Direct Selling Companies

BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $ 0.333 of capital to $ 1 of labor; medium is $ 0.125 to $ 0.333 of capital to $ 1 of labor; low is less than $ 0.125 of capital for every $ 1 of labor.

CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

EMPLOYMENT
The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.

BIG-BOX RETAILER
A retail store that is differentiated by its sheer size and large range of products, including electronics, household goods and other consumer products.

E-TAILER
A retailer that primarily sells goods and services via the internet. Many of these companies do not have brick-and- mortar locations.

MULTILEVEL MARKETING
A marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit.

Direct selling companies have relatively low start-up costs; therefore, many Americans who are unemployed or underemployed establish direct selling businesses as a means of income. As the unemployment rate fluctuated but ultimately declined over the past five years, these operators mainly opted to remain part of the industry, taking on part-time roles instead of exiting the industry entirely. As demand and direct sellers' revenue rose during the current period, more operators entered the industry to use it as a flexible, low-commitment way to earn supplemental income. Moreover, the industry is expected to continue performing well throughout 2022 due to the widespread distribution of the coronavirus vaccine. The reduction of social gathering restrictions will likely enable operators to reach and advertise to a wider audience, possibly resulting in increased sales. Consequently, industry revenue is anticipated to rise 4.3% in 2022 alone.