Direct Sales Booming in PH

Direct sales has been growing much faster than any other channel in the fast-moving consumer goods (FMCG) market, this is according to Kantar Worldpanel, the world leader in consumer knowledge and insights based on consumer panels.

Data from Kantar Worldpanel shows that Filipinos are enticed to spend more via the direct sales channel because of the availability of an ‘instalment’ scheme and the fact that they are buying the items from friends or relatives. These factors are driving consumer sales up, with 77 pesos spent more on the channel this year compared to 2013.

In the direct sales business model, sales consultants market goods directly to customers, eliminating the need for middlemen and fixed retail locations. Around half of consumers who buy through direct selling are from Visayas and Mindanao, accounting for 22.3% and 28.4% respectively of the total number of customers who purchase goods through direct sales channels in the Philippines from June 2013 to June 2014, 63.3% of them belonging to Class D households.

Personal Care vs. Household Care
Known mostly for personal care products, the direct sales channel is fast becoming a household care channel as well. In June 2014, about 14% of Filipino homes purchased household products via direct sales, an increase from 11.7% the previous year. In addition, the average spending for household care in the direct sales channel is now at P603 per year, helping double the share of household care within the direct sales channel, accounting for almost 22% of its sales in June 2014.

According to Kantar Worldpanel, the growth in direct sales can be attributed primarily to an increase in purchases of laundry detergents, fabric softeners, dishwash, and toilet bowl cleaners. Kantar Worldpanel finds that 7.7% of Filipino homes now buy laundry detergent via the direct sales channel compared to only around seven percent (7%) last year. Fabric softener buyer base doubled to four percent (4.4%) in 2014, while toilet bowl cleaners saw a one percent increase in buyers (from 3% to 4%).

In terms of frequency of buying, laundry powder has been bought thrice a year via the direct sales channel. Today, consumers are likewise spending 20 pesos more each time they buy household care products via direct sales.

Kantar Worldpanel foresees a bright future for the direct sales channel in the country. “Despite having a small share relative to other FMCG channels, it cannot be denied that direct sales is becoming an important source of personal and household care products for Filipino consumers,” Fabrice Carrasco, Managing Director said.