Best World

[Boon]

Another set of interesting membership drive target estimates put up by a BWL Taiwan member, which says:

Currently Amway Taiwan has about 400,000 members.
BWL Taiwan membership is currently growing at about + 4,000 members per month.
2016 = + 50,000
2017 = + 60,000
2018 = + 70,000
2019 = + 80,000
2020 = + 90,000 

=> 4 years later, total members would exceed 400,000 
=> Taiwan revenue of TWD 10,000 million would likely to be realized.

Can BWL Taiwan do it ?

A bullish view would be if Amway Taiwan could do it, why not BWL Taiwan.
A bearish view would be NO way.

My view is :

if current total BWL Taiwan membership is only at about 50,000 to 60,000 level - it means there are still rooms for growth - and 400,000 members is not an impossible target - after all, Amway Taiwan could do it. 

But to achieve it over a period of 4 years seems pretty ambitious - wondering how long it took Amway Taiwan to reach the 400,000 mark ?
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[CityFarmer]

I respect the stickiness of group behavior, thus group average figures are good numbers to follow, to understand group dynamic. As usual, an alternative view, on top of Boon's

The average rev/member of Taiwan, was around S$1.3K pa. (Note: it is the total members, rather than active members as reported by other DS company)

The 1H2016 average was S$1.7K pa, and 2H2015 was S$1.9K pa. Both are way above the average. I reckon, it might due to the recent new product launches. Logically, the average will eventually normalized in next few quarters.

(not vested, and sharing a view)

[Boon]

There seems to be a lot of interest in Best World now. But it should be remembered that ultimately it operates in a competitive market. It is not that the products do not work - if they don't work consumers would soon stop buying. But are they good value for money? Because the consumer can choose from many brands of skincare products, from the famous ones like Shiseido or Amorepacific to obscure ones that few have heard of.

I looked at the direct selling business model, and the sales trends suggest that it tends to be a fad - sales grow steadily then peak and taper off. Some companies get a second wind, but many others go into slow decline.

This grow-peak-decline pattern is visible in the last 10 years in large companies (sales over USD 1bn) such as Avon, Herbalife, Tupperware, Nu Skin and Oriflame.

Among smaller companies (sales below USD 1bn) there is no clear pattern. Some have clearly peaked, with flat sales for the last few years. Others have been in decline for several years. A few show meteoric sales increases with clearly unsustainable growth rates.

Best World seems to be on its second wind, but it is not clear how long this can last. This may not be a concern to short-term investors looking to trade on news, but the long-term investor would do well to be cautious. Taiwan is the current star market for Best World, but if Taiwan peaks soon and China doesn't take off, it's game over. It is true that the Chinese market is enormous. But it is also intensely competitive for both the principals and their distributors. It is not clear whether Best World will be able to maintain prices or commissions in China.

As usual, YMMV.

[Image: AmwaySales1959-2011.jpg]

http://www.amwaywiki.com/Sales_Data

50 years of global sales figures from Amway: 

3 grow-peak-decline phases are visible (with peaks in 1982, 1997, 2005).

Interestingly, it is worth noting that each decline (has a SHORT phase) and was followed by a stronger LONGER growth phase which subsequent ended with a HIGHER peak. 

As I have said before, these grow-peak-decline patterns are observable in every company that managed to make it into the growth phase - regardless of biz models and types of products.

Question is
How long is the growth phase? 
What is the magnitude of peak?
What pattern of decline follows ? 
Can it bounce back?

Can one attribute Amway's global sales trend (and success) to be a fad ?
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[mslee888]

My understanding may be a little different...a fad usually refers to a product or service. Is DS a fad? I don't think so. This model has been around for so many years, so it is workable and can withstand test of time.

So the question is whether the products or services that Best World provides are fad? This may not be so as I recalled the COO mentioned during the AGM that their product line cycles are very long. This mean they can keep attracting new users to their products.

As long as Best World can continue to roll out new products or services that can create demand, I am quite sure the company will continue to do well especially now their geographic market size is getting larger too.

[d.o.g.]

Can one attribute Amway's global sales trend (and success) to be a fad ?

Amway may be very successful, but is its success an exception or the rule? Based on the direct selling companies I examined, the general sales pattern suggests that Amway's continued success is unusual.

Certainly, Best World may turn out to be another Amway, but the investor would have to satisfy himself/herself as to what makes Best World like Amway and unlike the other direct selling companies. It is not merely about having a good product - that is necessary but not sufficient. It is not about having an attractive commission structure either - again, necessary but not sufficient. So what makes Best World special?

I do not have the answer. Perhaps someone else does.

[brattzz]

branding, networking, good commissions,products, achieving dreams...

[CityFarmer]

Nu Skin is one of the DS company tracked. Based on info collected, Nu Skin's sale in the last 20 years (selected years data) were

1996 : US$ 762 million
2000 : US$ 880 million
2005 : US$ 1181 million
2010 : US$ 1518 million
2015 : US$ 2247 million

In short, generally sales is in up trend. Total growth (20 Years) is 295%, or CAGR of 6%. IMO, the business model is an proven model. Execution matters for performance.

(sharing an info to our discussion)

[d.o.g.]

Nu Skin is one of the DS company tracked. Based on info collected, Nu Skin's sale in the last 20 years (selected years data) were

1996 : US$ 762 million
2000 : US$ 880 million
2005 : US$ 1181 million
2010 : US$ 1518 million
2015 : US$ 2247 million

In short, generally sales is in up trend. Total growth (20 Years) is 295%, or CAGR of 6%. IMO, the business model is an proven model. Execution matters for performance.

(sharing an info to our discussion)

Nu Skin peaked in 2013.

For reference, Nu Skin sales from 2010-2015:

2010: US$ 1.5bn
2011: US$ 1.7bn
2012: US$ 2.1bn
2013: US$ 3.2bn
2014: US$ 2.6bn
2015: US$ 2.2bn

Avon peaked in 2011 at US$11bn, 2015 sales were US$6.1bn.
Oriflame peaked in 2010 at US$2.0bn, 2015 sales were US$1.3bn.
Herbalife peaked in 2014 at US$5.0bn, 2015 sales were US$4.5bn.
Tupperware peaked in 2013 at US$2.7bn, 2015 sales were US$2.3bn.

There are others but I will not belabor the point. The numbers are what they are, it is up to each of us to interpret the numbers.

In any case, Best World is in the "small" (sales under US$1bn) category where there is no obvious grow-peak-decline pattern but instead a wide variation in outcomes over the past 10 years.

As usual, YMMV.

[CityFarmer]

I don't know the rest, but Nu Skin's 2013 poorer performance was due to a hiccup, which I have posted previously. If long-term trend is up, we shouldn't be too bothered by a blip, IMO

(not vested)

[Boon]

Can one attribute Amway's global sales trend (and success) to be a fad ?

Amway may be very successful, but is its success an exception or the rule? Based on the direct selling companies I examined, the general sales pattern suggests that Amway's continued success is unusual.

Certainly, Best World may turn out to be another Amway, but the investor would have to satisfy himself/herself as to what makes Best World like Amway and unlike the other direct selling companies. It is not merely about having a good product - that is necessary but not sufficient. It is not about having an attractive commission structure either - again, necessary but not sufficient. So what makes Best World special?

I do not have the answer. Perhaps someone else does.

What makes Best World special?
 
It has shown its ability to compete and gain market shares in one of the most competitive DS market in the world - Taiwan – with the USD billion revenue DS companies including Amway (ranked No:1 in Taiwan and in the world), Herbalife (ranked No:4 in Taiwan and No:3 in the world), Nu Skin (ranked No:5 in Taiwan and No:10 in the world) and Avon (ranked No:10 in Taiwan and No:2 in the world).
 
And I believe, BWI, being who it is now, has the ability to do the same in China and in other markets. 

The ability to compete and grow in competitive markets is the investment merit.
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