The New Kids on the Direct Selling BlockGarrett Hughes, Content & Community Manager, Hyperwallet
Is direct selling only for old people?
Maybe ‘old people’ is an overstatement, but you know what I mean. It’s a label that we see a lot in this industry: direct selling is reserved for middle-aged people hoping to make some money on the side, or retirees looking for something to keep them busy. Heck, I’m a young guy—it’s how I thought of direct selling until I started working at Hyperwallet and got a better understanding of the business model. I can still remember when, as a teenager, the MonaVie craze hit our town in force, and all of the adults in my life were suddenly wrapped up in direct selling. My mom went to local MonaVie events with her friends. My history teacher described the health benefits of the acai berry. My great-aunt boasted about her tidy side income.
Of course, that was just one kid’s experience, and it’s obviously an incomplete picture of the industry as a whole. But it’s got me thinking: is there any merit to direct selling’s reputation as an occupation for older adults?
To find out, we’ve got to go to the numbers.
The Generational Divide
I’m sure that most of you are familiar with the Direct Selling Association’s annual industry overview. In their 2016 analysis, the DSA reported that the industry’s age segments are relatively balanced: 8.2% are under 25, 21.4% are between 25-34, 26% are between 35-44, 23.3% are between 44-54, 14.3% are between 55-64, and 6.8% are over 65. Relatively even, though skewing slightly towards middle age. More interesting, though, is the growth of the youngest segment of direct sellers. The DSA reported in their 2013 industry overview that individuals aged 18-34 made up just 23% of direct sellers. Today, that number is closer to 30%.
According to the DSA, the demographics of the direct selling industry are changing—and they’re changing faster than many of us would expect. But who are these social selling newcomers? And what does the emergence of Millennials mean for your company?
Who Are Millennials?
You’ve already heard plenty about Millennials, the youthful group of individuals born between 1980 and 2000. Perhaps you’ve even heard (or perpetuated) some of the negative stereotypes with which Millennials are often branded: they’re lazy; they’re entitled; they’re narcissistic. While the validity of these labels is up for debate, if you’re a direct selling executive with an aging sales force, you’re going to want to drop them real fast. Whether you like it or not, the Millennial generation is going to decide the future of your company.
Many direct selling organizations are facing a recruitment crunch. Older distributors are beginning to age out of the industry and competition for the limited pool of veteran direct sellers is increasing. Although direct selling has seen modest growth in the United States over the past several years, it pales when compared to the boom we’ve seen in certain Asian and Central and South American markets—for example, China saw an 19.0% increase in sales in 2015, compared to just 4.8% in the United States. Part of the reason, no doubt, is the lack of new recruits: direct selling has been a major industry in the United States for decades, while it’s only just recently taken off in many other countries. If American direct selling companies want to accelerate—or even sustain—the current pace of growth in the United States, they need a new source of domestic direct selling recruits.
According to Mary Meeker’s annual Internet Trends report from Kleiner Perkins Caufield Byers (KPCB), Millennials are now the largest generational group in the American workforce. More importantly, many Millennials rank a flexible work schedule as the most important feature in a job, and more Millennials say that they’d be willing to take on freelance work than individuals over 35 years old. In fact, if we look at the age distribution in the on-demand economy—companies like Uber and TaskRabbit that help connect independent workers or producers with consumers—we see that Millennials make up the majority of the workforce, compared with much less participation from Gen Xers and Baby Boomers. Need a new pool of direct selling recruits? Millennials might be the best candidates you’ve ever had.
Getting in Touch with Millennials
It seems like all anyone can talk about these days are Millennials. Study after study seeks to unlock the mystery of these enigmatic beings: Millennials, what do they want? And while I’ll be the first to admit that Millennial-mania has gone on long enough, direct selling companies hoping to attract young entrepreneurs to their opportunity need to be aware of two key Millennial motivations. What are they? Find out in upcoming part two of The New Kids on the Direct Selling Block.
The New Kids on the Direct Selling Block was originally published by Hyperwallet at