NuSkin turning to affiliate model to regain sales momentum
Executives with NuSkin, which sells a variety of topical products and beauty-from-within dietary supplements as well as skin care devices, detailed the transformation during a recent earnings call with analysts.
NuSkin, based in Provo, UT, has long been one of the world’s leading direct selling companies. One of the company's first products, and a foundation of its early success, was a scanner that measured the carotenoid content in the skin as a measure of the skin's antioxidant potential and, by extension, a measure of skin health. The company has risen to the No. 6 spot overall in Global 100 list of top network marketing companies maintained by the publication Direct Selling News.
NuSkin’s rise could be attributed more to staying power than meteoric growth. Indeed, the company’s annual revenue, according the DSN figures, peaked at $2.68 billion in 2019 and has yet to return to that level. NuSkin hovered around $2.2 billion in annual revenue for several years before rising in 2019.
Turning to affiliates to regain momentum
Rather, NuSkin’s rise on the list came as the MLM industry contracted overall. The top companies on the list for years have been Amway and Avon. In 2013 those companies’ annual revenue, again according to DSN figures, was $11.3 billion and $10.7 billion respectively. In fiscal 2019 the companies reported annual revenues of $8.4 billion and $4.7 billion respectively (Avon has since been acquired by Brazilian MLM Natura & Co).
In a recent earnings call with analysts, newly appointed CEO Ryan Napierski said his goal is to, “Transform our business towards our vision of becoming the world's leading innovative beauty and wellness company powered by our dynamic affiliate opportunity platform.”
“The value of our business has often been defined through the narrow lens of our historic direct selling distribution channel. But when you examine our business for what it is becoming, we are better described as a beauty and wellness company that connects consumers to innovative products that help them look feel and live better through our trusted brand affiliates, via our socially enabled digital platform, affiliate powered direct to customer social commerce,” he added.
Napierski made his comments during an earnings call that was posted in transcript form on the site seekingalpha.com.
Other MLMs have had to wrestle with the rise of online commerce. The business concept is a face to face one at its core, but as new digital tools have come online, the end user is left to wonder why a potentially cumbersome interaction with a sales associated is really necessary when there are so many one-click options available online.
China’s network marketing review gave push to online sales
For network marketing companies that have done a lot of business in China, as NuSkin has, this transformation got a big push from that country’s governmental review of the whole direct sales sector. The transformation has been further accelerated by lockdowns during the pandemic, when all commerce de facto had to be accomplished on digital platforms.
Napierski said NuSkin’s revenues now derive more than 90% from online sales.
“Our route to market has always been through micro influencers well before social media. We're evolving our business model to further leverage social scale and reach for our authentic affiliate marketing channel around the globe, including further refinements to our sales incentives, campaigns and promotion plans,” he said.
Sports & Active Nutrition Summit 2021
The affiliate marketing model is being a huge part of the sports nutrition category as well. The issues surrounding affiliate marketing will one of the topics covered at NutraIngredients-USA’s Sports & Active Nutrition Summit, which returns in 2022 as an in-person event at the beautiful Hyatt Regency Mission Bay hotel in San Diego on Feb. 14-16. For more information and to secure your spot, visit the event homepage.