Panel Discussion on International Regulation John Holloway, Executive Director, Direct Selling Association of Australia

Mark-e-Dir: Bringing Market to Consumers

Wednesday, 17th April, 2013New Delhi

Direct Selling – An Australian Perspective

Direct Selling is an economically and socially accepted channel for retailing consumer products

Business models are changing and little understood or conveniently stereotyped by key stakeholders

Australia’s regulation of direct selling has pronounced strengths and weaknesses.

Direct Selling is a socially and economically accepted channel for retailing consumer products

•400,000 Australians engaged in distributing member products•Technology and consumer behaviour enhance direct selling’s relationship and experiential selling strengths•Social connect is a key driver for distributor engagement•True size of Australia’s direct selling market is not known•DSAA members report $1.4 billion in annual sales •Australian market relatively world competitive

USD Billion 5 10 15 20 25 30

Sales 2011

Source: WFDSA

Distributors 2011

5 Million 10 Million 15 MillionSource: WFDSA

Participation Rates 2011

Source: WFDSA, DSAA

Per Capita Sales 2011

Source: WFDSA, DSAA

Direct Selling is a socially and economically accepted channel for retailing consumer products

•400,000 Australians engaged in distributing member products•Technology and consumer behaviour enhance direct selling’s relationship and experiential selling strengths•Social connect is a key driver for distributor engagement•True size of Australia’s direct selling market is not known•DSAA members report $1.4 billion in annual sales •Australian market relatively world competitive•Relatively low cost structure makes direct selling an attractive retail option•Small business kindergarten

Business models are changing and little understood or conveniently stereotyped by some stakeholders

•Direct selling is increasingly multi channel

“Direct Selling” – selling a consumer product or service, person-to-person, away from a fixed retail location, usually in a home or workplace

DSO

Direct Seller

CONSUMER

Independent Contractor

Agency

Model

Wholesale Model

ConsumerGroup Purchaser

SellerSeller/Business Builder

Business Builder

Direct Selling Organisation

Direct Seller

CONSUMER

Door-to-Door

Direct Selling Organisation

Direct Seller

CONSUMER

Door-to-Door

Distance Selling

Store Selling

Business models are changing and little understood or conveniently stereotyped by some stakeholders

•Direct selling is increasingly multi channel•Growing awareness by policy makers•Some interests argue the best way to overcome relatively small consumer detriment is to restrict retailing to store selling

Australia’s regulation of direct selling has pronounced strengths and weaknesses

•Prior to the Australian Consumer Law (ACL) direct selling was regulated by a patchwork of Federal, State and Territory law.•DSAA membership assures distributors and consumers of ethical trading behaviour

Sets out transactional requirements for members and distributors, product guarantees and representations

Regulates certain behaviour between members and between members and their distributors, including•Entry Costs•Inventory Management•Buy-back•Marketing Plans

Australia’s regulation of direct selling has pronounced strengths and weaknesses

•Prior to the Australian Consumer Law (ACL) direct selling was regulated by a patchwork of Federal, State and Territory law.•DSAA membership assures distributors and consumers of ethical trading behaviour•ACL, singular consumer protection and fair trading law for all Australia, commenced January 2011 . Co-operative venture between nine governments recognising the social and economic benefits of the reform. Policy and administration underpinned by an inter-governmental agreement. Details at www.consumer law.gov.au•ACL’s regulation of unsolicited (direct) selling is problematic. DSAA achieved concessions, but a fresh regulatory approach is needed to capture the consumer protection and business certainty challenges in the non-store retail environment.

Thank You For Your Time