Direct Selling News Ignite Feb2009

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Any company that is written about in Direct Selling News is one that has credibility, success, and opportunity.

Transcript of Direct Selling News Ignite Feb2009

  • 1. Industry News TheBillion DollaRCluB how the Top Companies Compare by Brittany Glenn

2. Tired of reading about the global economic crisis?Heres the good news: Among the many industries falling by the wayside,the direct selling industry is charting a strong and steady course around the world. So strong and steady that we thought it would be interesting to see how the industrys topcompaniesthose with annual billings of more than US$1 billion were faring, despite all the doom and gloom reported by the media.We decided to call this very exclusive group of industry leaders the billion-dollar club.Although each company has a healthy respect for todays global economic challenges, each is experiencing continued growth and success. Most of the executives we spoke to believe the current financial crises are responsible, at least in part, for the direct selling industryscurrent solvency and success.continued on page 8 3. The Billion DollarClub continued from page 7And now, wed like to invite you to peek inside the companies that comprise the direct selling Name of Company: Avon Products Inc. industrys own billion-dollar club. Type of Company: Public (AVPNYSE) Number of Employees: 42,000 Number of Markets: More than 100 1. Avon Products Inc. $10.9 Billion Revenue: $10.9 billion in revenueTopping the billion-dollar club list is, of course, New York City-basedfor last four quarters (Q4 2007 Q3 public company Avon (AVPNYSE), the industrys mother ship. As2008); $9.9 billion in revenue for 2007 the worlds largest direct seller, Avon markets to women in more than 100 Jul Sep 2008 (Q3 2008): countries through 5.5 million independent sales representatives.$2.6 billion in revenueJudging by Avons latest financial figures and its third-quarter earnings Apr Jun 2008 (Q2 2008): statement, the company is in a growth cycle.$2.7 billion in revenueIn 2007, Avons revenue was $9.9 billion. Over the last four Jan Mar 2008 (Q1 2008): quartersQ4 2007 through Q3 2008Avons revenue was $10.9 billion.$2.5 billion in revenue Additionally, third-quarter 2008 revenue grew to $2.6 billion, a 13 percent Oct Dec 2007 (Q4 2007): increase over Q3 2007.$3.1 billion in revenueAvons third-quarter performance reflects continued momentum of our turnaround plan, Andrea Jung, Avon Chairman and CEO, said in a press release. Our investments in advertising and the Representative Value Proposition (RVP) are yielding strong results.Avon was ranked No. 265 on the 2008 Fortune 500 list. Name of Company: Amway 2. Amway Corporation $8.2 BillionCorporation Type of Company: PrivateIn the No. 2 spot is direct selling giant Amway. Its annual sales for 2007 Number of Employees: 13,000 were $7.16 billion, and for 2008 were $8.2 billion. Number of Markets: More than 80Amway Chairman Steve Van Andel says the company continues Sales: $7.16 billion annual sales to remain optimistic about its future growth potential, despite a bleakin 2007; $8.2 billion annual sales economic outlook in some of its markets. Amways rapid expansionin 2008 around the world and the acceptance of the direct selling business model by countries such as Russia, India, Ukraine and others, has blunted the impact of the economic downturn on our company, he says.In late 2007, Amway completed its production and warehousing facility in Vietnam. Since then, Amway Vietnam Co. Ltd. has become one of the companys fastest-growing markets. Officially launched in February 2008, Amway Vietnam now has more than 40,000 independent business owners throughout the country, Van Andel says.In 2009, Amway plans to increase its efforts in more established markets such as the United States and Great Britainto revive our former buoyancy, Van Andel says.Were expecting big things to happen in 2009, such as continuing to increase our visibility through advertising, sponsorships and a growing physical presence around the world, he says. 8 Direct Selling News | February 2009 4. TheBillionDollar ClubBut to a certain extent, Vorwerk is 3. Vorwerk & Co. KG $3.15 Billion protected from financial turbulence. As aFounded in 1883 as a carpet company, Wuppertal,financially viable, family-owned company, we German-based private firm Vorwerk & Co. KG has been are not dependent on banks, Hardt says. selling quality productsfrom household appliances toHardt says, as others have, that more people may be cosmeticsthrough the direct sales channel since 1930.willing to join Vorwerkand other direct selling companies, For 2007, Vorwerk reported a sales volume of $3.15 billiontooduring tough financial times. Availability of salespeople (2.32 billion).is one of the most important factors for success in directVorwerk is the parent company of JAFRA Cosmetics,sales, he says. Our growth expectations are unlimited. which had a sales volume of $469.71 million (342 million) in 2007.Regarding the current monetary malaise affecting countries worldwide, Vorwerks managing partners decided not to participate in the global economic crisis, says Vorwerk Senior Vice President of Corporate Communications Jrgen Hardt. In truth, the Europeanand especially German Name of Company: Vorwerk & Co. KG economy is better prepared for global turbulences than other Type of Company: Private parent company parts of the world.of JAFRA CosmeticsWhile Hardt says Vorwerks growth has been significant Number of Employees: 23,000 in the past 10 years, he admits the firm must be careful to Number of Markets: 61 balance potentially negative influences. The company will Sales Volume: 2.32 billion ($3.15 billion) in not be totally free of the negative impact of the crisis, he says. sales volume for 2007 While our business isnt countercyclical to the economy, 4. Herbalife Ltd. $2.4 Billionas of Q3 2008, it seems to be resilient to the economy,Los Angeles-based public company Herbalife says Des Walsh, Herbalife Executive Vice President, (HFLNYSE) sells its products through more than Worldwide Operations and Sales. Eighty percent of our1.9 million independent distributors who conduct business is outside the United States, so were constantly business worldwide. In 2007, Herbalifes net sales were operating in various economies. Naturally, in a tough $2.14 billion. Over the last four quartersQ4 2007economic climate, our business opportunity is even more through Q3 2008the companys net sales wereattractive to someone who loses his job or is in need of $2.4 billion. supplemental income.Walsh says Herbalife has made substantial investments Name of Company: Herbalife Ltd. in markets outside the United States. In 2008, Herbalife Type of Company: Public (HFLNYSE)opened four new markets: Honduras, Guatemala, Number of Employees: 3,644Nicaragua and Ecuador. Number of Markets: 70Herbalife has also invested more than $50 million Net Sales: $2.4 billion in net sales forin upgraded Oracle applications, so it has the IT last four quarters (Q4 2007 Q3 2008); infrastructure necessary to support significant $2.14 billion in net sales for 2007 future growth. Jul Sep 2008 (Q3 2008): $602.2 Were currently doing business in 70 countries, but million net sales there are several markets we are planning to open in 2009, Apr Jun 2008 (Q2 2008): $639.7Walsh says. Also, were focused on more deeply penetrating million net sales our existing markets and globalizing best practices. Jan Mar 2008 (Q1 2008): $604.4 million net sales Oct Dec 2007 (Q4 2007): $578.1 million net sales continued on page 9 5. TheBillionDollar continued from page 9 Club Name of Company:5. Mary Kay Inc. $2.4 BillionMary Kay Inc. Addison, Texas-based private company Mary Kay Inc. was founded in Type of Company: 1963 by Mary Kay Ash with her life savings of $5,000. From its humblePrivate, family-ownedbeginnings in a 500-square-foot Dallas storefront, Mary Kay Inc. has grown Number of Employees: into one of the largest direct sellers of skin care and color cosmetics in the5,000world, with a global independent salesforce exceeding 1.8 million. Number of Markets:Since the firms founding, Mary Kay Inc. has averaged double-digit growthMore than 35 each year. In 2007, the firm generated $2.4 billion in wholesale sales. Sales: $2.4 billion inMary Kay opened its first international marketAustraliain 1971, andwholesale sales forits most recentIndiain 2007. Among its more than 35 active markets,2007 Mary Kays three top international markets are China, Russia and Mexico.In 2009, Mary Kay Inc. plans to invest time and money in its corporate social responsibility initiative, Pink Changing LivesSM. Mary Kay Inc.s financial and product donations spotlight changing the lives of women and children around the world, with a focus on the prevention of violence against women. Additionally, Mary Kay Inc. will plant 100,000 trees in North America and embark on a groundbreaking initiative to turn waste from its manufacturing process into usable energy. 6. Primerica Financial Services Inc. Name of Company: Primerica Financial$2.3 BillionServices Inc. Based in Duluth, Ga., private firm Primerica Financial Type of Company: Private, subsidiary;Servicesa subsidiary of public parent company Citi Parent company, Citi (CNYSE)(CNYSE)boasts the largest salesforce in the financial Number of Employees: 2,000services industry. There are approximately 100,000 licensed, Number of Markets: Threeindependent Primerica representatives across the United Revenue: $2.3 billion in revenue in 2007States (including Puerto Rico), Canada and Spain. For Primerica, the current credit crunch is a blessingin disguise, or maybe just a blessing. Primerica Co-CEOJohn Addison is known for saying, There might bea recession in America, but theres no recession atPrimerica. The numbers bear him out. Through the first threequarters of last year, of the top 100 largest life insurancesignificant investments in our technology platformcompanies in the United States, 89 had a net decrease to make the recordkeeping for our indep