Multi-level Marketing
While the number of multi-level salespersons rose by 330,000 last year, the number of salespersons receiving supplementary allowances by only 20,000.
The Korea Fair Trade Commission analyzed sales, the number of salespeople and the amounts of sponsor allowances of 124 multi-level dealers last year. The commission announced on July 19 that the analysis showed that sales of the multi-level sales market last year slipped 0.4% to 5.130 trillion won (US$4.6 billion).
The top ten companies' combined sales also edged up 0.04% year-on-year to 3.624 billion won (US$3.26 million). Last year, the number of multi-level marketing companies subject to information disclosure sank by four to 124 from the previous year.
Sales and number of multi-level marketing companies inched down but the number of salespeople inflated. As of the end of last year, the total number of salespersons registered in multi-level dealers swelled 4.1% to 8.29 million. There are many cases in which multi-level salespeople registered themselves in multiple multi-level marketing companies or salespeople stop selling products after registering themselves in multi-level marketing companies. Thus, actually there are less active salespeople. But, the number of salespeople who received sponsor allowances through sales activities increased 1.2% to 1.64 million, showing a rise in the number of active salespeople.
The amounts of sponsor allowances also tended to be polarized. While the number of salespersons expanded by 330,000 from 7.96 million in 2015 to 8.29 million in 2016, the number of sales people receiving sponsor allowances increased by only 20,000 to 1.64 million, from 1.62 million.
In particular, the analysis says that the structure where the top one percent of salespeople monopolizing on sponsor allowances is strengthening. The total amount of sponsor allowance paid to salespeople by multi-level vendors last year hit 1.53 trillion won (US$1.37 billion), a 1.5% increase from the previous year. The number of salespeople who received sponsor allowances was 1,640,000, of which 16,370 multi-level salespeople who accounted for less than 1% of the top level were paid an average of 57,070,000 won (US$51,363) in sponsor allowances while the remaining 99% of salespeople (1,623,000) received an average of 470,000 won in sponsor allowances. The amount of sponsor allowances of the top 1% was more than 100 times the amount of sponsor allowances of the rest.
Amway, Atomy, and Nu Skin Korea ranked among the top 10 multi-level marketing companies in terms of revenue in Korea. Fourth place was taken by Unicity Korea which placed fifth last year and Herbalife Korea was relegated to fifth place from fourth.