Direct Sales: Everything You Need To Know!

Direct Sales is a multifaceted industry with many different types of sellers.

Simply put, direct sales is an industry made up of sales professionals who sell straight to the consumer, bypassing the retailer and wholesaler.

There is not a store location in direct sales.

What Is Direct Sales?

Historically, direct sales is rooted in every culture. Records of ancient merchants go back to Greek mythology and it is mentioned throughout all of recorded history.

From the peddler in the colonial US to the modern day internet marketer, direct sales has allowed individuals to take control of their lives and reach for their dreams.

The industry includes selling through door to door, one to one, multi-level marketing, party plan business model and even internet marketing. These are only some of the many forms of direct sales.

Below we discuss the different marketing plans, share success stories and define the different types of direct sales.

Click any of these links to jump down the page to the topics that interest you the most:

Definition Of Direct Sales

The definition of direct is “moving from one place to another using the shortest route possible.”

The definition of Sales is “the exchange of a commodity for money, the action of selling something.”

Direct sales is the act of selling direct.

The sales professionals, often called representatives, consultants, distributors, partners, etc. sell a wide variety of products including but not limited to cosmetics, cooking utensils, foods, clothing, vitamins, electronics and technology without a retail location.

Usually working from their home, the individual consultants reach out to their customers directly, establishing relationships and earning commissions as a result.

A direct seller is self-employed but aligned with an established national or worldwide brand.

This relationship is called an “outside contractor”. The seller receives the benefit of the national or worldwide brand, advertising and brand recognition but they are actually working for themselves. Other than the commission there are no employee benefits.

This relationship is similar to a franchise in that the outside contractor has the benefits of being aligned with a major company but different in that the “start up” investment is comparably low. A franchise can require a $100,000 + investment, while most direct sales companies only require an investment of a couple hundred dollars to buy the “start up kit”.

Types Of Direct Sales Methods

As already mentioned there are many methods of direct selling.

The difference between the different forms of direct selling is related to their preferred source of leads and the types of compensation structures that are used.

The most widely used methods of direct sales in the modern selling era are:

  • Door To Door: A bit old fashioned these days but basically just going out and ringing doorbells. In past times this may have been literal but most often now the seller has some sort of an introduction and the visit is not a total cold call. Lead generation is usually friends and family, then referrals from sales presentations. A good example is Cutco Knives.
  • Affiliate Marketing: With the advent of the internet, affiliate marketing is the selling of someone else’s products in cyber space using coded links for referrals. This can be lucrative but is not the get-rich-quick opportunity perceived by many.
  • MLM: Multi-level marketing is a very broad term that means that the sales consultant is getting paid on the sales of those they bring in as opposed to only their own. MLM falls under many forms of compensation plans and is referral marketing based on a wide variety of lead generation systems, often using both internet and personal connections. MLM is the classic form of “residual earning.” When you build a team you continue to create income even when you do not work. The sales commissions are often structured so that you are paid deep in your “downline”. You may never meet some of the people who are providing you with income.
direct sales company
  • Party Plan: The party plan business model is MLM in the truest sense in that there is more than one level of commissions but that is where the similarities stop. The primary lead generation system in party plan is the party referral. “Hosts” invite you to their home, then they in turn invite their friends to come over and hear your sales demonstration.  The warm and fuzzy environment of the party provides an environment very conducive to sales and more “bookings”. The fun, social environment,  peer reviews and testimonials make this a very lucrative business model. The pay structure is usually only 3 levels deep unlike most MLM companies which may pay down 10 levels. Good examples include: Pampered Chef, Mary Kay, Tastefully Simple.
  • Direct Sales Campaign Selling 1:1: This direct sales model is 1:1 selling that takes the best of party plan and door to door and combines them. A distributor contacts each client whenever a new product campaign starts and leverages connections within friends without doing parties.  Avon is a good example of this model.

The compensation plans are explained more fully on another Cash Flow Show page. Check out the different methods of direct selling on the page dedicated to that topic.

Direct Sales Brands

The investment for a starter kit is small in direct sales. The purchase price for the kit generally gives you enough product to get started without further investment in products for at least 60-90 days.

Examples of some of the most well known direct sales brands and their “starter kit” cost are:
Direct Sales Kit Cost
Some companies/product lines (jewelry specifically) may have a higher investment but are still providing a good business start up opportunity.

As you can see the investment to start a direct sales business is small.

A franchise can require a $100,000+ investment while affiliating with a worldwide direct sales brand may require an investment of $10 to $3000 to buy the “start up kit”.

When starting a direct sales business you are buying product at a greatly reduced price in order to give you the demonstration kit to work with. In exchange for that discount the seller usually agrees to generate a certain amount of sales.

Cash Flow Show Direct Sales Articles & Information

The Create A Cash Flow Show website has over 500 pages of resources, most of which relate to direct sales techniques, success and business systems for direct sellers. The follow pages are other recommended resources on the site:

Benefits Of Direct Sales

There are many benefits of direct sales but the primary ones are:

  • You set your own schedule, working around other jobs or family obligations.
  • Your pay is directly tied to your effort so you can create any level of income that you would like by working as much (or as little) as you want.
  • Direct sales allows you to create 2 streams of income with one effort.
  • In industrialized nations, direct sales gives the work at home (WAH) consultant the opportunity to earn a commission on personal sales as well as reduce their income tax liability using the home office deductions that become available as a result of the home office.

    As a direct seller many of the things that every modern household has or uses, is now partly or entirely a business expense. This “home office deduction” legally frees up monies that formerly would be paid in taxes.

    A direct sales consultant who works their business to create an additional income (or as a full time paycheck) now has the ability to save tax dollars as well because of the ability to allocate certain household expenses to their business.

    Every country has its own regulations, but they are similar in the fact that the government recognizes that the work at home entrepreneur uses his/her home’s space, furnishings, phone, etc. in the business too. If that same person went out and rented a facility and bought separate equipment, then the investment would be 100% deductible.

    Listen to an audio recording about direct sales and the home office deduction.

    Every outside contractor should be sure to take advantage of this tax savings based on their place of residence. Here are a few references.

    United States IRS Home Office Deduction
    Canadian Work At Home Expenses

    Calculate Your Deduction In Australia

    Check Home Business Deductions In UK

    If your country is not listed above be sure you check, because chances are you DO have a home office deduction in your country!

    The Statistics About Direct Selling

    direct sales training
    Direct selling is an excellent opportunity for wanna-be entrepreneurs.*

    • 1 out of every 20 Americans buy products from direct sellers regularly
    • There are 91.5 direct sellers worldwide
    • Direct sales is a $153,727 million industry in the US
    • The Top 10 global direct sales markets are in order of volume: United States, Japan, China, Korea, Brazil, Mexico, France, Germany, Russia, Italy
    • Direct sales is a $153,727 million industry in the US
    • Direct sales is a $117 billion industry worldwide
    • Asian and Pacific direct selling adds up to $66,871 million
    • European direct sales volume is $24,995 million per year
    • The category of cosmetics and personal care is the top product line sold through direct selling on a global scale
    • In the US cosmetics and personal care is only 18% and wellness is 24% of the market
    • The 2 product groups that have been consistently gaining market share as a percentage of retail sales since 2008 are the wellness industry and services.
    • Home, family and personal care have had a steady drop in market shares since 2008.
    • While MLM gets the most promotional publicity (especially in the US) on a global scale 42% of direct sales companies operate on a single level compensation plan.
    • The party plan business model is 20% of the industry.
    • Many corporate businesses leaders are moving more and more into the direct sales arena: Warren Buffet, Donald Trump, Robert Kyosaki, Paul Zane Pilzer
    • Celebrities who endorse direct selling: Bill Clinton, Bruce Willis, Reese Witherspoon, Patrick Dempsey, Demi Moore,
    • There are 91.5 million direct sellers worldwide
    • The direct selling giant, Avon was listed as one of the top 100 Best Global Brands multiple times by Interbrand.

    It is interesting to note that there are over 7 billion people on earth and just over 1% are direct sellers!

    *Statistics From:
    World Federation Of Direct Selling

    Print Global Statistical Report PDF

    Direct Selling Association, President Joe Mariano shares on how direct sales can make dreams come true.

    It is important to do your research before joining a direct sales company. The key is to find a company that you can be passionate about. After that, it is recommended that you talk to other direct sellers affiliated with the company you are considering before joining, and research all your options.

    Learn more about how to start a home party business.

    Read more about what is a pyramid scheme.

    Can You Make Money In Direct Sales?

    You can definitely make real money in direct sales but it does not happen by itself. Like any real business or job, it takes time and effort. Unfortunately many join for the get-rich-quick option which does not happen!

    For those who put the time into learning the trade and treat their business seriously as if it was a profession, there are great rewards.

    It was four years ago when I heard about the Gold Party concept and it was truly an Aha! Moment… as Oprah would say!

    A home party where guests get money for things that are broken or have been sitting in a jewelry box for years … and they leave the party with more money than they came with!

    That was the start of Gold Rush Parties! I knew it was just right for these economic times and right for the direct sales industry. I knew that I made the right decision and have never looked back! We have been changing lives ever since!

    Nina Troy, Owner & Founder
    We got into the direct sales business as consumers at first.

    However as we shared the healthy chocolate with our friends and family we started getting checks and our chocolate paid for!

    We are in construction and really didn’t have time to build another business….. well, you know what happened to the construction business.

    Never been in MLM before but this is an amazing industry. Wish we would have know this when we were young! Will never go back to construction. MLM for us from now on!

    Bruce and Bonnie, Xocai the Healthy Chocolate
    I started with Origami Owl in February of 2012 and I never looked back since making that decision.

    I recently made Executive Team Leader with a team of 70 girls, which is a much smaller team than most. Achieving the Executive Team Leader title has been a goal of mine. I think in the direct sales business it should be a top priority to establish goals.

    Ask yourself where do you want to be? Then do it! I have strong communication with my team members and I just love Origami Owl.

    Amy Marek, Orgami Owl
    My frontline is 5 and my downline is 3 for a total of 9 including me. We sold $8000+ in Wax and Warmers this month.

    My personal sales are $3000+ this month with future parties scheduled up to 3 months out. This journey is enabling me to stay at home with my two school age children.

    Paula Frank, The Scentsy Family
    Deb Bixler generated enough income in 9 months using the party plan business model to quit her corporate job.

    She then went on to use her direct selling business as her total household income for over 7 years.

    Click To Contact Deb

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