Los Angeles। Over the past five years, the Direct Selling Companies industry has been on a roller-coaster ride. When the Canadian economy began to slump in late 2008 following the collapse of the global economy, many Canadians immediately tightened their purse strings.
Furthermore, lending institutions became cautious, leading to a full-scale recession in 2009 and 2010. Consequently, consumers, who make up the largest source of industry sales, cut back on discretionary purchases and more frequently sought to save money by shopping at department stores, mass merchandisers and e-commerce retailers.
Because of such a drop-off in demand, revenue is expected to increase at an average annual rate of only 0.7% to $3.8 billion in the five years to 2013, says IBISWorld industry analyst Eben Jose. Unlike the United States, Canada made a considerably faster recovery, which helped mask declines in revenue early in the period. However, a slight decline in the housing sector over 2013 is expected to deter some consumers from making purchases, leading to growth of only 0.7% over the year.
The Direct Selling Companies industry is vulnerable to a substantial number of external competitors due to the wide array of products industry operators sell. Unfortunately, many direct selling companies are not able to compete due to a lack of size and scope, continues Jose. In 2013, IBISWorld estimates that about 77.2% of industry enterprises are nonemployers.
As a result, the majority of industry operators do not have the ability to purchase products in bulk from manufacturers and wholesalers, leading to steady loss of revenue to stores such as Walmart and Target and e-commerce retailers. Due to their global scale, these competitors are able to easily beat any price direct sellers might offer. Consequently, the industry has faced stagnant profit margins for the past five years.
However, the intense competition has not had an adverse effect on industry expansion. In fact, the recession and subsequent rise in unemployment has led to an influx of new enterprises due to low barriers of industry. The industry has a low level of concentration. The two largest players are Amway Canada Corporation and Avon Canada in 2013.
In the five years to 2013, the industry has managed to continue to expand, adding enterprises at an estimated average rate of 6.7% annually, despite declines of 16.0% and 16.5% in 2009 and 2010, respectively. During the recession, many direct selling companies were forced out of business because they mainly sell discretionary products that consumers can purchase for less at mass merchandisers and department stores.
However, the industry rebounded quickly in 2011, adding over 1,000 firms as many unemployed people entered the industry due to its low barriers to entry. In the five years to 2018, the industry will experience slightly better revenue growth; however, the continued presence of fierce external competition will offset this increase. For more information, visit IBISWorld’s Direct Selling Companies in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry sells a product or service from person to person, away from a fixed retail location. People in the industry are known as independent consultants, distributors or representatives. Sales are usually done via home parties, workplaces, street corner carts and door-to-door. However, direct sellers of food for immediate consumption and fuel are excluded from this industry.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Read the full story athttp://www.prweb.com/releases/2013/7/prweb10903071.htm
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