and wellness products to home decor and clothing. The largest categories of product sales are personal care products ($9.1 billion), home/family care ($9.1 billion), and wellness products ($4.8 billion). Direct selling companies also offer many other interesting products and services such as pet supplies, toys and children's accessories, in-home photo shoots and much more.

The study also found significant social benefits that flow to those who work as independent sellers. These include the flexibility that allows them to own and operate a business while caring for their families, higher self-esteem and confidence as a result of their direct selling experiences, and high levels of satisfaction (More than 89 percent described satisfaction with their direct selling experience.).

"A growing number of companies recognize the benefits associated with direct selling -- low overhead, robust cash flow, a highly motivated workforce and loyal customers among others -- and are diving into the direct selling market," said Offen. These companies include retailers and other companies such as Jones Apparel Group, Citigroup, Hallmark Cards, Lillian Vernon, Jockey, The Body Shop, and Vanity Fair.

Other key findings from the study, titled "The Social and Economic Contributions from Direct Selling -- Insight from the United States," include:

* Economic activity generated by the direct selling industry resulted
in $6.6 billion in total federal, state, and local taxes in 2004.

* Direct selling organizations gave an estimated $90 million to
charitable causes in 2003.

The study is part of a world-wide effort of the World Federation of Direct Selling Associations (WFDSA) to collect country-specific economic impact data.

Direct Selling Economic Impact Study

KEY FACTS

Industry Overview

* Direct selling is a large, growing and unique industry in the United
States. Sales have increased nearly 80 percent over the past 10
years, from $16.6 billion in 1994 to $29.7 billion in 2004.

* Direct selling provides significant economic and social contributions
to American families, and to the country as a whole. The industry
offers an alternative income source and schedule flexibility for
millions of households.

* Direct selling offers a wide variety of products, ranging from
cosmetics and wellness products to home decor and clothing.

The largest categories of product sales are personal care products
($9.1 billion), home/family care ($9.1 billion), and wellness
products ($4.8 billion).

Size of Industry

* In 2004, there were approximately 13.6 million independent sellers
who received compensation (commission, overrides or bonuses) from
direct selling companies.

Economic/Fiscal/Social Contributions

* About 80 percent of independent sellers are women. Most are
married with three or more people in the household, and many have
a spouse who is also involved in their direct selling business.

* Taxes generate $6.6 billion -- $2.2 billion direct, and $4.4 billion
indirect.

Benefits to Consumers

* Direct selling companies gave an estimated $90 million to charitable
causes in 2003. Eighty-nine percent of the independent seller
respondents said they contributed to human services and charities,
and 36 percent of respondents contributed to education.