There Is No Freedom Without Free Enterprise
There Is No Freedom Without Free Enterprise
Changing 200,000,000 Lives
Vital Voices - Women in Democracy
Small Business Strategy Workshop
October 1-3, 1998
Presented by Richard C. Bartlett
Vice Chairman, Mary Kay Corporation
Thank you for inviting me to this very special "Vital Voices" Conference. This is an extraordinary assembly of talent and leadership experience, and it’s an honor for me to be with you. I would like to thank our hosts here in Montevideo for their hospitality. I would also like to thank the conference organizers and the U.S. State Department for their part in making this possible. I look forward to our workshop on small business strategy.
It’s so appropriate that we’re talking about economic opportunities here in the Americas, because I firmly believe that this region remains one of the greatest economic opportunities in history. I have spent 40 years in the direct selling industry, and I believe that our industry has a special potential for helping tens of millions of individuals here in Latin America and elsewhere to achieve economic freedom.
To give you some idea of the scope of our industry in the Americas, here are our major country independent small business totals for 1997 in the Western Hemisphere:
|Chile (1996)||160,000||Uruguay (1996)||22,500|
The news is filled today with analysis of world economic problems, particularly those in Asia and Russia. There is great concern over how these dangers might spread to the Americas. Here in Latin America, the enormous economic achievement of recent years has been admired world-wide. The region, as you know, has the lowest inflation in 50 years, and Latin America posted its best economic performance in a quarter century last year. The Mercosur countries have been among the most attractive in the world for foreign investment. The question is, will this great progress be threatened by ripples spreading outward from troubled areas elsewhere on the globe?
We must do all we can to prevent that from happening. Some of the prevention may come from wise government action. And yet, I submit that we in the business world can and must play a major role in safeguarding the progress that has been made here in Latin America.
I further suggest that we in the direct selling industry have one of the most powerful tools ever devised to protect the economic gains made here in recent years and -- more importantly -- to extend the benefits of economic growth in a way that will make the coming decades by far the most successful in the history of Latin America. Let me outline briefly why I think this is possible.
Almost 40 years ago, I was assigned to pioneer direct selling in Western Europe, introducing the concept of an unknown line of plastic housewares with the improbable brand name Tupperware. Today, that company and my current one, Mary Kay, are both billion-dollar marketers relying heavily on global sales to spur future growth.
I speak to you wearing two hats – first, as vice chairman of a corporation whose international group of businesswomen is fully empowered and independent. Each individual is in business for herself, but not by herself.
Second, as vice chairman of the World Federation of Direct Selling Associations, I represent 1,000 companies in 140 countries with thirty-one million independent business people. Taken as a whole, our industry is perhaps the largest and most complex adaptive system of people on earth. Every one of those thirty-one million individuals "does it her way," constrained only by the moral and high ethical standards of conduct promulgated by their companies and our industry. (We have one of the oldest and best enforced self-regulatory codes of ethics in the business world.)
Forty years ago, only a sparse handful of U.S. companies were audacious enough to go global. Companies such as Avon and Tupperware led the way. The real story on the globalization of direct selling is in the people we touch and the lives we change. By "direct selling," I mean simply a company whose products are sold to consumers directly, rather than in stores.
Way back when business got started, it consisted of just two people . . . a buyer and a seller. This was, in essence, DIRECT SELLING, and it still is. There’s no mystery about direct selling.
In simple terms, it permits a straight line flow of products or services from a manufacturer or national distributor directly to the household end user through an organization of small, independent businesses. If we think about it, we realize that direct selling is a form of retailing . . . in fact, the world’s oldest form of retailing. Any time an organization sells products and services to household consumers for personal use, retailing has taken place. And so direct selling is an alternative to in-store retailing. Unlike the store merchant who hopes the prospective buyer will seek him out, the direct selling firm distributes products by making personal visits to the consumer prospect’s home or office for the purpose of product demonstration and an ultimate sale.
In a retailing organization, resources are organized primarily to support the selling of products in a store where people come to buy them. The key to success is being able to attract -- or ‘pull’ -- customers into the retail establishment to buy the product. Advertising and promotion ‘pulls’ customers into the store; independent direct sellers act as mobile mini-stores who initiate the selling occasion by taking the product to the consumer.
After 40 years of firsthand experience, I am convinced that association with reputable direct selling companies improves the self image, self confidence, and self reliance of individual human beings. We offer Freedom.
Experience -- even very limited experience -- with a direct-selling company delivers a powerful, life altering benefit. The benefit becomes richer with the tenure of the individual who, in the global direct sales world, is mainly female. This is especially so in transitional economies.
What are we in direct selling offering to women? The freedom to order their lives as they choose. The freedom to break clear of the full-time mother/full-time businesswoman dilemma. Freedom from frustration for a woman who wants to contribute to her family’s income but cannot figure out how to do it without making unacceptable sacrifices in her life. Any pollster in the world can tell you that these are freedoms that women of all ages are demanding today -- and rightfully so!
FREEDOM of EXPRESSION
What else are we offering the independent direct seller?
Freedom to express herself in the business world as she grows. The freedom to run her new business in her own way. The freedom to stop selling if she needs to for a period of time. Freedom to transition into the full-time work force if she chooses. The feeling of freedom that comes from being a part of a "sisterhood" of direct sellers who can share ideas with her and give her emotional support that will help free her mind and emotions in ways that otherwise would not be possible.
My passion for direct selling is fueled by what I call the paycheck of the heart, and comes from the sure knowledge of the lives we are enhancing, the Freedom we are offering. Individual earnings from direct selling improve economic status; children have a better shot at life; there are improvements in health, security, education, even leisure; communities are bettered; and thousands of leaders are developed.
Even when individuals leave direct selling, as they do in large numbers for many reasons – and, by the way, most of the reasons are not negative -- the quality of their lives is almost invariably improved.
They are more confident, they now can earn a living on their own if they so choose, and many have become effective leaders, a skill carried over to other enterprises, to the community, and sometimes even to political power.
The ripple effect of this is immense because our direct sellers are not functioning in a vacuum -- they have built relationships with large numbers of consumers and community members. It should not be overlooked that these consumers are benefiting from the quality products they acquire from their independent direct seller, and that in ways small and large, their quality of life is being enhanced as well.
ACCESS and CONVENIENCE
What freedoms do direct sellers offer to their customers? The freedom of choice among a broad and impressive line of products. In developing markets lacking sophisticated infrastructures, we offer access and convenience by bringing products to customers; in other words, freedom from wasted hours of simply traveling to larger population centers, or searching for products within those large cities.
I want to focus now on the consumers of our opportunity around the world.
Women are the real engine of economic growth. Approximately 90% of the customer purchasing decisions around the world are made by women. And because so many hundreds of millions of women are still constrained by their governments and their societies, their potential has yet to be unleashed.
From my perspective at Mary Kay -- a global marketer to women through its 500,000 women who own their own businesses and who sell our cosmetics in 27 countries -- I can only say that we should look forward to steadily increasing per-capita incomes as women gain more freedom and exert their leadership -- economic and otherwise -- in developing areas of the world such as Africa, Asia, the Middle East, Eastern Europe, Russia, and here in Latin America.
The scale and rate of growth of what we are collectively achieving in direct selling globally are awesome. The number of small businesses established was up 40% in 1997 from 1996 and up some 15 million in the past five years.
It is important that you know that 80 percent of those people are women, and most of them had little or no business training before they joined our companies. Our opportunity is open to all – we are as diverse as the 140 nations in which we operate. It is also important that you know that the open-ended opportunities we offer are especially suited to women with an entrepreneurial spirit.
I would argue that I have yet to meet a woman who doesn’t have an entrepreneurial spirit. Running a household has a way of doing that. A household is a mini-economy in itself.
It has been a beautiful thing to watch as the world has come to acknowledge something the founder of my company has known all her life: once given the opportunity, women will rise to the occasion.
Although the U.S. is the most mature market, direct selling continues to outperform fixed-location retailing, mail order, and telemarketing on a percentage of growth basis. U.S. sales increased $17.94 billion in 1995 to $21 billion in 1996, more than 17%, and rose 6.6% again in 1997 to $22.2 billion.
This shows that growth will continue in transitional markets for decades to come.
The direct selling industry grew in number of independent business people by an astonishing 336% between 1987 and 1997. But, that's not even the biggest news . . .
Let’s assume that the direct selling industry’s global independent small businesses’ size will only increase 100% in the next ten years, which I believe to be laughably conservative. In 1996, the industry completed a comprehensive research study, comprised of over 1,000 interviews and conducted by one of the nation’s most respected research organizations, The Wirthlin Group. The Wirthlin Study says that 25% of former independent direct sellers anticipate they will return to direct selling, so we will discount growth by this factor. Now, if you assume the turnover figures reported in the Wirthlin Study of the U.S. direct-selling industry and add this to the discounted growth projection, you come to a total of 200 million people -- mainly women -- who will have been a part of direct selling.
This is roughly equivalent to the combined populations of the Mercosur countries: Brazil, Argentina, Uruguay, Paraguay and Chile!
This calculation doesn’t include spouses and children, nor the incredible number of customers who will have been reached. The real total would be in the billions. It is this people reach that is the awesome dimension of the direct selling industry. It dwarfs the mere $80 billion or so in global retail sales reported for 1997. But how many people realize that?
The rapid world growth of recent years may be viewed as the payoff to a decade of worldwide economic reforms. Growth is robust where these conditions appear:
- Openness of trade and financial markets
- Smaller government
- Corruption-free civil service
- Good infrastructure
- Highly educated labor forces
- The rule of law
- In the parts of the world where there have not been economic reforms, but rather, totalitarian governments and weak financial institutions, there has been chaos and stagnation -- I refer specifically to Russia, South East Asia, the Middle East, and much of Africa. In such places, direct selling has had to struggle for a beachhead and to work its magic – to the great disadvantage of the people who most desperately need an economic jump start. Still, the industry has made progress in some of these markets.
In summary, then, the opportunity for direct selling to transform the world economy is bright -- but it must be jealously guarded within the parameters of our code of ethics. With freedom comes responsibility.
I think there’s little doubt that the global direct selling industry will be more than 60 million strong and will have global sales of more than $200 billion by 2007.
The independent businesses will continue to be owned and led mainly by females, but will increasingly include more families and men.
More of the industry’s small businesses will be in emerging, transitional markets. We will be well thought of in these markets because many lives will have changed for the better due to direct selling. In developed nations, the industry will be much more "wired," as it will have learned to blend great personal selling skills with electronic forms of communications, such as the Internet.
The direct selling industry looks strong at the beginning of the millennium. It’s poised to create revenues and profits for the 200 million individuals who will learn so much from us between now and 2007! We represent the ultimate in economic -- and personal -- freedom. We’re helping to revolutionize the world of human potential.
Political freedom has been a hard-won prize, achieved only after decades of bitter struggle. Today, the magnificent economic freedom represented by the direct-selling industry is truly the next great victory to be won.
Again, thank you for inviting me here, and I look forward to our panel discussion.