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US Multi-Level Marketing and the Beauty Industry Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Multi-Level Marketing and the Beauty Industry market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Key points included

  • Don’t forget about men
  • Competition in the larger market poses a threat to direct sellers
  • Product expansion and innovation are necessary to compete and stay relevant

Covered in this report

The focus of this report is on the multi-level marketing, also known as referral marketing, segment of the beauty industry.

For the purposes of this report, Mintel defines the beauty category to include the following: color cosmetics; facial skincare; body care including soap, bath and shower products; haircare; nail care; women’s and men’s fragrances; skin protection products; beauty appliances (hair and skin) and accessories (hair and makeup).

This report builds on the analysis presented in Mintel’s Beauty Retailing – US, September 2018, 2017 and January 2016. For more detailed information about any of the aforementioned beauty categories, please refer to specific Report titles in the Beauty and Personal Care library

Expert analysis from a specialist in the field

Written by Alexis DeSalva, a leading analyst in the Retail & Apparel sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Multi-level marketing is one section of the beauty industry, which consists of direct sales companies, that uses referral-based or peer-to-peer selling. The nature of the business structure creates opportunities, with customers having the ability to represent companies, but also challenges, as sales can largely depend on salespeople. Inadequate or disengaged sales representatives not only can cost companies sales opportunities, they also can weaken brand awareness or perceptions. Those shopping this portion of the beauty market have mostly high awareness and many positive experiences, but some still have issues with sales environments or credibility, and they purchase at other retailers that are category experts or more convenient. Alexis DeSalva
Retail & Apparel Analyst


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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • Market overview
            • Top takeaways
              • Competition in the larger market poses a threat to direct sellers
                • Don’t forget about men
                  • Product expansion and innovation are necessary to compete and stay relevant
                    • The issues
                      • Peer-to-peer selling presents trust and credibility challenges
                        • Purchases in the general beauty market signal shoppers have unmet needs at direct sellers
                          • The opportunities
                            • Better informing and inclusive recruiting can serve more consumers, particularly men
                              • Innovation in marketing and products can prevent leakage
                                • What it means
                                • The Market – What You Need to Know

                                  • A chance to drive growth among underserved consumers
                                    • Social media: a tool for communication and commerce
                                    • Market Perspective

                                      • What is multi-level marketing within the beauty industry?
                                      • Market Factors

                                        • Shared gender interest signals potential room for growth and a need for tailored targeting
                                          • DPI is favorable, but how consumers spend their money varies by gender and age
                                            • Figure 1: Splurges, by gender and age, August 2017
                                          • Social media engages more consumers, introduces new competitors
                                          • Key Players – What You Need to Know

                                            • Emerging brands appeal to a younger, overlooked consumer
                                              • Despite partnerships and other evolution efforts, direct sellers face growth challenges
                                                • Digitally native brands make selling more direct with technology
                                                • What’s Working

                                                  • Avon’s efforts to evolve pay off with shoppers
                                                    • Figure 2: Avon Insider Instagram post, June 2018
                                                  • Emerging brands’ efforts to connect with young men are paying off
                                                    • Figure 3: Arbonne Instagram post, May 2019
                                                    • Figure 4: Beautycounter Instagram post, January 2019
                                                • What’s Struggling

                                                  • Brands, new and old, face growth struggles in a crowded market
                                                  • What to Watch

                                                    • Digitally native brands explore ways to use technology to sell even more directly
                                                    • The Consumer – What You Need to Know

                                                      • Legacy brands are favorites, but younger brands resonate with young shoppers
                                                        • Direct sellers face competition from mass merchandisers in stores, Amazon online
                                                          • Fewer items purchased through direct sellers than elsewhere in the beauty market
                                                            • Embracing the social nature of shopping and improving the experience will lead to repeat purchases
                                                            • Retailers Shopped

                                                              • Key takeaways/Analyst POV:
                                                                • Legacy companies see highest share of shopping
                                                                  • Figure 5: MLM retailers shopped, July 2019
                                                                • Emerging brands are winning with younger males
                                                                  • Figure 6: MLM retailers shopped, by gender and age, July 2019
                                                                  • Figure 7: Arbonne YouTube tutorial, April 2016
                                                                • Where else are customers shopping in the beauty market?
                                                                  • General merchandise and specialty retailers are biggest in-store threats
                                                                    • Mass and Amazon are winning online trips
                                                                      • Figure 8: Retailers shopped (general), in-store versus online, July 2019
                                                                  • Shopping Method

                                                                    • Key takeaways/Analyst POV:
                                                                      • Online is the preferred method of purchasing
                                                                        • Figure 9: Shopping method – In-store and online – (NET), July 2019
                                                                      • Older women rank direct sales as number one
                                                                        • Figure 10: Shopping method – In-person and online, by gender and age, July 2019
                                                                      • Competitive leakage occurs among older women in-store at mass and younger men at Amazon
                                                                        • Figure 11: Shopping method – (NET any rank) – In-store and online, by gender and age, July 2019
                                                                      • Legacy brands see traffic through social media
                                                                        • Figure 12: Avon Instagram post, August 2019
                                                                        • Figure 13: Mary Kay Instagram post, June 2019
                                                                        • Figure 14: Mary Kay Instagram post, June 2019
                                                                    • Items Purchased

                                                                      • Key takeaways/Analyst POV:
                                                                        • Skincare and cosmetics are top purchases through direct sales companies
                                                                          • Figure 15: MLM items purchased, July 2019
                                                                        • Older women represent an opportunity for basket building
                                                                          • Figure 16: MLM items purchased, by gender and age, July 2019
                                                                        • MLM purchases compared to general beauty purchases
                                                                          • Figure 17: Items purchased (general), July 2019
                                                                      • Brand Awareness

                                                                        • Key takeaways/Analyst POV:
                                                                          • Awareness mirrors retailers shopped
                                                                            • Figure 18: Brand awareness, July 2019
                                                                          • Emerging brands have high awareness among young moms, but might be isolating older women
                                                                            • Figure 19: Brand awareness, by parental status by gender, July 2019
                                                                        • Types of Shoppers

                                                                          • Key takeaways/Analyst POV:
                                                                            • Despite evolving beauty routines, most shoppers remain loyal to brands and products
                                                                              • Figure 20: Types of shoppers, July 2019
                                                                            • Younger shoppers swayed by expert or influencer recommendations
                                                                              • Figure 21: Sephora email campaign, February 2019
                                                                              • Figure 22: Types of shoppers, by age, July 2019
                                                                            • Young men enjoy their beauty routines
                                                                              • Figure 23: Types of shoppers, by gender and age, July 2019
                                                                          • Shopping Experiences

                                                                            • Key takeaways/Analyst POV:
                                                                              • Improving the experience will elicit repeat purchases
                                                                                • Figure 24: Shopping experiences, July 2019
                                                                              • The social nature of shopping direct sellers appeals to parents
                                                                                • Figure 25: Shopping experiences, by parental status, July 2019
                                                                              • Young men are more likely to primarily purchase through direct sellers
                                                                                • Figure 26: Shopping experiences, by gender and age, July 2019
                                                                            • Attitudes toward MLM Companies

                                                                              • Key takeaways/Analyst POV:
                                                                                • Shopper sentiments of direct sales brands are mostly positive
                                                                                  • Figure 27: Attitudes toward MLMs, July 2019
                                                                                • Men appreciate socializing and women seek employment opportunities
                                                                                  • Figure 28: Attitudes toward MLM companies, by gender, July 2019
                                                                                • Younger consumers more wary of direct sellers
                                                                                  • Figure 29: Attitudes toward MLM companies, by age, July 2019
                                                                              • Appendix – Data Sources and Abbreviations

                                                                                • Data sources
                                                                                  • Consumer survey data
                                                                                    • Direct marketing creative
                                                                                      • Abbreviations and terms
                                                                                        • Abbreviations