April Tu and her husband, Jack, look for new recruits for their Amway sales team during their weekly meeting at at a Kitchener Holiday Inn on Nov. 13, 2013.GLENN LOWSON/The Globe and Mail
There was a time when the average Mary Kay or Avon seller was a housewife, but an increasingly competitive job market has launched a new wave of faces into the industry – Generation Y.
Concerned about an aging demographic of sellers in the '90s, the industry has worked over the past decade to change the perception of direct selling to appeal to a younger generation. A new marketing strategy, in tandem with the tough job market, means that Generation Y, born between 1981 and 2000, is approaching the direct-selling model as a viable career option, rather than simply as a side business.
"That solidarity of having a stable job just doesn't exist any more," said April Tu, who left university early four years ago at 21 to pursue Amway, a direct-selling giant that markets everything from cosmetics to health supplements to cleaning products. "Students are investing thousands of dollars into school. … You've been told to do something that was supposed to work for you, but when you went out into the economy all you were met with was pure frustration."
Young people such as Ms. Tu are increasingly seeing direct-selling as a way out of low-paying, entry-level positions after graduation, especially in an economy where youth unemployment hovers around 14 per cent, up from around 11 per cent in 2008. The number of long-term unemployed youth has also skyrocketed to over 40,000 as of October, 2013, more than triple what it was a half-decade ago.
But for Amway, Generation Y is its fastest rising demographic. Millennials have gone from representing just over 10 per cent of its global sales force in 2005 to nearly a third in 2012. Gen Y now makes up a third of new Canadian memberships. Mr. Johnson also says that between 2011 and 2012, Amway has seen Gen Y shoot up 21 per cent in recruiting and 19 per cent in sales generated.
The demographic trend is also reflected at cosmetics giant Mary Kay Cosmetics Inc., where just over 20 per cent of the 38,000-strong Canadian sales force is Gen Y, while half of the U.S. sales force is under 35. The company, once synonymous with shopping parties, has taken great pains in the last decade to enhance its appeal, using online showrooms, virtual makeover applications and a widening social presence to attract a new generation. Sponsoring such events as the MuchMusic Video Awards has also created a new, younger Mary Kay culture.
"They have a very strong entrepreneurial spirit," said Lynda Rose, vice-president of marketing at Mary Kay Canada. "They're saying, 'We want to travel with our business and we want to have it at our fingertips.' … Their income is reflective of the amount of effort they put into their business, and they love that."
Ms. Tu had only completed her first year of university when a stranger at a gas station approached her with the Amway opportunity. That stranger later became her first mentor after she quit school, and since then she has gone from new recruit to team leader of about 50 people, a team so dedicated that they clear about $20,000 worth of sales a month. Her weekly team and informational meeting in Waterloo, Ont., is attended almost exclusively by millennials, with another dozen from out of town who tune in to the live webcast – one logs on every week from Calgary.
Ms. Tu, 25, and her husband Jack net roughly $45,000 a year from their part-time business, made from a combination of sales and bonuses she receives from Amway for training her team. Membership has also seen a recent surge, with over a quarter of her team having joined in the last year alone, a product of an environment that Ms. Tu says appeals to her younger crowd.
"We recognize people for everything, whether it's 'I started a conversation' to 'I made a sale.' We understand that in the normal world, people are not recognized for their achievements," she said. "When you plug into an environment that is so blasted with positivity and hope and belief, it becomes something that you crave because it's literally the best part of your week."
The direct-selling opportunity is providing Gen Y with an alternative work environment outside of the nine-to-five, says 22-year-old Alex Bakay, who has spent roughly $1,000 on his business in the six months since he joined. He earns around $100 a month. The investment, he says, is more than worth it.
"Being told what to do all day isn't the nicest thing," he said, "so being able to hang around business owners all day who make their own schedule and who are disciplined – it brings a new mindset."
Roberto Artwell, 19, who has also been with the team less than a year, is so optimistic about his business that, within the next 12 months, he sees himself with his own team of 50 people.
"The first time I walked into a meeting, I thought it was going to be a bunch of old people who'd already been successful and be the awkward one out," he said. "The first time I came, I went, 'Oh my gosh, half these people are around my age.' … You know that if he's 25, he's 20, and I'm only 19, why can't I do what he's already doing? The reason why so many young people are jumping at this opportunity is because our infrastructure is so simple."
Direct selling, or multilevel marketing companies (MLM), typically follow a basic model whereby sellers are recruited to market products, but also to recruit other sellers. Originating sellers earn extra percentages of pay based on the performance and size of their team.
For years, the industry has faced harsh criticism for seemingly harbouring scams and pyramid schemes, which has led executives to drastically change marketing strategies. The shift is well timed: Gen Y remains relatively unaware of any stigma that surrounds MLMs. An Ipsos study commissioned by Amway found that 79 per cent of millennials in North America were favourable or neutral to the direct-selling model.
Nowadays, "we present it in a much more common-sense, basic presentation," said Jeff Johnson, national sales manager for Amway Canada. "What's in it for them. What can they earn. … They want to know the bottom line, and they don't want a PhD thesis given to them."
Mary Kay does not post earnings, though Amway parent Alticor Inc. has reported consecutive years of growth, having hit $11.3-billion (U.S.) worth of sales in 2012. The performance of other publicly listed MLMs also shows a slowly expanding industry. Both Herbalife Ltd. and Tupperware Brands Corp. announced record third-quarter earnings in October. Avon Products Inc. saw another dip in earnings, but the company is struggling with more than just sales, having changed leadership last year.
For many in Generation Y, the industry's accomplishments suggest a future where the young can achieve entrepreneurial success, with or without a degree.
"They want financial independence," Ms. Rose said. "… They almost see work and fun time as mixed. Maybe my generation you have work and home. Our lives were separate. But a Gen Y person looks at their life and goes, 'My work has to be fun, my life has to be fun and I want to do a job that's fun.' "