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.
10. USANA Health Sciences, Inc. (NYSE:USNA)
Revenue: $1.01 Billion
USANA Health Sciences, Inc. (NYSE:USNA) is a multi-level company that makes dietary supplements and has operations in 20 countries. The company’s network consists of Associates, who sell products and Preferred Customers, who buy products for their personal use. At the end of 2016, USANA Health Sciences, Inc. (NYSE:USNA) had 471,000 active Associates, including 384,000 in the Asia Pacific region, and 93,000 active Preferred customers worldwide. The company says that its associates can earn up to 18% on retail sales, but according to its statistics in 2016, 58% of its U.S Associates earned nothing, while 26.17% earned between $1 and $500. At the same time, 0.08% of its associates (34 people) made between $200,000 and $1,000,000. USANA Health Services, Inc. (NYSE:USNA) says most associates join the company to buy products for themselves, which is why they don’t earn anything. At the same time, the section on the company’s website titled “Why USANA”, puts a big emphasis on its earnings potential.
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9. Ambit Energy
Revenue: $1.20 Billion
Not all multi-level companies sell physical goods. Ambit Energy, the number 9 in our list of top 10 direct sales companies in USA, for example, provides electricity and natural gas services. The company signs up independent consultants who then work with customers, who are offered a one- or two-year fixed-rate contract for utilities. Individuals who want to start selling Ambit Energy’s plans sign up and are named as Marketing Consultants and can advance up to the Executive Consultant rank. Ambit Energy was sued several times on allegations that it increased prices and defrauded its customers. In 2015, Ambit had to refund $950,700 to 1,566 customers in New York after an investigation from the New York Public Service Commission.
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8. Jeunesse
Revenue: $1.41 Billion
Eighth on the list of the top 10 direct sales companies in USA is Jeunesse, which offers skin-care products and supplements, on which its distributors can earn profits ranging from 20% to 45%. In addition, distributors can get other people to join and earn commissions on their sales. With more people added to the network, individuals can advance up the rankings and earn more money, as it usually is with multi-level marketing.
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7. Primerica, Inc. (NYSE:PRI)
Revenue: $1.52 Billion
Primerica, Inc. (NYSE:PRI) ranks 7th in our list of top 10 direct sales companies in USA. It sells insurance and financial services through independent representatives. The company, which was separated from Citigroup Inc (NYSE:C), has around 116,800 representatives in the U.S and Canada as of the end of 2016. Last year, the company had around 262,700 new recruits, all of whom paid an entry fee, but the number of newly-licensed representatives amounted to just 44,700. In 2014, each sales representative of Primerica, Inc. (NYSE:PRI) earned an average of $6,030.
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6. Nu Skin Enterprises, Inc. (NYSE:NUS)
Revenue: $2.21 Billion
Nu Skin Enterprises, Inc. (NYSE:NUS) is next on the list of the top 10 direct sales companies in USA. The company offers personal care products and dietary supplements. It had 988,000 customers at the end of 2016, which bought products for personal use and an average of 48,521 active distributors during the year. Each active distributor earned around $2,224 on average in commissions during 2016.
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5. Tupperware Brands Corporation (NYSE:TUP)
Revenue: $2.21 Billion
Tupperware Brands Corporation (NYSE:TUP) ranks 5th in our list of top 10 direct sales companies in USA. It is a direct selling company specializing in household goods, mainly storage and serving solutions, but it also sells cosmetics, skin care, and personal care products. It had a total sales force of 3.11 million at the end of 2016 and an average active sales force of 687,160 during the year. In addition, it had around 118,300 managers and 2,100 distributors.
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4. Mary Kay
Revenue: $3.50 Billion
Texas-based Mary Kay, that’s up next in our list of top 10 direct sales companies in USA, is a multi-level marketing company that offers cosmetics products. In 2015, the company had around 3.50 million consultants, 39,000 directors and 600 national directors. Consultants earn money through retail sales, where they can get a commission of up to 50% and they also get a commission from recruiting new people.
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3. Herbalife Ltd. (NYSE:HLF)
Revenue: $4.50 Billion
The notorious Herbalife Ltd. (NYSE:HLF) ranks third on the list of the top 10 direct sales companies in USA. Herbalife is one of the most well-known multi-level marketing corporations, which sells weight management products, healthy meals, snacks, and sports and fitness nutritional products. It has around 4 million members, including 636,000 members that are at the “sales leader” level and 573,000 members at the “supervisor” level. Around 86% of its U.S members did not receive any earnings from Herbalife Ltd. (NYSE:HLF) in 2015, with the company saying that the majority of the members join to obtain discounts on products.
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2. Avon Products, Inc. (NYSE:AVP)
Revenue: $5.70 Billion
Avon Products, Inc. (NYSE:AVP) ranks second in our list of top 10 direct sales companies in USA. It has around 6.4 million representatives and offers beauty, household, and personal care products. Last year, the company sold the remainder of its American business to Cerberus Capital Management for $605 million. Under the terms of the agreement, Avon North America was separated from Avon Products into a privately-held company owned by Cerberus. Avon North America is engaged in the same operations as it was under the ownership of Avon Products, Inc. (NYSE:AVP) and licenses the rights to use the Avon brand.
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1. Amway
Revenue: $8.80 Billion
Amway is the largest direct sales and multi-level marketing company. Its distributors are referred to as “independent business owners” and sell products directly to customers to earn a commission, and also can sign up and mentor other people in order to earn a performance bonus based on the sales generated by those people down the line. Amway claims to have millions of distributors and the company was in the spotlight on many occasions in relation to some of its distributor groups using “cult-like” tactics to attract and keep new distributors. According to multiple reports, the majority of Amway distributors don’t make any money. In the U.S, Amway is required to indicate on its products that 54% of Amway recruits don’t make any money and the rest earn an average of $65 per month.
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These are the top 10 direct sales companies in USA. As you can see, at most of these companies the earnings potential is very overestimated and a lot of people either don’t make money, or can even lose money. This is why direct sales companies are constantly scrutinized and require a lot of research in the event that someone wants to get involved.
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