Op­por­tu­nity Econ­omy Lever­age

Nu Skin is op­ti­mistic about the emer­gence of what it calls ‘gig econ­omy’ that it sees as a source of the com­pany’s work­force re­quire­ment

Portfolio - - IN THIS ISSUE - BY LI HAO­HAN

Founded in 1984 in Utah, USA, Nu Skin En­ter­prises drew early pub­lic at­ten­tion to its multi-level mar­ket­ing strat­egy that reached out to dis­trib­u­tors of and tar­get mar­kets for its own range of per­sonal care and di­etary sup­ple­ments. The com­pany has en­dured le­gal bat­tles that were as­so­ci­ated with al­leged un­sub­stan­ti­ated claims about its prod­ucts. In 2010, how­ever Nu Skin was named among Forbes’ 100 Most Trust­wor­thy Com­pa­nies. Nu Skin is traded on the New York Stock Ex­change. The Nu Skin cor­po­rate head­quar­ters are in Provo, Utah. It op­er­ates re­search and de­vel­op­ment cen­ters in Provo and in Shang­hai, China, and have man­u­fac­tur­ing fa­cil­i­ties in both the United States and China. It also runs walk-in cen­ters and pick-up lo­ca­tions in many of its mar­kets and op­er­ates stores and ser­vice cen­ters in China. We re­cently in­ter­viewed Mr. Ryan Napier­ski, Nu Skin pres­i­dent, about the ef­fec­tive­ness of the com­pany’s di­rect sell­ing strat­egy and the stream of prod­ucts that it plans to launch.

De­scribe the busi­ness of Nu Skin in terms of rev­enue stream and mon­e­ti­za­tion.

Nu Skin is per­fectly po­si­tioned in to­day’s emerg­ing ‘gig econ­omy’. This shift in work­force dy­nam­ics to­wards in­de­pen­dent con­tract­ing is driven largely by mil­len­ni­als emerg­ing as the largest per­cent­age of the work­force. We call this new econ­omy the ‘op­por­tu­nity econ­omy’ or ‘gig econ­omy.’ Nu Skin’s busi­ness model em­pow­ers peo­ple to live life on their terms by pro­vid­ing a re­ward­ing busi­ness op­por­tu­nity to mar­ket and sell the world’s lead­ing per­sonal care and nu­tri­tion prod­ucts. For this very rea­son, we have re­fined our vi­sion state­ment to ‘be­come the world’s lead­ing op­por­tu­nity plat­form’, seek­ing to pro­vide mi­cro-en­trepreneurs with a flex­i­ble op­por­tu­nity re­quir­ing a min­i­mal mon­e­tary in­vest­ment by en­abling them to uti­lize ex­ist­ing as­sets such as their own so­cial net­works to build a busi­ness.

What are your fis­cal and other growth tar­gets in the near fu­ture? What will it take to get you there?

Nu Skin ex­pects to sus­tain growth by ex­e­cut­ing our Growth Strat­egy, fo­cus­ing on en­gag­ing plat­forms, en­abling prod­ucts, and em­pow­er­ing pro­grams. With plat­forms, we are in­vest­ing heav­ily in tech­nol­ogy to pro­vide our mi­cro-en­trepreneurs with the best tools to build their busi­ness. Our prod­ucts are founded upon world-class anti-ag­ing and con­sumer trend re­search that em­power sales lead­ers. Re­cently we launched our lat­est skin care de­vice. We are see­ing a strong re­sponse from the mar­ket with this of­fer­ing. In ad­di­tion, we also pre­viewed sev­eral ad­di­tional prod­ucts at SEA Nu Skin LIVE! that have been de­vel­oped to sup­port our sales leader so­cial sell­ing ef­forts. Fi­nally, we think our busi­ness pro­grams, in­clud­ing VELOCITY, our lat­est busi­ness model in­no­va­tion, en­sures that we pro­vide a flex­i­ble, fast, and ful­fill­ing op­por­tu­nity on the mar­ket. This strat­egy is vi­tal to en­sur­ing Nu Skin’s suc­cess.

What prod­ucts con­trib­ute most to its prof­itabil­ity?

We have two pri­mary prod­uct cat­e­gories, each op­er­at­ing un­der its own brand. We mar­ket our pre­mium-qual­ity per­sonal care prod­ucts un­der the Nu Skin cat­e­gory brand and our sci­ence-based nu­tri­tional sup­ple­ments un­der the Phar­manex cat­e­gory brand. Over the last sev­eral years, we have in­tro­duced new Phar­manex nu­tri­tional sup­ple­ments and Nu Skin per­sonal care prod­ucts un­der our ageLOC anti-ag­ing brand. We also of­fer prod­ucts un­der other brands, par­tic­u­larly prod­ucts in our Nu Skin cat­e­gory brand that are con­ducive to so­cial sell­ing. Our pri­mary cat­e­gories in the Nu Skin cat­e­gory brand are core skin care sys­tems and tar­geted treat­ment prod­ucts that ad­dress spe­cific skin needs. We for­mu­late these prod­ucts with in­gre­di­ents that are sci­en­tif­i­cally proven to pro­vide vis­i­ble re­sults. In 2017, our three top-sell­ing prod­ucts in this cat­e­gory were our in­no­va­tive skin care de­vices: ageLOC Spa sys­tems, ageLOC Me cus­tom­ized skin care sys­tem, and ageLOC Lu­miSpa skin treat­ment and cleans­ing de­vice. Our strat­egy for the Phar­manex cat­e­gory brand is to con­tinue to in­tro­duce in­no­va­tive, sub­stan­ti­ated anti-ag­ing prod­ucts based on re­search and de­vel­op­ment and qual­ity man­u­fac­tur­ing. Di­rect sell­ing has proven to be an ef­fec­tive method of mar­ket­ing our high-qual­ity sup­ple­ments be­cause our sales force can per­son­ally

ed­u­cate con­sumers on the qual­ity and ben­e­fits of our prod­ucts, dif­fer­en­ti­at­ing them from our com­peti­tors’ of­fer­ings.

Will this sus­tain or are there de­vel­op­ments in the hori­zon that may change the com­pany’s sources of in­come?

We are com­mit­ted to de­vel­op­ing and mar­ket­ing in­no­va­tive prod­ucts. We have sev­eral prod­ucts in de­vel­op­ment, in­clud­ing next-gen­er­a­tion skin care prod­ucts and nu­tri­tional sup­ple­ments. In our re­search and prod­uct de­vel­op­ment we seek to bet­ter un­der­stand the sources of ag­ing to en­hance our abil­ity to in­no­vate in our de­vel­op­ment of an­ti­ag­ing prod­ucts. We also are in­creas­ingly fo­cused on de­vel­op­ing and of­fer­ing prod­ucts that are con­ducive to so­cial sell­ing.

Does Nu Skin (a) work with pro­pri­etary solutions or does it (b) out­source test­ing, man­u­fac­ture and other lab­o­ra­tory re­searches?

A num­ber of our prod­ucts, in­clud­ing our fa­cial spas, are based on pro­pri­etary tech­nolo­gies, some of which are patented or li­censed from third par­ties. We main­tain re­search and prod­uct de­vel­op­ment fa­cil­i­ties in the United States and China. We also con­tract with third par­ties for clin­i­cal stud­ies and col­lab­o­rate on ba­sic re­search projects with re­searchers from uni­ver­si­ties and other re­search in­sti­tu­tions in the United States and Asia. We also work to iden­tify and as­sess in­no­va­tive tech­nolo­gies de­vel­oped by third par­ties for po­ten­tial li­cens­ing, sup­ply or ac­qui­si­tion ar­range­ments.

Where are the prod­ucts dis­trib­uted? What are the top mar­kets?

Nu Skin sells its prod­ucts through a global net­work of sales lead­ers in Asia, the Amer­i­cas, Europe, Africa and the Pa­cific. In 2017, Nu Skin’s top mar­kets were Main­land China with 32 per cent of rev­enue, South Korea (16 per cent), Amer­i­cas (14 per cent), South Asia/Pa­cific (13 per cent) and Ja­pan (11 per cent). In Sin­ga­pore, Nu Skin sells more than 150 prod­ucts and is one of the lead­ing di­rect sell­ing com­pa­nies.

What new mar­kets are be­ing ex­plored cur­rently? What is the busi­ness strat­egy for these?

The first pri­or­ity of Nu Skin’s man­age­ment is to re­in­force op­er­a­tions in mar­kets where the com­pany cur­rently con­ducts busi­ness. At the same time, Nu Skin is con­tin­u­ally in­ves­ti­gat­ing new mar­kets around the world, and we an­nounce those mar­kets just prior to their open­ing. Nu Skin’s goal in each new mar­ket is to es­tab­lish a rep­u­ta­tion as a solid cor­po­rate ci­ti­zen and leader in our re­spec­tive in­dus­tries. To be a solid cor­po­rate ci­ti­zen and in­dus­try leader, Nu Skin works closely with lo­cal gov­ern­ment of­fi­cials when en­ter­ing a new mar­ket. Nu Skin also strives to serve dis­trib­u­tors and cus­tomers quickly and with re­spect, and to pro­tect the con­sumers in each mar­ket. By con­cen­trat­ing on these goals, Nu Skin’s suc­cess will be even greater and more re­ward­ing in years to come.

What are the lat­est trends and de­vel­op­ments in skin­care?

Beauty de­vices are likely to con­tinue to grow in pop­u­lar­ity. Ad­di­tion­ally, cus­tomiza­tion will ex­pand as con­sumers want items that are for them per­son­ally. An­other key area that fits with cus­tomiza­tion is color prod­ucts. Fur­ther­more, cos­met­ics con­tain­ing nat­u­ral in­gre­di­ents are in­creas­ingly be­ing de­manded by con­sumers, but at Nu Skin we know that there are some great cos­metic in­gre­di­ents from sci­ence that are still safe and in­cred­i­bly ef­fi­ca­cious. I would also say that anti-pol­lu­tion is a grow­ing con­cern glob­ally with more and more ur­ban­iza­tion. Many of our Nu Skin prod­ucts con­tain tech­nolo­gies that pro­vide pro­tec­tion and/or help to re­move pol­lu­tion. For ex­am­ple, the ex­fo­li­a­tion ben­e­fits of ageLOC Lu­miSpa help to re­move pol­lu­tion that might be ad­her­ing to the skin.

What is the ethos of the brand and how is this com­mu­ni­cated?

Right from the first days of Nu Skin, our founders, Blake, Steve and Sandie wanted to build a com­pany that would be a force for good in the world, and that re­mains our mis­sion to this day. This force for good cul­ture has been demon­strated sev­eral ways, in­clud­ing: Ex­ten­sive cor­po­rate so­cial re­spon­si­bil­ity ef­forts that pro­vide chil­dren hope for a bet­ter life all around the world De­vel­op­ing in­no­va­tive prod­ucts that sub­scribe to the phi­los­o­phy of “all the good, none of the bad.” Nu Skin has been able to grow for nearly 35 years in large part be­cause it is al­ways de­vel­op­ing new prod­ucts that are pre­mium qual­ity and that peo­ple love. A re­ward­ing busi­ness op­por­tu­nity that im­proves lives and has given in­di­vid­u­als the flex­i­bil­ity to earn a sup­ple­men­tal in­come or build a full-time, suc­cess­ful busi­ness. As we de­velop in­no­va­tive prod­ucts, of­fer a re­ward­ing busi­ness op­por­tu­nity and be­come a force for good around the word, we en­cour­age peo­ple to dis­cover their best selves. All this com­bined with the ex­cep­tional peo­ple that have been part of the Nu Skin fam­ily has shaped the com­pany into a multi-bil­lion­dol­lar en­ter­prise that still re­mains true to its core val­ues.

NUSKINMAINTAINSRESEARCHANDPRODUCTDEVELOPMENT FA­CIL­I­TIES INTHE USA AND IN CHINA

MR. RYAN NAPIER­SKI

NU SKIN IN­NO­VA­TION CEN­TER IN UTAH, USA

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