Last month, Herbalife agreed to restructure its U.S. operations and to pay $200 million in consumer reparations after a two-year Federal Trade Commission (“FTC”) investigation. While the target in this specific case was Herbalife, those in the evolving direct selling consumer industry understood that the outcome would be a referendum on the industry as a whole. And while noted industry lawyers point out that the settlement does not set legal precedent, the message was clear—focus on selling products and reward for that activity.

Monica Vaca, an Assistant Director in the FTC’s Bureau of Consumer Protection, alluded to this message last October at the Direct Selling Association Strategic Summit as her remarks included reference to selling products to meet customer demand. To an industry outsider, this seems extremely simplistic. However, many customers who sign up as distributors only do so to receive discounts on those products with no real intent to sell the products. The question now becomes—what is a customer?

The Distributor and the Evolving Direct Selling Consumer Roles

The conversation is a technical one—is a distributor who purchases products for personal consumption a customer, or considered to be an “end user?” And does that count as a retail sale? Is an active distributor, one that sells the company’s products and also purchases products to use personally, also considered a customer/end user? The answers to these questions can redefine the evolving direct selling consumer industry. The narrower the definition of a customer or “end user,” the greater the need for modification of business practices, and compensation plans will need to be refined.

For industry naysayers, they might view this as a positive turn of events. Yet traditional and e-commerce companies are using technology and turning to evolving direct selling concepts as they continue to try new ways to connect directly with their customers.

Last month, the Wall Street Journal reported that Proctor & Gamble started an online subscription service for selling dissolvable Tide Pods directly to consumers via an auto-ship program as a way to appeal to customers directly. Auto-ship programs are a staple of the direct selling industry. Apps like Uber and Lyft hire independent contractors to deliver the company services. Again, supporting, motivating, and the respectful treatment of a 1099 sales force are the principle foundations of successful direct selling companies.

And direct selling companies themselves are evolving. Many companies have recognized the need to better serve their customers through preferred customer discount programs. Preferred customer programs have identified those direct selling customers that sign up as distributors to receive a discount on the products they consume and have no intention of selling them. Companies have also leveraged their entrepreneur opportunity with enhanced training and compliance education programs for their distributors. These training and compliance education programs often include how to correctly use technology to grow a sustainable business.

Ultimately, it will be the consumer and their evolving purchasing habits that will shape the new era in the evolving direct selling consumer business. Whether that is through a traditional direct selling company, a division of a CPG enterprise looking to connect directly with its consumers, or an app with an enticing business opportunity, how consumers prefer to shop and receive merchandize will fuel the industry’s future success.