Direct selling explained 

Direct Selling encompasses Classical Direct Selling, Multi-Level Marketing (MLM), Network Marketing and Referral Marketing.

Direct selling is a dynamic, vibrant, rapidly expanding channel of distribution that has proven to be a highly successful and effective method of compensating direct sellers (independent contractors) for the marketing and distribution of products and services directly to consumers.

Collective statistics from 58 National DSAs worldwide and the Federation of European DSAs report sales of US$114-billion generated though 65 million direct sellers (independent contractors).

In South Africa, 1.11 million direct sellers were involved in the industry with annual sales increasing to R 6,34-billion in 2009 (annual reported figures July 2010).  The industry currently provides full-time employment for over 3,600 people in South Africa.

Direct selling provides important benefits to individuals who desire an opportunity to earn an income and build a business of their own; to consumers who enjoy an alternative to shopping centers, department stores or the like; and to the consumer products market.

It offers an alternative to traditional employment for those who desire a flexible income earning opportunity to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full time employment. In many cases, direct selling opportunities develop into a fulfilling career for those who achieve success and choose to pursue their independent direct selling business on a full time basis.

Direct selling allows individuals to become proactive and positive about their lives instead of waiting for the economy to improve, the next salary increase or hoping for circumstances to change.

The cost for an individual (direct seller) to start a direct selling business-within-a-business (with a DSA member company) is typically very low. Usually, a modestly priced sales kit is all that is required for one to get started, and there is little or no required inventory or other cash commitments to begin. This stands in sharp contrast to franchise and other business investment opportunities, which may require substantial expenditures and expose the investor to a significant risk of loss.

It also brings the advantage of benefiting from an existing business strategy. Individuals enjoy all the benefits of being in business for themselves whilst at the same time benefiting from administrative and marketing support, top quality products, and on-going product, business and life skills training - all provided by the direct selling company.

The products sold globally by direct sellers are as diverse as the people themselves and include: cosmetics and skin care products; home care and personal care items; household specialties; household cleaning products; food and nutrition products; toys, books and educational products; financial products, and jewellery and fashion accessories; just to mention a few.

Consumers’ benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. Moreover, direct selling provides a channel of distribution for companies with innovative or distinctive products not readily available in traditional retail stores, or who cannot afford to compete with the enormous advertising and promotion costs associated with gaining space on retail shelves. Direct selling enhances the retail distribution infrastructure of the economy, and serves consumers with a convenient source of quality products.

Direct selling should not be confused with terms such as direct marketing or distance selling such as telemarketing, direct mail, and direct response. Although direct selling organizations occasionally use some direct marketing or distance selling techniques and technology to enhance their businesses, the primary difference between the two methods of marketing is the face-to-face, or personal presentation that is always an aspect of the direct selling relationship.

* Some copy is referenced from the WFDSA website http://www.wfdsa.org

No restrictions

Anyone can become involved in direct selling. Thousands of men and women across all age groups have achieved success beyond their dreams. From teenager to beyond “official” retirement, people can enjoy the benefits of financial reward and personal development. And as the direct selling company provides the training to get going, no previous experience or stipulated education levels are required.

Systems of Direct Selling

The direct selling industry encompasses Classical Direct Selling, Multi-Level Marketing (MLM), Network Marketing and Referral Marketing. These are selling systems, which offer a variety of compensation plans (financial reward) and administrative systems, individual to each company. The main difference between a Multi-Level Marketing company and a Network Marketing company is the structure and benefits of the COMPENSATION PLAN.

Classical direct selling

Direct Sellers sell products directly to a wide customer base and earn financial rebates or volume discounts on all products sold. Depending on the product range, it’s often that products are required on a regular basis bringing repeat sales and further income. New customers are sought to add to a growing client base. The emphasis in classical direct selling is for the direct seller to sell products to a wide base of their own customers, thereby earning rebates on all products they sell.

Multi-Level and Network Marketing

These terms refer to a marketing system in which individual direct sellers recruit, train and develop a team of product users. These new direct sellers also recruit, train and develop their own team of product users, who also recruit, train and develop their own team, etc.,

Although there can be variations between companies, the basic concept is that any individuals sales performance can be multiplied by using the efforts of others. The multi-level/network marketer creates a "network" of people who work directly for themselves and indirectly for the person who introduced them into the network i.e. "A" contacts "B" who contacts "C" who contacts "D", and so on. This lineage of people is (typically) called a "downline". Financial reward is gained through rebates paid on the individual’s product sales, and rebates paid on his/her downline product sales.

More and more classical direct selling companies now use elements of multi-level/network marketing as they recognise its potential for exponential growth. Over half of the direct selling companies worldwide, and almost all new direct selling companies, use multi-level/network marketing as a means to promote their business.

However, the success of any business depends upon how well individuals "duplicate" their efforts – all direct sellers – whatever level - should personally be using the products and should receive and give regular training regarding products, business skills and life skills.

The emphasis in Multi-Level and Network Marketing is for the direct seller to be a product user, to sell products to a small base of their own customers, and to recruit, train and develop many other product users who will also sell products to a small base of their own customers and recruit, train and develop other product users, etc.,

Referral Marketing

This term refers to a marketing system in which individual direct sellers refer other direct sellers to a network marketing or multilevel organisation for the purpose of selling or providing products and services. Such referrals usually take place down to four or six levels with all referring direct sellers earning a referral income for the products or services introduced to the marketing organization.

Methods of Direct Selling

Person-to-person selling

This is a method of direct selling where direct sellers sell services and products directly to people on a one-to-one basis in the home, office or workplace, away from a retail outlet. The business opportunity is also often presented during this meeting.

Party-Plan or Group Presentations

This is a method of direct selling during which sales are made to individuals who are part of a group.

The direct seller invites a "hostess" to hold a "party/group presentation" for eight to ten prospective customers, usually at a home, but can also be at an office or workplace.

The objective of the presentation is to sell products and to present the business opportunity, but it’s also about people having fun and shopping in a relaxed environment. Products are attractively displayed and enable consumers to look, feel, touch, smell and taste the products (depending on the product being demonstrated!).

Because it’s a group meeting, the direct seller needs to make just one sales presentation to secure many product orders. Party-plan/Group presentation selling is efficient as it achieves the maximum results in the minimum amount of time. It also utilizes group dynamics to start sales. The hostess is rewarded with a gift for the collective sales made at the party, the value being according to the total value of sales. In addition, customers are invited to host their own “party/group presentation” for their friends and associates - leading to additional new customers and further sales.

Person-to-person selling and party-plan/group presentations are selling methods used within classical direct sales, Multi-level and Network Marketing and Referral Marketing.