ADA — A softening market in China led sales to dip in 2016 for Amway Corp., a trend that’s dogged the global direct-selling giant since 2014.
Amway President Doug DeVos cited increased competition from other direct sellers in China and negative currency fluctuations as contributing to the decline, but said it mostly stemmed from the company’s business cycle.
“It’s as much regarding our internal cycle,” DeVos told MiBiz during an interview at the company’s headquarters in Ada. “In a direct sales force, you have a lot of enthusiasm and momentum that takes the business forward, and people to a certain extent get tired. Our main leaders who are there, they are absolutely committed, but you have a huge part-time element and for a while they might be interested and then they might pare back or they have other interests or things happen. It’s just really difficult to maintain that level of engagement for an extended period.”
Amway generated annual sales of $8.8 billion for 2016, a 7.4-percent decrease compared to the $9.5 billion the prior year. Sales for the company reached their peak in 2013 at $11.8 billion and have fallen every year since.
The family-owned Amway publicly reports annual sales, but does not disclose earnings.
Despite the dip in sales in China, the majority of Amway’s other international sectors performed well, DeVos said. However, both Russia and Vietnam “struggled” for 2016, he said.
Looking ahead, DeVos expects key markets in China, the U.S. and India to drive performance for the company, particularly among younger millennials. In an Amway study, the company found millennials opened the majority of independent businesses selling Amway products.
“We appeal because we bring flexibility and we bring lifestyle and relationships,” DeVos said. “Our global entrepreneurship report continues to demonstrate that the millennials are very open to a business opportunity like ours and are very interested in having a flexible lifestyle where they can draw income to it.”
Overall, DeVos expects Amway’s performance this year to be dictated by sales in China — Amway’s largest market — followed by the United States and South Korea.
“It really all depends on China,” he said. “We’re believing that if China settles in at a level of 2016 or maybe a little bit below, depending on how the markets grow, we’re thinking that 2017 will probably be a flat cycle for us. … If we look into our crystal ball, we’re still smiling.”