The advent of social media has breathed new life into Quebec’s multi-level marketing (MLM) industry, but the pandemic has blown the industry apart.
“Between 2019 and 2020, sales increased by 26%,” Direct Selling Association of Canada (DSA) President Peter Maddox said in a phone interview.
He expects the numbers for 2021 to look similar to those for 2020.
The DSA estimates that the number of women distributors has increased by 19%, indicating a renewed interest.
That won’t necessarily translate to market expansion, Maddox warned, because some people may find it’s not for them, and others may sign up just to get discounts.
“When COVID-19 hit, people who were already salespeople had a bit more time to spend in this business, as their 9-to-5 jobs weren’t as busy, or were even suspended by restrictions,” did he declare.
A 2021 Abacus survey for the DSA concluded that “during the pandemic, one in three Canadians took up opportunities to generate additional income outside of their main job.”
The health crisis has 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 this business before the pandemic because people weren’t ready (to order online) until they had a choice,” she said. “I think the pandemic has helped a lot in that people are more on social media, more online.”
The DSA calculates that there are 1.39 million independent distributors in Canada. Most are women (84%) and are between 18 and 54 years old.
The association also states that more than 200 companies share $4.15 billion in annual sales, including $830 million in Quebec.
However, the Abacus poll also revealed that no less than 28% of Canadians have a negative impression of the industry. In comparison, 38% have a positive impression and 34% are undecided.
THE INSTAGRAM EFFECT
Direct selling existed in Quebec long before the internet age, Maddox said.
“These were people who went door to door selling products and earned commissions on what they sold,” he said.
Product lines from Tupperware or Avon became common items in households at this time.
“Historically, there were no descendants,” Maddox said.
The first transformation of MLM was followed by a second revolution, the social media revolution.
“(Before) everything was done by word of mouth,” said Georges-Alexandre Rodrigue, professor of marketing at Laval University. “Now, it very often becomes 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, 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 this model.”
However, Rodrigue recommends moderating profit expectations.
“When you look at the facts, there are very few participants making more money than they spend in this kind of system,” he said.
Maddox added that the internet also means you don’t have to invest money to build up inventory, as the transaction can be done directly through an online store. “(Some sellers) don’t have to make that many sales, they just have repeat customers who will buy from their site,” he said.
— This report from The Canadian Press was first published in French on April 23, 2022.