Health and wellness is a huge sector within the direct selling space; in fact, it has captured the highest volume of product scales and is projected to continue to boom. Health and wellness is the only product category to have strong growth in the direct sales channel between 2011 and 2015 in the U.S. As long as obesity continues to be a concern and subsequently, that weight loss continues to be a focus for people both in the U.S. and abroad, this category will continue to experience steady, solid growth. The Institute for Health Metrics and Evaluation (HME) reports that almost a third of the world’s population – 671 million people – are overweight or considered obese.
Direct selling companies in this category are slated to perform well because of the need for products and services that address this pain point worldwide. Isagenix International, a dietary supplements and personal care product company, is a great example of what’s possible for this sector of direct selling companies. August of 2016 marked the 10th executive year that the company was acknowledge by Inc. as one of the fastest-growing private companies in America.
While business is booming for these organizations, threats on the lifeblood of these companies are growing exponentially, too. Establishing payment processing operations and maintaining merchant accounts as a direct selling company can be a challenge and a half. First, there are several considerations that should factor into the type of payment processor you choose:
- Processing Needs – are processing solutions secure, affordable and multi-channel (online, offline and mobile payments)?
- PCI DSS Compliance – How can you reduce the scope and burden of PCI compliance?
- Commissions - How do commission payments factor into your payments operation? Are you able to transfer funds internationally to a representative’s local currency? Do you pay commissions to a prepaid card?
- Distributor Payments - Do field representatives use replicated websites for selling and do they need to be connected to a central payments system for payment acceptance?
Once you find the right fit, maintaining a healthy merchant account relationship is essential. Communication is the most important aspect of this relationship. Direct selling companies need to work with processors that understand their business model and its unique needs and challenges. In the same vein, direct selling companies need to be upfront with banking partners on the type of company they run and exactly what they do. If you are a health and wellness direct selling corporation with multiple levels of compensation, you should disclose that early and often. Companies who bypass this disclosure, or even attempt to be dishonest about it, put the entire business at risk. Below are top points that should spur conversation between you and your banking partner.
Sudden and extreme growth – This is not uncommon with direct selling companies; perhaps you’re signing a new distributor that has a 50,000 projected person downline. Tell your processing partner.
New products - This is one of the key criteria upon which processing contracts are underwritten. If you are launching a new product and fail to notify your processing partner, they can terminate your merchant account. Be upfront and honest and open to any feedback they provide.
Sudden and/or unexpected underperformance – Extreme fluctuation can happen in either direction for direct selling companies, and sometimes that direction is downward. If this happens, have an honest conversation with your processing partner about your plans to recover. Solid partners will be consultative with you and provide guidance on getting back on track.
If you’re a health and wellness direct selling company, the outlook is positive. The market for related products and services is bustling with eager buyers and emerging payments technology is making it easier than ever to streamline the unique needs to direct selling organizations. The key is to keep all the above considerations in mind when choosing a processing partner and to focus on maintaining an open, honest relationship with your merchant account provider. Being transparent and collaborative can mean the difference between a healthy processing partner relationship and account termination.
Not sure where to start? Contact us today to get a free consultation – we’ll discuss your business model and your unique needs in a processing partner.