Direct selling rakes in R12.9bn
Direct sellers are coining it as more people join the industry amid tough economic conditions
Listed retail may be having a tough time, but direct sellers are coining it. Results from the Direct Selling Association of SA show that the direct selling industry experienced double-digit growth, generating sales of R12.9bn in 2016.
The association is made up of 34 entities in the health, beauty, homeware and financial services and products sectors.
"Direct selling is growing, especially in our current economic environment," said chairman Ernest du Toit.
"You can sell most products through direct selling but beauty, health and wellness have not stopped their growth since the Second World War. Household goods are also popular and Tupperware sells extremely well."
In 2016, the number of direct selling business owners grew to more than 122,000, a 35% increase from 2015.
"As conditions are becoming more challenging, we are finding that more people are joining the industry. Currently, this form of retail accounts for less than 10% of total sales, but there is definitely scope for growth," said Du Toit.
The direct selling industry is not only thriving in SA, but globally too. The US has more than 140 member companies and 20.5-million agents generated $35.5bn in sales in 2016.
On the local front, Gauteng generated 35% of total sales, followed by KwaZulu-Natal at 17% and Limpopo at 8%.
Du Toit said he was optimistic about future penetration rates. "Direct selling has a much greater reach than retail outlets have. It offers far better penetration into the distant rural markets, but without the costs evident in the more urban markets," he said.
Meanwhile, prospects for the South African retail sector remain subdued.
36One Asset Management analyst Evan Walker said poor consumer confidence in addition to job losses meant weaker sales for 2017, which would probably continue into the first half of 2018.