The advent of social media breathed new life into the Quebec multi-level marketing (MLM) industry, but the pandemic caused the industry to explode.
“Between 2019 and 2020, sales have increased by 26 per cent,” said Direct Selling Association of Canada (DSA) president Peter Maddox, in a telephone interview.
He expects 2021 numbers to resemble those of 2020.
The DSA estimates that the number of women distributors has increased by 19 per cent, a sign of renewed interest.
That won’t necessarily translate into market expansion, Maddox cautioned, as some people may find it’s not for them, and others may sign up only to qualify for discounts.
“When COVID-19 hit, people who were already vendors had a little more time to spend in this business, because their 9-to-5 jobs weren’t as busy, or were even suspended by restrictions,” he said.
A 2021 Abacus survey for the DSA concluded that “during the pandemic, one in three Canadians took opportunities to generate additional income outside of their primary job.”
The health crisis also accelerated the shift to online shopping, a boon for Charlotte, who is a distributor for the clothing MLM Silver Icing.
“I never really sold that company before the pandemic because people weren’t ready (to order online) until they had no choice,” she said. “I think the pandemic has helped a lot in terms of people being more on social media, more online.”
The DSA calculates that there are 1.39 million independent distributors in Canada. Most are women (84 per cent) and between the ages of 18 and 54.
The association also says that more than 200 companies share $4.15 billion in annual sales, including $830 million in Quebec.
However, the Abacus survey also showed that no less than 28 per cent of Canadians have a negative impression of the industry. In comparison, 38 per cent have a positive impression and 34 per cent are undecided.
THE INSTAGRAM EFFECT
Direct selling was around in Quebec long before the internet era, Maddox said.
“It was people going door-to-door selling products and earning commissions on what they sold,” he said.
Product lines from Tupperware or Avon became common items in households during this era.
“Historically, there was no downline,” said Maddox.
The first transformation in MLM was followed by a second revolution, the social media revolution.
“(Before) everything was done by word of mouth,” said Laval University marketing professor Georges-Alexandre Rodrigue. “Now, it’s very often becoming a form of influence marketing,” where “companies, more and more, approach influencers, even micro-influencers.
“It’s no longer just in our direct network of friends with 10, 20 friends that we could contact,” he said. “On social media networks, someone who has 1,000, 2,000 friends or a network of 2,000 followers, obviously it’s much easier for them to reach people easily, and that’s why there are more and more people who are exposed to that model.”
However, Rodrigue recommends moderating profit expectations.
“When you look at the facts, there are very few participants who make more money than they spend in this kind of system,” he said.
Maddox added that the Internet also means you don’t have to put up money to build inventory, since the transaction can be done directly through an online store. “(Some sellers) don’t have to make so many sales, they just have regular customers who will buy from their site,” he said.
— This report by The Canadian Press was first published in French on April 23, 2022.