Panel Discussion on International Regulation John Holloway, Executive Director, Direct Selling Association of Australia Mark-e-Dir: Bringing Market to Consumers Wednesday, 17 th April, 2013 New 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 Sales 2011 Source: WFDSA

Distributors Million 10 Million15 Million Source: 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 Consumer Group Purchaser Seller Seller/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 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 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.

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