The top 10 direct sales companies in USA generate billions of dollars in revenue thanks to the direct sales industry growing and attracting more people. Direct sales have many advantages for individuals, as the industry allows them to start their own business without a big initial investment that would be required in the case of a franchise, or without the need to build their own company and brand from scratch.
This is why there were 20.5 million people involved in direct selling the U.S in 2016 according to the Direct Selling Association. However, because many of the companies that sell products directly to consumers instead of using retail locations or online stores, are network marketing companies, they provide relatively low levels of income, which is why the number of people actually using direct sales as a business is much smaller. Out of the aforementioned 20.5 million people, only 5.3 million people were using direct selling as a business and just 800,000 were doing this full-time. The other 15.20 million simply buy and use the discounted products offered by direct selling companies.
Nevertheless, the direct sales industry generated revenue of $35.54 billion in 2016, which was a slight decline from $36.12 million in 2015, but has nonetheless substantially grown from $29.87 million in 2011. However, comparing to total retail sales of $5.5 trillion in 2016, the share held by direct sales is tiny.
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How do direct sales work? There is actual direct selling, when an individual becomes an independent representative or an independent distributor, sales representative, etc. and then sells a company’s products directly to consumers, either through directly communicating with the customer, through events, or through the internet. And then there is multi-level marketing, which involves signing up more people that either become distributors themselves, or just buy products for personal use and the individual receives some royalties in addition to compensation from direct sales. Most direct selling companies position themselves as multi-level marketing companies and they are often slammed for scamming people and are often declared to be pyramid schemes. In 2016, John Oliver targeted multi-level marketing on his “Last Week Tonight” show, saying that many of these companies’ business models are very similar to pyramid schemes. Take a look at the segment below:
One of the companies that Oliver mentioned was Herbalife Ltd. (NYSE:HLF) and he is not the only one who considers that company to be “deceiving” its distributors and customers. Billionaire activist Bill Ackman has spent a large part of the last six years campaigning against Herbalife Ltd (NYSE:HLF), which he considers to be a pyramid scheme.
In this way, while companies engaged in direct sales make billions in revenue, the people who actually do the selling are struggling. According to an Inc.com article from 2010, the median income for an MLM representative is about $2,400 a year. Nu Skin Enterprises, Inc. (NYSE:NUS) shows that in 2016, the monthly average commission income at each level ranged from $32 for active distributors to $38,217 for a Blue Diamond Executive (the highest rank). At the same time, just 9.72% of the total distributors received a check and the numbers for other levels are much smaller, mostly being under 1%.
While people that sell products offered by direct sales companies don’t earn much money, you might want to check out this list of 11 good products to sell from home, for more profitable ideas.
With this in mind, let’s take a look at the top 10 direct sales companies in USA in terms of revenue and compare their revenue with what their distributors are making. The list is based on Direct Selling News‘ Global 100 List. Check it out starting on the next page.
