What you need to know before buying in to direct sales

Article Index

Thinking about selling jewelry, shakes, skin care products, cookware or anything else from home? You aren't alone. Direct sales has come a long way from the days of the “Tupperware mom” and there is plenty to learn before diving in.

Direct Sales Kirsten WKirsten Nilsen started selling Isagenix after the product improved her health. Colette Polignone’s path to direct sales started because she couldn’t keep her mouth shut.

A licensed psychologist and mother of two kids from Catonsville, Polignone began using Young Living Essential Oils for health reasons. She was so pleased with the results, she talked about the products to anyone who would listen. Selling and teaching classes for the company was the next logical step.

“It gives me an outlet where I can care for others without having a private practice,” Polignone says. Plus, she's earning a bit of extra money. “I’m making way beyond what I expected I would.”

Direct selling — selling a product without a fixed retail location — is booming across the country. Estimated retail sales for direct selling went from $28.56 billion in 2010 to $36.12 billion in 2015, and those selling in the U.S. jumped from 15.8 million to more than 20 million during the same period, according to the Direct Selling Association (DSA), a national trade association for direct selling companies.

“Direct selling is just another way of getting great products into the hands of consumers,” says Paul Skowronek, senior vice president for public affairs at DSA. He adds that the flexibility and face-to-face interaction of direct selling are big draws for people to get involved.

More than 75 percent of U.S.-based direct sellers are women, according to DSA’s research. Many moms go into the business because it's a flexible way to bolster household income, sources agree.

For those considering direct sales, there can be benefits — but there also can be disadvantages. Here’s what you need to know before picking a product and diving into direct sales.

What it takes

In the early 1990s, Andrea Daniels of Hughesville was a stay-at-home mom when she started selling Longaberger home decor products to supplement her family's single income. For eight years, she built a thriving business while raising her daughter and without paying for daycare.

“My husband had her when I went out in the evenings or afternoons to do shows, and when she went to school, I was able to get her on and off the bus,” Daniels says.

Flexible hours, however, doesn't mean reduced time.No matter what you’re selling, running a direct selling business takes time. It's not a way to get rich quick, Daniels says. She's seen many sellers fizzle out because of this misconception.

“Sometimes you don't see results as quickly as you would like, but you have to trust in the process and your efforts,” she says. “If you keep doing the basics of the business and do them consistently, they will pay off in the long run.”

Mary Beth Cudd, of California, a high school teacher and mom of two, began selling Jamberry nail wraps thinking it would make a good summer job. She soon learned, however, that the summer-only approach wouldn't work.

“You really have to be consistent in order to see results,” she says. “I thought I could spend time on it whenever I wanted, but you need to have more time in order to gain momentum.”

Rather than give it up, however, Cudd now spends two hours a week on her business during the school year and 10 hours a week in the summer.

How to pick a company

Those in the business agree that the best way to be successful in direct sales is to choose a product or company you like or are passionate about.

Kirsten Nilsen, a mom and adjunct English professor from Catonsville, began selling Isagenix wellness products after trying them herself and seeing positive effects on her health. By simply sharing her story with friends, she’s finding people who want to try the product. She's learning that it doesn't take a pushy personality to make sales if it's a product you believe in.

Daniels, who stopped selling Longaberger in 2008, has ventured back into part-time direct sales to cover college expenses for her now-grown daughter. This time, an interest in learning more about wine led her to become a consultant for Wine Shop at Home doing in-home wine tastings. She also chose the company because it had little overhead.

“There’s much less stuff to haul to the car, and I wanted something light and easy,” Daniels says. “Wine Shop at Home ships everything to the [tasting party] host, and I just bring a bag of order forms and maybe extra glasses.”

It's also important to research the sales requirements of a company before signing on. Cudd was interested in two companies, but ultimately chose to sell for Jamberry because it had less demanding sales requirements — a minimum of $600 in sales a year as opposed to $150 a month, she says.

“The sales requirements at [the other company] were more demanding than I felt I could keep up with,” she explains. “I [also] felt like I would need a lot of inventory and didn’t want to make that much of an investment in money and space to store product.”

Before deciding on a company, Skowronek recommends checking the DSA website to see if the company is a member. DSA member companies must agree to a code of ethics, which covers everything from backing up claims about their products with reliable evidence, to providing information to sellers on the company’s compensation plans and sales methods, and clearly defining its buyback policy on products or sales kits that a seller is required to purchase. Skowronek points out that the code applies not just to member companies, but the sellers as well.

“There’s financial protection that greatly minimizes the risk,” he says.

Carlene Cassidy, professor of business management and entrepreneurship at Anne Arundel Community College and chair of the college’s Entrepreneurial Studies Institute, spent a year undercover as a Pampered Chef consultant so she could better understand direct selling. She has since developed a curriculum for consumers who want to know more about direct sales before becoming sellers themselves.

In her research, Cassidy verified that direct selling is a legitimate distribution channel. “[These companies] really do have solidly researched products,” she says.

She stressed the importance of researching the company. Most companies have low overhead, but some require investing in inventory that may have a short shelf life.

“In these cases, you either have to sell the product or you are stuck with it,” she says.

If you don't know anyone selling the product you have chosen, that could signify a red flag, Skowronek says. “If you’re working with a startup that hasn’t been in business for very long, you could be putting yourself at risk,” he says.

Click next below for the pros and cons of direct sales.

The pros of direct sales

Direct sales can bolster a family's income while exploring a personal interest and enjoying social engagements.

Polignone's family has been able to take more trips, thanks to her direct selling income. Nilsen decided to delve into Isagenix sales to help pay down some debt and pay for a trip to France.

“The truth about any entrepreneurial endeavor is that if you set it up right, you're going to reap the rewards,” Cassidy says. “[Direct selling is] an opportunity to get started with very low buy-in.”

Aside from the extra income, Daniels found it was “a sanity break with adults in the evening” when her kids were young. Now her wine business is helping her combat empty nest syndrome and supplement the income from her full-time job. Plus she enjoys building her business.

Direct sales also allows you to run your business wherever you are, which works well for people who move frequently such as military families, Cassidy says. Such a business also helps you meet new people in a new community, she points out.

There is also the satisfaction of introducing others to the products you love and the impact of that on your life. It's definitely had that positive effect on Polignone.

“My husband says I am so happy and healthy, and my language is more positive,” she says.

Daniels agrees. “It's all about the basics: loving the product, sharing the love for the product, finding other people who love the product,” she says.

What to be aware of

Those in direct sales stress, however, that if you want to make money, it's going to take time.
“You have to give it all you’ve got. You can’t just dabble,” Daniels says.

Sellers also have to consider their sales tactics if they are heavily reliant on social media to pitch their products. Multiple sales pitches on Facebook can result in losing or being blocked by friends. Daniels recommends setting up a Facebook business page or private group just for those interested in the product. She advises, also, to only cross promote on your own page occasionally.

Lastly, there’s always the concern of pyramid schemes — which are illegal in all 50 states. Cassidy was leery of this when she began her research into direct sales, but soon learned that in most cases, direct sales don't cross the line. Almost all direct sales companies have a tiered approach, Cassidy explains. You start as a salesperson and earn a certain percentage. Often, the more you sell, the higher the percentage you earn. Many sellers (though not all) then recruit new sellers, serve as their managers and earn a percentage of their profits. This is a legitimate structure and one used by most commission-based companies, she says.

Problems arise, however, if the person recruiting isn't actually providing anything to the sellers.

“They are only giving access to a product but not providing any support, training or resources,” Cassidy says. “They are just taking a percentage without doing anything.”

Most direct sales companies are reputable though there are a few bad apples, she says.

“In most direct selling organizations, the team leaders are doing a lot of work to train and manage the team.”

What to know before you commit

Questions to ask a potential company:

  • What’s the company’s buyback policy on products purchased but not sold?
  • What’s the minimum sales quota required in a 12-month period?
  • Can you train online?
  • Are you required to attend any conferences or special events?
  • How is the sales team structured?
  • Are you required to recruit others to sell?

Questions to ask yourself before diving in:

  • Can you afford the starter kit and/or any required training?
  • Do you have blocks of time to devote to setting up parties, finding customers or keeping up with the latest news from the company?
  • Will your partner or other family member be able to take care of the kids while you are selling or will you need a sitter?
  • How do you feel about standing up in front of a group and selling a product?
  • How do you feel about networking and asking others — especially your friends — for referrals?

If you want to learn more about direct sales, Anne Arundel Community College will offer an informational workshop March 1 from 3-6 p.m. For more information, visit www.aacc.edu/esi or call the business department at 410-777-2161.

By Corinne Litchfield
Betsy Stein contributed to this article

© 2018 Chesapeake Family Life. All Rights Reserved.