Australia may be known as the land down under, but it's at the top of its form when it comes to direct selling. Australians know and accept direct selling, and multinational companies as well as home-grown Australian companies have made successful bids for Aussies' attention and dollars. Even with a robust economy and booming employment, the direct selling industry continues to grow.
Crunching the Numbers
Australia has approximately 600,000 fewer square miles than the United States, but the entire country's population of just over 20 million is less than the population of Texas. If that leaves you thinking that Australians have a lot of elbow room, think again. The vast majority of Australians live along the eastern coast. In fact, 75 percent of the population is concentrated onto the narrow strip of land between the South Pacific and the aptly named Great Dividing Range, which runs roughly north to south along the eastern edge of the continent. This strip is home to such iconic cities as Brisbane, Sydney and Melbourne. The remainder of Australia's population is spread across the rest of the continent, encompassing various lifestyles, perceptions and attitudes.
Throughout Australia, 620,000 people are salespeople in the direct selling industry. They amassed US$1.083 billion in sales for 2005, a number that is expected to rise for 2006. In fact, sales volume has increased 10-12 percent during the last five years, a figure that Direct Selling Association of Australia Executive Director Les Dell called "steady but not overwhelming." There are 70 companies enrolled as DSAA members, and 36 member suppliers who help pave the way and streamline business operations for direct selling companies. All of these companies and salespeople are busy plying a dizzying array of products, ranging from garden wares to security systems to lingerie. Of course, the most common and popular products are similar to those you can find in the United States, including housewares, jewelry, cosmetics and nutritional products
Mining the Similarities
Bill Duncan, Vice President of USANA in Australia, New Zealand and Southeast Asia, said, "If it flies in Australia, it will work in the United States." From his 25 years in the industry and his experience as current chairman of the DSAA, he believes the opposite can be true as well.
The Australian culture and government are very similar to that found in the United States, with the most obvious common ground being the English language. There are a few words and spellings that may give Americans pause, but, as they say in Australia, at the end of the day, it's basically the same. Even customer preferences are similar to what companies find in the United States. The products that sell well in the good ol' USA also sell well in Australia. Dell notes that the similarities give U.S. companies a level of comfort. "It's a walk-up start for U.S. companies," he said. "We have a stable political environment and a federal system of government that is like that in America, but with nine states instead of 50." A prime minister and parliament provide democratic representation, and the legislative slant toward direct selling is "not at all onerous," according to Dell. Even many of the industry's regulations were patterned after U.S. Fair Trading regulations.
George Howden, General Manager for Mannatech Australia, notes that there are other commonalities between his adopted country and the United States. Both are nations of immigrants, begun by Great Britain, and relatively young in terms of non-native history. In the realm of shared pop culture, almost 50 percent of Australian television is from the United States. Howden also notes that "Americans are well-liked by Australians and their products are liked and viewed as high quality."
Remembering the Differences
Lest Americans and U.S.-based companies charge Australian shores with reckless abandon, the genteel Aussies would like to point out some differences between the countries. First, they have a pride in being Australian. Yes, they like Americans, but they're not Americans and don't want to be addressed as such. USANA's Duncan points out that photos and images that are simply transferred from the U.S. market can be off-putting to Australians. "Often I find that Canadian or European or American executives think that an ad they've used very successfully in a home-country magazine will automatically just fit right into Australia. There may be imagery with a cross-section of people that is not a cross-section of people in Australia. Or there may be something with furnishings that are quite clearly American or European, and people will react against that."
There are also governmental regulations that U.S. companies in particular must adapt to. There is one standard, national tax-the Goods and Services Tax-that is added to the cost of goods but can become the responsibility of a consultant once her income level hits a relatively high threshold. Most businesses say that managing the GST is actually easier than complying with the multiple state taxes found in the United States, but it does require some initial training and setup to manage it from the corporate and consultant sides. A recent federal law and New South Wales court case have shaken up the industry slightly as they sought to clarify the difference between independent contractors and employees. While neither the case nor the law appears to affect direct selling, it is something that the DSAA intends to watch and relate their opinions.
The population of Australia is significantly smaller than that in the United States, so every plan and expectation must be proportionately adjusted. For David Mills, Founder of Australian-grown The Chefs Toolbox, his three-year-old company is reaping great success with its very productive 250 consultants. "In a U.S. context, we're very small," he said. "But in an Australian context, we're doing very well to have 250 consultants in three years. The average revenue per consultant is extremely good, and we think we can have up to 2,000 consultants in Australia." The number of potential consultants is smaller, as is the overall pool of consumers, so companies scale their efforts accordingly.
One other significant difference in the Australian market is that all nutritional products are regulated as pharmaceuticals through the Therapeutic Goods Act and the Therapeutic Goods Administration. Nutritional product companies must pass rigorous testing, manufacturing processes are thoroughly examined, their claims are closely monitored, and ingredients must be on the list of approved substances. Duncan explained that, like all nutritional product purveyors, USANA operations are certified annually and two to three TGA inspectors visit the manufacturing and research facilities in home base Salt Lake City. "It's costly to comply with the safety and cleanliness standards and all the rest," he said, estimating that it costs companies about $10,000 per person, per day for the annual certification review. "But at the end of the day, you have confidence that all the products are top quality. The regulations actually benefit the industry." Duncan adds that nutritional companies should think one to two years ahead so that they can meet and secure all the regulations. And he advises companies to use the DSAA's resources and contacts like DSAA member-supplier Robert Forbes, who can guide companies through the certification process.
Forecasting the Future
Current trends in the Australian market give good indications of what the next 10 to 20 years will be like. First, unemployment in Australia is at a 20-year low. While that's great for potential sales, it doesn't leave huge incentive for people to pursue direct selling as a career. Most of the direct salesforce today works the business part time, and the challenges will be to retain those people. "Distributors join because they fall in love with the product or they're looking for a social outlet, and then if they can pick up some income, that's a bonus," said DSAA's Dell. "There are goal-setters who come in to earn income for a specific purpose, and once they've made it, they may leave. The challenge is to keep people in the business once they've reached their initial goal."
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