Each month/quarter for the past ten months, we have evaluated the financial performance of both public and private direct selling companies.  The qualifications for inclusion within our dataset include a minimum of $50 million in revenue per year and that the company is U.S. based, with a significant portion of its revenue derived from US operations.  Moving forward, our private company reporting will transition to a quarterly schedule.
As expected, December revenue results were down slightly as compared to November due to the holiday season and the higher baseline set following the majority of the tracking set experiencing sequential revenue growth in 8 of the 9 preceding months. In total, 80% of the companies we are following were flat or went down in December on a sequential basis.  However, on a year-over-year basis, we believe that December 2020 results far exceeded those of 2019 as a general rule.  
After fully examining the totality of our data, we can confidently say that at least 80% of these companies grew revenue in 2020 as compared to 2019, with at least 10 doubling in revenue year-over-year.  Further, a total of 30 companies grew revenue by more than $100 million and at least 10 more than doubled annual revenue during the year.  Amongst private companies, we are aware of three, including MONAT and Scentsy (which more than doubled), that grew revenue by more than $400 million in 2020.  Within our public company tracking set, eXp World Holdings and possibly Herbalife, both appear to be on track to grow more than $400 million. Finally, and possibly most impressively, we are aware of at least 10 companies that returned to record annual revenue after experiencing some period of decline.  We believe that the renewal within these legacy companies provides a significant proof point supporting our theory of an industry-wide renaissance within the domestic direct selling market.  
Based on the above, we continue to believe and project that domestic direct selling revenue established a new record high in 2020, easily surpassing the $36.12 billion benchmark set in 2015.  As we have stated previously, we project domestic direct selling revenue growth will be in the 7% range on a year-over-year basis, resulting in total revenue of ~ $37.7 billion.
Referring to the chart below, it is easy to see how impactful 2020’s performance has been for an industry that had, for all intents and purposes, flatlined for the last four years.

The data and projections above are further confirmed and supported by the financial performance of the public companies within our tracking set and Wall Street has taken notice.  As previously reported, the Transformation Capital Direct Selling Index (TDSI), a market cap weighted index of all domestically traded direct selling companies with a market capitalization of at least $25 million, rose an impressive 77.1% between the end of February and December 31, 2020.  This compares to a gain of 20.5% for the Dow Jones Industrial Average (DJIA).
Looking forward, we expect the industry to continue to experience positive year-over-year revenue trends through at least the first quarter of 2021.  This is simple math, as the remarkable growth experienced in 2020 did not begin until the second quarter of the year. We also expect the pandemic driven trends that have positively impacted the industry over the last ten months will remain in full effect through the first half of the year, and continue to linger for the foreseeable future, which should continue to support strong performance across the sector.  However, we do see the potential for some politically driven headwinds in the intermediate to longer-term.  

The simple fact of the matter is that democratic administrations are traditionally more heavy-handed from a regulatory perspective and, as such, this is something that must be monitored closely.  Conversely and from a positive perspective, the industry has never been in a better position to weather enhanced scrutiny. While there will always be a few bad apples, the vast majority of companies are filling needs and serving both representatives and end consumers by providing unique and/or competitive products and services at or below market price points.  In sum, we expect the industry’s positive trends to continue through 2021 based on the leveraging of the momentum built over the last ten months.

Stay well,

Stuart Johnson,

CEO & Owner | SUCCESS Partners & Direct Selling News


About Stuart Johnson

For over 30 years, Stuart has served at the helm of SUCCESS Partners as Founder and CEO, empowering companies to achieve growth by engaging customers and distributors to improve the bottom line. A steadfast advocate of direct selling his reach is varied, covering ownership of SUCCESS Partners, Direct Selling News and SUCCESS magazine.

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