Direct Selling on the Rise in Tough Economy

March 23, 2009 12:00:00 AM PDT
You may have seen the Mary Kay commercials on TV or the Mona Vie stickers on rear windshields around town and wondered whether starting your own direct selling business could mean more money for you.Madera mom Maribel Alvarado is an Avon lady. She works from home about two hours a day and said the extra income has given her family a lot more financial flexibility. "The profit that could be produced from the business was just amazing to me because I thought, wow, I can't believe I can make this much money just selling out of the brochure."

Despite the economic downturn she said she's grown her business by $20,000 dollars compared to last year! "You can't get fired; you can't get laid-off, because it's your own business. You can give yourself a raise, though. All you have to do is increase your sales," said Alvarado.

Now Maribel mentors other Avon reps, including her friend Norma Garcia. "I was able to purchase a new vehicle and pay for the vehicle with my Avon earnings," said Garcia.

Its stories like theirs that direct selling companies are pointing to as they recruit heavily during this recession. One Avon commercial ran during the Super Bowl and Mary Kay recently launched this new ad campaign specifically focused on the company's business opportunity.

Mary Kay said 2008 was a banner year for sales, thanks to something the direct selling industry is calling "the lipstick factor."

People who are feeling a little glum about the recession, they want to have a little something to make them feel better. So that $12 lipstick is something they can easily purchase that will make them feel better but it doesn't make a huge dent in their pocketbook.

The Direct Selling Association says 15 million Americans worked as independent direct sellers in the United States in 2007, and they sold $30.8 billion worth of products and services, from candles to cookware, jewelry to juice. And that number is growing thanks to the increasing need for extra income and the low startup costs of starting a direct selling business. Most startup kits cost less than $100-dollars.

But should you pour your time and money into a new business when so many are struggling or failing? Fresno State Business and Marketing Professor Doctor Bill Rice said it's all about timing, "When do you get in. People who get in early, who get to be the top person who has multi-layers below them, they make a lot of money. Usually about that halfway point down, most people don't. For every 100 people who come in, they're expecting only about 10 to 15 to stay. The rest will come in, buy the product, realize its more work than they thought and they get out."

Case in point: the Kwoks. Both have jobs. Kevin is a medical sales rep and Linda is a massage therapist. But the Fresno newlyweds were looking for a little extra to make ends meet. "The economy was so bad where I was pretty booked up, about 2-3 weeks out, and then I got to the point where I was calling people and seeing if they wanted to come in for massages," said Linda Kwok.

So she tried selling Arbonne cosmetics to clients on the side. He started selling the health drink Monavie for $40-dollars a bottle, but soon grew discouraged.

"Didn't work out in my favor um just because the market is so flooded, Fresno's so flooded with Monavie reps," said Kevin Kwon.

The Direct Selling Association has this advice for anyone just getting started:
- Set realistic income goals and expectations
- Try the products yourself before choosing what to sell
- Make sure the company you choose is legitimate and has reasonable start-up costs
- Ask about the company's buy-back policy for unused inventory



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