Executive Summary:

Conclusions of the market analysis

• Sales volume in Direct Selling is increasing. The distribution channel Direct Selling as an alternative to stationary retailing is growing. Overall annual turnover of Direct Selling in consumer goods and services hit a record high of €7.9 billion in 2004. An additional €136 billion in the brokerage of financial transactions (mutual funds, insurance contracts, savings plans and savings contracts with building societies) can be added to the total turnover from Direct Selling. Direct Selling has been growing by 12% since 1994, including financial services 18% have been reached. Member companies of the German Direct Selling Association combine 30% of all sales in the Direct Selling market in Germany, which equals €2,4 billion.
  
• The importance of the Direct Selling Channel particularly depends on the line of business. The market share of Direct Selling in all distribution channels strongly varies with the product group. For example, 60% of all private insurance contracts are concluded by field workers (Direct Selling), whereas textiles are traditionally bought in the stationary retailing sector or via mail orders. Accordingly, Direct Selling in textiles is of lesser importance only. Among the analyzed industries very large Direct Selling segments with sales above €150m can be found in frozen food, household products, electrical domestic appliances. Moreover, small but fast growing segments like the Direct Selling market for pet food or lingerie exist with a turnover below €20m.
  
• Direct Selling is a major driver of industry growth in many segments. In many industries Direct Selling is experiencing above average growth. For financial services the “Prognos Germany Report 2020” forecasts annual growth of 4,5% p.a. Direct Selling companies can expect to grow with on average 7,5% p.a. according to this study. Dynamic growing companies are also expected within the segments food, household products, home furnishings (windows & doors), books & encyclopedia, frozen food and dietary supplements.
  
• Employment is rising in the Direct Selling Industry in Germany. A rise in number of employees (sales force incl. freelancers) serve as an indication of a growing importance of Direct Selling. At least 700.000 people (incl. part-timers) are employed in the field of Direct Selling. Acquisition power of the sales force can be both growth driver and restraint for future growth. Recruitment of sales persons is the largest impediment for corporate growth.