Direct selling is about connecting people and building relationships while offering personal attention and quality service. A key characteristic of direct selling is the role of independent contractors in the distribution of products and services. Independent contractors are variously described as distributors, consultants, representatives, agents, stylists and so on.
How Does Direct Selling Work?
In direct selling, products are sold in the context of group presentations (party plan), on a person to person basis (known as network marketing) or sometimes through catalogues or online.
In a party plan approach, the direct salesperson demonstrates products to a group of guests, invited by a host in whose home or other location the direct selling demonstration takes place.
By contrast, other direct sellers can explain and demonstrate the products they offer to consumers at a variety of locations including residential premises, a café or over the phone, at a time which is convenient for them.
Direct selling companies engage their sellers as either agents representing the company or as resellers of the products – the difference being that resellers buy products from the company and sell it on to consumers while agents make sales of products on behalf of the company.
What are the Benefits of Direct Selling?
Direct selling offers important benefits to people who want an opportunity to earn income and build a business of their own, to consumers as an alternative to retail stores, and a cost effective way for business to bring products to market.
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.
Direct selling offers an alternative to traditional employment for those wanting a flexible opportunity to supplement household income, or whose circumstances don’t allow regular employment. Direct selling opportunities can develop into a fulfilling career for those who achieve success and choose to pursue their independent direct selling business on a full time basis. Start-up costs in direct selling are typically low. Usually, a modestly priced sales kit is all that’s needed to get started, and there is little or no inventory or other cash commitment to begin. This stands in contrast to other businesses with the cost and risk associated with larger outlays.
Direct selling offers a distribution channel for businesses with innovative or distinctive products that for cost or other reasons are not suited to other retailing.
As external research shows, direct selling is a positive benefit to the Australian economy, and serves consumers with a convenient source of quality products.
Direct Selling is a Form of Retail, but Different
There are obvious similarities between direct selling industry and other retail but there are also some important differences. A key distinction lies in the use of an independent sales force in direct selling while retailing generally relies on employment. Other direct selling differences:
- It’s primarily based on establishing independent salesperson and-customer relationships, rather than one-off interactions;
- It takes place away from traditional ‘bricks and mortar’ premises;
- It encourages people to train and manage a teams of people below them (down lines), making salespeople truly independent small business owners with a tangible purpose and stake in their business; and
- It utilises salespeople for a range of activities not typically associated with traditional store-based retail salespeople, including being responsible for marketing and product promotion.