Why the Direct Sales Model Succeeds - dummies

Why the Direct Sales Model Succeeds

By Belinda Ellsworth

Direct sales models are successful because they offer the company an opportunity to market products directly to consumers. In direct sales the products are sold by independent representatives who are not employees. These reps are independent contractors who work on a commission-only basis.

Because the independent representatives are the sales arm of the company, the company only pays commissions for actual sales. Independent representatives are also the main way the company advertises and markets its products. Many traditional companies with ordinary sales channels utilize social media, for example, to help increase brand and product awareness.

But direct sales companies don’t use typical advertising strategies like radio or TV to market their offerings. Direct sales companies mainly utilize their representatives to help market their products because they believe the products will do better with word-of-mouth advertising and in-person demonstrations.

As you explore the different products available through direct sales, you will find that the products are often positioned as cutting-edge, unique, made from superior raw materials, and basically better than products that are available in stores. Although that may not always be the case, generally speaking the products do stand up to scrutiny and tend to inspire a type of “super fan” convinced of the supremely high quality of each product.

It is a fact that direct sales product lines often are the first to bring new ideas to market. The companies are often led by mavericks or risk takers who are looking to get out ahead of the pack and incorporate the latest research and the newest “miracle” ingredients. People in this distribution model who have been laughed at in the past are the same people who first brought things like super foods, vitamins, healthy energy drinks, and supercharged, nutrient-enriched shake powders to market. All of these things are now, of course, carried widely in health food and grocery stores around the country and are no longer considered fringe.

There is also a lot of truth to the cost-savings and cost-reallocation made possible by skipping the middle man and delivering your products direct to the consumer through volunteer sales people (independent representatives). Rather than pay a big portion of company revenue for advertising, which, studies show, continues to have less and less real impact on consumer decisions, these companies can and do spend a higher percentage of their budgets on creating high-quality products through product research and product development.

Combine products that are typically superior to what’s available elsewhere with a sales model that leverages social connections, and you have a social selling model that has been proven to be very effective and profitable over time, for both the companies themselves and the independent representatives who build businesses with them.

Today, you can find a vast array of products and services sold through direct sales. Here are some popular products:

  • Cosmetics, beauty products, and skincare products

  • Clothing and fashion

  • Food and wine

  • Home decor, including candles and fragrances

  • Jewelry

  • Kitchen items and cookware

  • Nutritional supplements and diet aids

  • Organizing and scrapbooking supplies

  • Personal protection

  • Romance and relationship enhancers

  • Tools for home repair

  • Weight management and workout supplies

And it’s not just about products. Services sold through direct sales can include the following:

  • Utilities and energy

  • Financial planning

  • Insurance products

  • Legal products

  • Personal business services

  • Telecommunication

Those lists are just a sampling. There are hundreds of categories of items you can market or purchase through direct sales companies.