| Direct
Selling in New Zealand |
Direct Selling
in New Zealand is conducted in a variety of ways, from
the party plan to individual one to one selling. All can be highly
successful and some methods are particularly tuned to each individual
company. These are described along with the current trends:
|
| MLM or Multi-level
Marketing (Selling or Reward)/Network Marketing Direct Selling |
| The term "multi-level
selling" is a more recent term relating to a tiered sales reward structure that has proven successful both inside New Zealand and elsewhere in the world. Around 85 percent of DSANZ members utilize MLM as their core sales reward structure. In principle the method is that of Network
marketing & this is another term often used. Some
companies even use the term Binary System to describe their operation. None of these terms should be confused with Pyramid Schemes which often use the same terms to hide the fact that they are a pyramid scheme. |
| True Multi-level
selling sees a reward to both the product seller and those within the structure who have recruited and trained that seller to perform the sale. |
| This has an equivalent
in many sales organizations through roles such as Sales Managers
who receive reward from the efforts of their sales team. |
| There really is
no such selling as "Multi-level selling", as
the term really relates to Multi-level rewarding of direct sales using Network Marketing of products. |
This more clearly
indicates that if there is no sale of a product or genuine service
then there is no reward unlike the Pyramid schemes which are illegal in New Zealand.
|
|
|
|
|
|
|
|
|
|
|
|
| Pyramid or Genuine
Multi-Level Business Opportunity? |
| Most MLM New Zealand
Direct Sellers use an average number of four levels. Many apply
just three. This does not mean that a company with more is a
pyramid but the difficulty in applying rewards with greater levels
is particularly complex. |
| With multilevel
selling in New Zealand there must all ways be a consciousness
of that which can be defined as Pyramid. Hence the prime
purpose must always be to sell products and using products
as a disguise to hide the fact that recruiting is the principle
for reward does not make the scheme legal. |
| Failure to adhere
to this has seen some non members prosecuted and fined severely
in recent years. |
| Those prosecutions
may viewed at the Commerce Commission Site found through our
Government Links Page. |
The sale of reports
which hold no commercial value are expressly defined in the Fair
Trading Act as Pyramid Schemes and are not genuine MLM business
opportunities. Equally you can not use the sale of a product which
is a required purchase as part of the recruitment. Again this
is likely to be a pyramid scheme.
|
| Party Plan Direct
Selling |
While there are
some who continue to use individual selling very successfully,
many members use the Party plan sales systems in New Zealand.
With those companies applying
party plan as their core sales system, some also use variations
of the MLM system to ensure growth and business opportunity to
be part of their system. for Hostesses and distributors.
It is fair to say that within the Party Plan adherents, those
with the greatest growth use a 1 or 2 level MLM structures to
enhance the business component. It is rare for Party Plan to
use more than 2 levels of MLM. |
| Within most Party
Plan members the ratio of Female distributors is 95% although
this does not preclude the business opportunity for males. |
Party Plan in recent
years has seen a resurgence in New Zealand and around the world.
Average sales ratios of distributors are historically higher
for products sold by this method than all other methods except
direct door to door sales.
|
| Traditional Door to Door Direct Selling |
| Many times we forget
to remember the roots of Direct Selling started with the traditional
Door to Door selling of products. In New Zealand we remember
well the the Bon Brush man, Electrolux and Rawleighs. Of course
it is great to note that two of those names just mentioned still
exist and operate in the New Zealand market. (Electrolux is now known as just Lux) |
| Door to Door or Traditional Direct Selling is as strong as ever and has a significant growth record that competes well with the other sales methods. |
| Growth using technology,
including mobile shops and strong promotion are just part of
the new Door to Door market. While traditional method still hold
a strong position, the use of inovation and promotion to get
to the market has been a key factor in the growth of Door to
Door. Of key interest in this market has been the number of traditional
retail outlets that have gone for combinations of retail and
Direct Selling using the Door to Door sales process. |
| Because this form of Direct Selling does not usually develop into a grow you own business opportunity as is promoted by other plans, it has often been dismissed. However more and more the ability to make both a full time and a good income can also be very attractive as an employment opportunity. |
| Potential |
On a base ratio
of potential in New Zealand, it is reasonable to assume that
the overall Direct Selling Market for New Zealand can grow to
at least 3 and possibly 4 times its present size on dollar value
and around double the number of distributors
This is justified by taking the US and Japanese ratios and applying
them to New Zealand. (If we were to take the Japanese, Korean,
Taiwanese or Malaysian markets then the potential is far greater
when considering the per capita sales)
This assumes that New Zealand can grow to the same ratios from its present of 1 in 36. If markets like those in Asia were considered then perhaps the present level of Direct Selling is just the tip of the iceberg! |
Companies considering
setting up a Direct Selling operation in New Zealand are advised
to contact the DSANZ to obtain a copy of the Code of Practice and discuss their sales
plan for potential problems.
There is no charge for this service but clearly the DSANZ would
look to those companies to take up membership and adhere to the
Code of Practice when commencing operations in New Zealand |
| |
|
|
|
|
|
|
|
|
|
|