Despite a Surge in Sponsor Direct Sellers Last Year, Sales and Sponsor Commissions Declined

Fair Trade Commission, Disclosure of Key Information on Sponsored Door-to-Door Sales Operators in 2020

Comparison of Sponsorship Commission Payment Structures between Multi-Level Marketing and Sponsored Door-to-Door Sales.

[Sejong=Asia Economy Reporter Joo Sang-don] The number of sponsor visit sales agents increased last year, but both sales revenue and total sponsor commission payments decreased.

On the 29th, the Fair Trade Commission disclosed the "2020 Key Information on Sponsor Visit Sales Agents" containing these details.

Sponsor visit sales is a concept newly established separately from door-to-door sales through the full revision of the Door-to-Door Sales Act in 2012 to regulate modified door-to-door sales companies operating similarly to multi-level marketing organizations. Unlike door-to-door sales, which operate under a reporting system, sponsor visit sales operate under a registration system to prevent consumer damage caused by modified door-to-door sales companies. Sponsor visit sales combine elements of door-to-door sales and multi-level marketing but have a single-level sponsor commission payment method. In other words, commissions are paid only on the sales performance of the salesperson and their direct subordinates.

The number of sponsor visit sales agents subject to information disclosure in 2020 was 3,130, an increase of 43% (941 agents) compared to the previous year. Compared to the previous year, the number of agency business operators for major companies such as LG Household & Health Care decreased by 41, Amorepacific by 20, Mime by 138, and Narzio Walking Shoes by 28, but the number of agency business operators affiliated with Lehman Korea increased by 1,379, resulting in an overall increase in the number of sponsor visit sales agents subject to information disclosure.

Sales revenue has been declining for four consecutive years since 2016. The total sales revenue of the sponsor visit sales market in 2020 was 3.0384 trillion KRW, a 0.6% (18.3 billion KRW) decrease from the previous year (3.0568 trillion KRW).

As of the end of December 2020, the number of salespersons registered with sponsor visit sales agents was approximately 698,000, an increase of 314,000 (81.7%) from the previous year (384,000). Among them, about 334,000 salespersons received sponsor commissions, accounting for 47.8% of registered salespersons. This is an increase of about 105,000 (45.8%) compared to the previous year (229,000). The total amount of sponsor commissions paid by sponsor visit sales agents in 2020 was 779.5 billion KRW, a decrease of 5.1% (42.3 billion KRW) from 2019 (821.8 billion KRW).