Direct Selling and Its Significant Impact on Utah’s Economy
Big companies like doTERRA and Nu Skin have more in common with a door-to-door seller than you might think. They both follow a direct selling business model and are popular. These companies accounted for more than 71% of Utah’s exports in 2020.
Over the decades, Utah has become a hub for direct sales. Dr. Levi Pace, senior research economist at the University of Utah’s Ken C. Gardner Policy Institute, spoke with KSL about its prominence in the state.
“One thing I didn’t realize was the extent to which this industry generates revenue from other states and customers around the world,” Pace said.
According to his findings in a study titled, An Economic Analysis of Utah’s Direct Selling Industry, 10 direct selling companies combined for $6.3 billion in international sales.
Direct sales have proven to be lucrative, but what are they?
Person-to-person selling, fueled by personal networks
Pace said direct selling includes companies that have a person-to-person selling business model. Fueled by making connections with their personal networks, he explained that not all internet retail businesses are a direct selling model.
“Direct selling often also involves a lot of in-house manufacturing. So ordering and ingredients, but also preparing things,” Pace said.
According to an article published by Pace, the direct selling industry employed 17,487 Utahns. It also indirectly supported 20,751 jobs through industrial activity. These are high-skilled jobs that pay above average, Pace said.
“So we’re in the neighborhood of $63,000 to $64,000 for average salary at those jobs,” Pace said.
He also said that these jobs are not exclusive to large companies and the fact that Utah is in a unique position as home to these companies.