DIRECT SELLING IN INDONESIA - ANALYSIS

Country Report | Jan 2018

HEADLINES Market Sizes

In a midst of shifting consumer behaviour, the channel’s performance in 2017 shows Sales of Direct Selling
how important product differentiation is in direct selling Retail Value RSP excl Sales Tax - IDR billion - Current - 2003-2022
Health-related products and beauty products are the best sellers in 2017
The channel is set to grow positively over the forecast period, due to favourable
23,271 Forecast
35,000
demographics, especially the rising young population
30,000
PROSPECTS
25,000
Direct selling records a positive growth rate in 2017 despite challenges
20,000
In 2017 direct selling grew at a slower rate compared with the previous year. The
channel increased during the review period despite the deceleration or decline of
some of the leading brands, such as Tupperware, Oriflame and Sophie Paris, which was 15,000
due to consumers shifting towards online buying, and also because consumers were
becoming wiser in allocating their budgets. Other factors such as company and product 10,000
dynamics also contributed to declining growth. For example, leading brand Tupperware
suffered value sales declines in 2016 and 2017. This was partly due to the declining 5,000
number of its salesforce across the nation, but more importantly there has been an
absence of product differentiation offered by the brand. Tupperware, which is well 0
known for offering food storage and serving products, tends to be easy to counterfeit in 2003 2017 2022
Indonesia. Sophie Paris, which sells products such as apparel, footwear, bags and other
fashion items, can also be easily imitated, and copycat items are indeed widely found
in the market; therefore, it is challenging for the brand to retain consumers, and this is Sales Performance of Direct Selling
resulting in sales declining. % Y-O-Y Retail Value RSP excl Sales Tax Growth 2003-2022

© Euromonitor Interna onal 2018 Page 1 of 5

Product differentiation is key
Direct selling in Indonesia is dominated by multi-level marketing (MLM) companies.
6.0% Forecast
Direct selling, particularly the MLM segment, relies heavily on sales agents 20%
demonstrating and explaining the uniqueness and the advantages that the products can
offer. In Indonesia, MLM products are usually of a higher price because of the business
dynamics of the channel; product sales profit is distributed among the multi-level
15%
salesforce. So, if products are generic and can be found elsewhere then there is no
reason for consumers to buy them or be loyal to the companies selling them.

Direct selling is set to grow at a slower rate 10%

The channel will continue to perform well thanks to MLM, a business concept that can
continue to grow, despite the dynamic economic conditions. This is because Indonesia
has a large young population to support supply (as sales agents) and demand. In 5%
addition, with Indonesians getting wiser in terms of reserving their wealth for more
important goals, people will prefer to spend just on what they need in the forecast
period. Therefore, generic products will not be appealing to them; so the channel’s
growth will also be generated by companies that provide value-added products such as 0%
2003 2017 2022
health-related or beauty-related items. Due to these factors, direct selling is predicted
to again grow positively, but slower than in the review period.

COMPETITIVE LANDSCAPE

Much movement is observed among players

During the review period, there was much movement observed among players. Some
rose in the company rankings, while others fell. This was because of business
conditions, and shifts in consumer behaviour; people were being more selective in
terms of their spending. In 2017, it was challenging to sell products that were more
generic in nature and that could easily be replaced with other products available
locally.

Health and beauty products are the most demanded goods

In 2017, it was more apparent that brands that offer health-related or beauty-related
products, such as cosmetics and supplements, were the most successful. For example,
Moment and Biogreen Science, two of the more recently established brands, recorded
rapid growth. These brands are offering products that contain collagen, stem cells and
glycogen, as well as other health- and beauty-related products that are advertised to
promote more youthful-looking skin, a healthier body etc. This is because Indonesians’
purchasing power is not diminishing; it is in fact increasing with the rise in the income

© Euromonitor Interna onal 2018 Page 2 of 5

per capita. As income is rising, demand for better-quality living is growing. Also, with
increases in literacy rates and education levels, consumers realise the importance of Sales of Direct Selling by Category
Retail Value RSP excl Sales Tax - IDR billion - Current - 2017 Growth Performance
healthy living.
Apparel and Footwear Direct Sell...
Online direct selling is limited 261.3

With the rise of the internet retailing channel, direct selling companies are increasingly Beauty and Personal Care Direct ...
4,523.8
challenged. Although these companies are allowed to utilise the digital platform as a
means of advertising and promoting products, they are limited to selling their products Consumer Electronics Direct Sell...
-
online to members. This limitation serves to prevent the overlapping of sales by
different industries. Due to this factor, the direct selling channel cannot fully utilise Consumer Healthcare Direct Selli...
5,227.9
and reap the full benefits of internet retailing.
Consumer Appliances Direct Selli...
13.0
Food and Drink Direct Selling
2,667.8
Home Care Direct Selling
108.0
Home Improvement and Gardening D...
-
Housewares and Home Furnishings ...
4,484.3
Media Products Direct Selling
-
Personal Accessories and Eyewear...
456.8
Pet Care Direct Selling
-
Traditional Toys and Games Direc...
-
Video Games Hardware Direct Sell...
-
Other Direct Selling
5,527.8
-30% 0% 25%

DIRECT SELLING 23,270.7 CURRENT % CAGR % CAGR

YEAR % 2012-2017 2017-2022
GROWTH

© Euromonitor Interna onal 2018 Page 3 of 5

 Competitive Landscape

Company Shares of Direct Selling

% Share (NBO) - Retail Value RSP excl Sales Tax - 2017

Tupperware Indonesia PT 9.9%

Orindo Alam Ayu PT 9.6%
Herbalife Indonesia PT 8.2%
Nusa Selaras Indonesia P... 6.8%
Momen Global Indonesia P... 6.3%
Bio Organik Nusantara PT 6.2%
K-Link Indonesia PT 5.4%
Amindoway Jaya PT 4.2%
Sophie Martin Indonesia ... 4.1%
Citra Nusa Insan Cemerla... 2.5%
Tahitian Noni Internatio... 1.2%
Jafra Cosmetics Indonesi... 0.8%
Luxindo Raya PT 0.6%
Singa Langit Jaya PT 0.6%
Sunrider Nusaperdana PT 0.2%
Nugra Aloeverindo PT 0.1%
Unicity Network PT 0.0%
Others 33.3%

© Euromonitor Interna onal 2018 Page 4 of 5

 Brand Shares of Direct Selling
% Share (LBN) - Retail Value RSP excl Sales Tax - 2017

Tupperware 9.9%
Oriflame 9.6%
Herbalife 8.2%
Nu Skin 6.8%
Moment 6.3%
Biogreen Science 6.2%
K-Link 5.4%
Amway 4.2%
Sophie Paris 4.1%
CNI 2.5%
Tahitian Noni 1.2%
Jafra 0.8%
Lux 0.6%
Tiens 0.6%
Sunrider 0.2%
Forever Living 0.1%
Unicity 0.0%
Others 33.3%

Increasing share Decreasing share No change

© Euromonitor Interna onal 2018 Page 5 of 5