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
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