Direct selling sector ticks some key budget boxes
Issued by Meropa Communications On behalf of The Direct Selling Association of South Africa - Mar 13th, 09:47
In delivering the budget, the finance minister played the best of a bad hand, but the ace was his focus on the critical role that small businesses and entrepreneurs need to play in facilitating growth by creating income opportunities.
Creating income opportunities is certainly something that the Direct Selling Association of South Africa (DSASA) has been driving over the past 42 years. By offering inexpensive business opportunities, flexible working hours, relevant training programs and earnings that are linked to effort, member companies of the DSASA provide a conducive environment for growth in a sector that is already expanding faster than most other sectors in South Africa’s sluggish economy.
The latest available figures show that direct selling in South Africa grew by 18% from about R11 billion in 2015 to nearly R13 billion in 2016. Reports of further growth is expected when the 2017 figures are released in July 2018.
“More South Africans are turning to direct selling to supplement their income. While economic growth in the country is fairly stagnant, the number of direct selling independent representatives in South Africa increased by 35% in 2016” says Cornellé van Graan, chairperson of South Africa’s Direct Selling Association (DSASA). Instead, she attributes the sector’s success to direct selling’s proven benefits, increased professionalism, the opportunities it offers people who were not previously part of the formal economy and the geographic reach that it enjoys.
Direct selling has existed in the United States of America since the 1920s and in 2016 had 20,500,000 direct selling independent representatives, in South Africa, the industry has only been around since 1976 and in 2016 had 1 333 223 sellers.
From a business perspective, direct selling has some distinct advantages. Unlike retail outlets, direct selling is not restricted to specific bricks-and-mortar locations. Lower overheads mean higher profits and the direct selling business model is therefore an inexpensive and encouraging way to start up a business. There’s the added advantage that direct selling is not restricted to specific locations, but can extend as far as the direct selling independent representative can travel or deliver the product.
“Traditionally it was mainly the health and beauty industry that used direct selling as a primary distribution channel, but other sectors like financial services are now also enjoying the benefits of direct selling” say van Graan.
Besides its cost effectiveness and extended reach, direct selling independent representatives thrive on personal contact and regular follow up with their with their customers. She argues that with more companies across various sectors seeing the benefits of direct selling, there are more opportunities for people wanting to enter the sector as independent representatives.
At the same time, the flexibility and opportunities that direct selling provides is appealing to the youth, many of whom have established social media networks with people who share similar interests. “Direct selling gives them the lifestyle benefits of being an independent business owner and the opportunity to earn an income from their social networks.”
One of the ways that the Direct Selling Association of South Africa is reaching out to the youth is through a work-integrated learning project it has run with the University of Johannesburg for the past 15 years. This provides practical experience for students who are studying courses on sales and sales management. The project seeks to enhance students’ employment prospects when they complete the course but also teaches them how to establish and grow their own direct selling business.
Through the nature of direct selling, transformation of the direct selling industry has been seamless and with no effort. Figures for 2016 show that 86% of direct selling independent representatives are black of which 72% are female. The number of black women in direct selling increased by 33% in 2016.
“In both the SONA and the budget it is clear that the government knows it is not the large corporations that will turn the economy around, but small business will. For young people who would like to avoid traditional employment, direct selling provides a simple, safe and effective way to own their own business, while having the support of a corporate entity. It provides the opportunities that the Finance Minister referred to when he said township entrepreneurship doesn’t have to be restricted to spaza shops.”
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