Despite digital, direct sales is booming in the PH

Digital is all the rage in the Philippines but Kantar Worldpanel found in a new report that direct sales has been growing much faster than any other channel in the fast-moving consumer goods (FMCG) market

Kantar noted that the availability of installment schemes and the familiarity of consumers to sellers, which are usually  friends or relatives, are driving consumer sales up, with P77.00 spent more on the channel from June 2013 to June 2014 period versus the comparable period.

Around half of consumers who buy through direct selling in the Philippines are from Visayas and Mindanao, accounting for 22.3% and 28.4% respectively. Also, 6 in 10 (63.3%) of the respondents belonged to Class D households.

Kantar didn't provide the exact number of direct sales customers or figures for the other sales channels in the press release, however.

Personal Care VS Household Care

Known mostly for personal care products, the direct sales channel is fast becoming a household care channel as well. In June 2014, about 14% of Filipino homes purchased household products via direct sales, an increase from 11.7% the previous year. In addition, the average spending for household care in the direct sales channel is now at P603 per year, helping double the share of household care within the direct sales channel, accounting for almost 22% of its sales in June 2014.

Screen Shot 2014-09-26 at 1.07.12 PMThe growth in direct sales is mainly to an increase in purchases of laundry detergents, fabric softeners, dishwash, and toilet bowl cleaners.  Kantar found that 7.7% of Filipino homes now buy laundry detergent via the direct sales channel compared to only around seven percent (7%) last year. Fabric softener buyer base doubled to four percent (4.4%) in 2014, while toilet bowl cleaners saw a one percent increase in buyers (from 3% to 4%).

Screen Shot 2014-09-26 at 1.07.19 PMIn terms of frequency of buying, laundry powder has been bought thrice a year via the direct sales channel. Today, consumers are likewise spending 20 pesos more each time they buy household care products via direct sales.

“Despite having a small share relative to other FMCG channels, it cannot be denied that direct sales is becoming an important source of personal and household care products for Filipino consumers,” Fabrice Carrasco, Kantar Worldpanel managing director for the Philippines, Vietnam, and Indonesia, said.