July 6, 2009 -- Direct selling is a proven moneymaker when times are tough. The numbers tell the story: During the 1990 recession, the number of direct sellers grew to more than 5 million. In the 2001 recession, that number jumped to more than 12 million. In 2007, there were 15 million direct sellers — and rising. Direct selling brought in more than $30 billion in the United States alone.
It's not easy. To succeed in direct sales, you really have to hustle. It's like running your own business; your effort (or lack of) will make your sales sink or swim. The people who are making money now in direct sales work on their business every single day; it's front and center on their minds and in their actions.
It's not get-rich-quick. The median income is about $2,500 a year, which means a couple hundred dollars a month — perhaps enough to pay down a credit card bill. For active sellers, the median jumps to $6,000 a year.
If you think it's for you, there are several details to consider.
What's in a name? When you hear Mary Kay or Avon, you know exactly what they sell. You can dream of cruising around in a slick pink Cadillac as a Mary Kay superstar or jetting off to the Bahamas for a luxurious vacation, as Avon's top sellers did recently. Everyone knows the product and there's a history of quality, which may make you feel most comfortable.
The potential challenge: Since everyone knows the product, you may have an uphill battle carving out a customer base because existing fans may already be aligned with their favorite seller.
Lesser-known companies will lack the multimillion-dollar marketing campaigns to generate awareness for their brand, so you'll have to work overtime taking on the challenge of introducing new product lines.
Clever Container, for example, is a relatively new line of organizing products with only about 100 consultants nationwide. You could be the one to introduce friends to its products by hosting Tupperware-style parties, which the company calls organizing workshops, for every part of the home.
Money, money, money. There are three financial questions you have to ask before you get involved with any direct selling company: what are the startup costs?; what's your commission or realistic earning potential, and what's the refund policy if you decide it's not for you?
Startup costs. You will have to pay some upfront costs to cover product samples, training materials, order forms, and the opportunity to sell. The amount varies widely from company to company; don't just look at the cost, be sure to examine what exactly you're getting for your money.
Cookie Lee, a moderately priced trendy jewelry company, has three different starter kits ranging from $99 to over $500.
Look at commissions. Cookie Lee and Mary Kay, for example, offer a 50 percent base commission. That means if you sell a $30 product, you'll pocket $15 on the sale.
Check out the refund policy. Let's say you buy a startup kit and find that direct selling just isn't for you. If the company is a member of the Direct Selling Association, its code of ethics requires the company to buy back unused/unopened material within a year for at least 90 percent of the purchase price.
Sell what you love. When choosing a direct sales company, passion is the key word. You should choose something you would use yourself, something that complements your lifestyle.
For example, if your family loves games, Simply Fun is a company that sells more than 85 games for all ages. These are exclusive products; customers can only buy them from you.
If you're a scrapbooker, you can sell products by Heritage Makers. They sell greeting cards, posters, scrapbooks, albums — lots of things for that hobby.
And who wouldn't come to a chocolate party? Dove Chocolate Discoveries just launched nationally last year, and as a chocolatier, as the sellers are called, you can invite friends over to indulge in -- and buy — treats — everything from candy to chocolate martinis to brownie mix.
No matter what you decide, remember that direct selling is selling. Even the best products won't sell themselves if you're not actively soliciting customers and promoting your business. To make money, you'll have to wear your sales hat.