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Direct Selling: A Hundred-Billion Dollar Vision for the Commerce Industry

We at Comcast Ventures are focused on the commerce industry and exploring exciting verticals within it. What a surprise that some of the most exciting new startups are in a niche that was started thousands of years before. In 2000 BC, the Code of Hammurabi, a monument of Babylonian law, protected the general welfare and integrity of the Babylonian direct seller.

 Direct selling is now a $150B industry that employs 74M people globally. This is a mass merchandising channel based on individuals selling products to other individuals in person or in a party setting, without a brick-and-mortar presence.

In the last 5 years, several venture backed startups have grown into multi-$100 million dollar revenue businesses and in the process, re-invigorated the industry. Recent entrants like Stella & Dot, Scentsy, and Thirty-One gifts have proven that technology and social media can be used to great effect in increasing reach and driving sales of new product categories.

 The most successful companies have adopted and evolved a “direct selling playbook” to suit their specific needs. By no means an exhaustive list – it includes organizing around social interactions and party plans, charismatic leaders, investing in training and technology, and carefully crafted compensation plans. When well executed, you find businesses that generate 70%+ gross margins and 10-20% operating margins, while paying out 30-40% sales commissions to the field, allowing many reps to earn thousands of dollars per month. As importantly from a startup and venture perspective, these are extremely capital efficient enterprises.

We are excited about the industry and welcome a conversation with any startup or individual who is thinking about starting a direct selling business. If you or your company fit the bill, drop us a line at Info at ComcastVentures.com!

Posted by on June 12, 2012   |    Our View

 

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