Korea’s Direct Sales Market Booming

Lee Seon-yeong, a mother of a fifth grader daughter and a five- year-old son, is a “Yakult woman,” a yogurt delivery person.

She delivers a variety of products, mainly yogurt, of Yakult Korea, around the Gangnam-gu office and nearby three apartment complexes everyday from 7:00 a.m. to 12:30 p.m.. She smiles, saying, “I am beat by the end of my work, especially in these hot summer days, but I am happy to make money for living expenses and my children’s education fees.” Yakult Korea expects its sales this year to exceed one trillion won for the first time in the company’s history, of which 810 billion won is accounted for by door-to –door salespersons like Lee.

Korea’s direct sales market, which consists of door-to-door sales and so-called “multi-level marketing” by direct sellers, is growing fast. The size of the market amounted to an eight trillion won range last year, up from 3.4674 trillion won in 2000.

The world’s third largest direct sales market-

The Direct Selling Association estimates the size of international direct sales market at 101.05 billion dollars or 95.9975 trillion won as of 2005.

Korea, as of 2004, accounted for 8.03 billion dollars, the world’s third largest behind the U.S. and Japan. A whopping 4.65 million workers are engaged in this business.

Direct sales also contribute much to the Korean economy. According to the Korea Distribution Association’s 2003 statistics, direct sales took up 5.5 percent of the domestic retail industry, and provided 1,763,800 jobs.

Lim Young-yoon, a Gwangwoon university professor, said that direct selling gave breathing room for small and medium-sized enterprises, which often found it difficult to access the market on their own.

Job Creation for Women-

Park So-jae (39) was last year’s saleswoman of the year for the cosmetics company, Amore Pacific. She sells products worth 120 million won per month on average, accompanied by 35 junior salespersons.

The firm’s regular vocational training helped the homemaker turned saleswoman successfully lead the sales organization.

“Only ten years ago, all I knew about was my kids. I had never been interested in getting a job. But since I started out as a beauty counselor and received periodic training, I became confident.”

Direct sales do not cost much expense but help salespersons to foster expertise through continuous education. The flexible time also attracts many women to direct selling. Naturally, women represent 63 percent of the total direct sellers compared to men at 37 percent.

Dark side to the direct sales market-

However, one should not paint too rosy of a picture of the industry.

A man by the surname Sohn (41) became a credit delinquent after standing surety for his old colleague at a multi-level marketing company.

Sohn sighed saying that he allowed the friend to use his name for getting loans for the multi-level marketing firm. Soon afterwards, the company went bankrupt and Sohn was branded a credit delinquent.

Multi-level marketing, a big part of the direct sales market, lost consumer confidence as some company managers were prosecuted on a series of fraud charges. Its market shrunk to the two trillion won range last year from the all time high 5.548 trillion won in 2002.

jsonhng@donga.com