Emerging Markets: Key Factors & Markets For MLM Companies

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MLM Markets | As multi-level marketing (MLM) companies pursue their growth strategies, there are a few different levers they can pull to drive increased sales. To achieve their growth goals, direct selling companies can broaden their customer targets. They can expand selling to new channels, such as social selling and live online events. They can expand their product set and amp up their representative recruiting efforts. And they can expand their geographic footprint into additional international markets. For MLM companies, global expansion can generate explosive and sustained revenue growth. However, without a well-defined strategy, international expansion can fall flat.

MLM Stock Market ticker for emerging markets — Emerging Markets for MLM Companies

It’s a small world after all

According to the World Federation of Direct Selling Associations, global direct selling revenue reached $180.5 billion in 2019, with 120 million independent sales representatives worldwide. Overall, excluding the China market, which has experienced ups and downs due to regulatory concerns and limited data availability in recent years, the direct selling industry has a three-year compound growth rate of 1.5 percent.

There are two primary reasons behind the continued growth. First, MLM companies offer products and services that hold broad consumer appeal across markets. Wellness-focused direct selling companies lead the way worldwide, generating more than one-third (36 percent) of the global revenue total. Cosmetics and personal care MLM companies are not far behind, with 29 percent of direct selling revenue. Then, household goods companies follow with 20 percent of global revenue. Rounding out the top five list are clothing companies (6 percent of global revenue) and financial services (4 percent of global revenue).

The second reason behind the MLM industry’s international growth is the direct selling business model itself. In addition to being a cost-efficient way for companies to enter new markets and scale rapidly, the direct selling model aligns with increasing worldwide interest in entrepreneurship and independent work opportunities. The rise of the gig economy worldwide, combined with the impact of the global COVID-19 pandemic, increased overall awareness of direct selling as a viable opportunity for people to build their own business without having significant overhead expenses.

Emerging MLM markets

When an MLM company decides to explore expansion beyond its domestic market, the first – and most important – step is the market assessment process. For direct selling companies, the assessment can’t just focus on the market’s size and consumer interest. MLM companies must also evaluate the country’s regulatory environment.

The World Federation of Direct Selling Associations reports that 78 percent of the industry’s sales are generated by the top ten markets worldwide. The current top markets ranked by direct selling revenue are:

1. United States ($35.2 billion)

2. China ($24 billion)

3. Korea ($17.7 billion)

4. Germany ($17.5 billion)

5. Japan ($15.6 billion)

6. Brazil ($9.8 billion)

7. Malaysia ($6.1 billion)

8. Mexico ($6 billion)

9. France ($5.2 billion)

10. Taiwan, China ($3.7 billion)

Generally, companies can expect to find a receptive business environment and workforce across these top markets for direct selling. But these aren’t the only markets to consider. There are a few up and coming markets that continue to grow steadily and are worth examination.

Canada: As the northern neighbor of the direct selling industry-leading United States, Canada can be a natural market expansion for American MLM companies. With its stable economy and similar demographics to the U.S., the Canadian direct selling industry grew 16 percent between 2008 and 2018. Today, there are more than 200 direct selling companies operating in Canada with 1.16 million independent sales representatives.

South Africa: With an overall growth rate of 12 percent between 2018 and 2019, the African and Middle Eastern region is a fast-growing area for direct selling companies. Within the region, South Africa is the largest market, accounting for 42 percent of MLM sales. Direct selling is projected to grow significantly in South Africa over the next ten years. ‘

India: Another up-and-coming direct selling market is India. In 2013, the direct selling market size in India was estimated at just under $1 billion (USD) in sales. By 2025, it’s projected to grow eight times over to nearly $9 billion. Several factors are contributing to the growth, including the affordable opportunity for micro-entrepreneurship. Building your own business, which has high appeal for younger generations worldwide, is especially popular in India, which has the world’s largest youth population with nearly half (47 percent) of its residents under the age of 25.

Keys to successful MLM international expansion

Choosing the right markets for your MLM company’s expansion is a critical first step. After evaluating the local culture, economy, and regulatory environment, take the following three steps to ensure the success of your expansion.

1. Start with strategy.

Even if you’ve aced your market assessment due diligence, you must also create a detailed, end-to-end strategy for the market launch and ongoing operations. What worked in a previous market won’t automatically translate “as-is” in the next. Your team needs to take everything you’ve learned in the assessment phase and apply it when developing a launch strategy.

During this phase, it’s a good idea to conduct in-market product testing to better understand local consumer interest and identify any potential obstacles to marketing and selling your products. This can include finding out which features resonate with the local audience, whether your current marketing messages translate effectively or need to be reworked, and if your prospective customers have additional needs that your products can address.

Then, get strategic. Define your short-, medium-, and long-term objectives for the market. Outline the key performance indicators (KPIs) that you’ll look at to measure the progress for each objective. Create a go-to-market plan that includes marketing campaigns to introduce your brand and products to your target consumers. And, of course, map out a reasonable budget.

It’s also time to get practical. Find out about the country’s packaging requirements. Look at what both traditional and non-traditional competitors are doing. Determine the corporate presence you’ll need in the market.

2. Choose MLM software that streamlines international expansion.

There are a lot of details that must be accounted for when expanding an MLM company into international markets. A step-by-step operational plan is crucial. Your MLM software will be the core element behind operational efficiency. From currency conversions to multi-language capabilities, having the right MLM software can help to streamline both the international launch as well as ongoing operations.

When selecting MLM software, look for functionality that aligns with international expansion, even if you’re not immediately planning to operate outside your domestic market. Here’s a checklist of key functions you should look for to help you get your company up and running in additional markets quickly:

Multiple languages built-in
Multiple currencies and currency conversion features
Ability to configure your website menu, content, and product offerings by country or market
Customization options for pricing, promotions, and shipping by market
Country-specific terms and conditions
Ability to customize representative enrollment options by country
Option for representatives to sponsor representatives across international borders
Configurable commission values and payout options by market
Detailed tracking and reporting by country

If your current MLM software doesn’t offer the flexibility you need to easily expand into international markets, there may be an answer that doesn’t require you to simultaneously migrate your legacy software to a new platform. Explore flexible MLM software options for the international expansion while keeping your legacy software in place in your domestic market. This option is not only cost-effective but also decreases the risks and timeline associated with entering a new international market. In addition, it can be an effective way to test-drive the new MLM software solution before adapting it to support the entire business in the future.

3. Be local.

Tailoring your business practices to fit the local culture and market is a critical component in any successful international expansion. What works in one country will not automatically work in another. Take the time to understand the market overall as well as your target customers and target representatives. Your company’s key executives will want to spend time in the market, and you may also want to consider establishing an in-country corporate presence as well.

Initial recruiting and training of local MLM sales representatives are all-important. The local MLM representatives will provide invaluable insights into both the market and its customers. Leverage your existing recruiting strategies and onboarding programs but be careful to adapt them as needed to fit the local culture. Again, your MLM software can play a central role with online enrollment options, journey-based onboarding, and effective communication tools.

Overall, your main objective is to create brand consistency while being respectful of the new market environment. In the long run, you want your representatives and customers to think of your company as a local enterprise that’s part of a global MLM brand.

ByDesign’s ecosystem of MLM software solutions is designed to help direct selling companies execute their international expansion strategies from inception through ongoing operations seamlessly and efficiently. When it’s time to grow your business, tap into our 20+ years of MLM industry experience, cutting-edge software expertise, and trusted partnerships. Contact us to schedule a mlm software consultation today.