Direct-Selling Businesses - dummies

Direct-Selling Businesses

A business based on direct selling, well, sells consumer product or services in a face-to-face manner. Direct-selling businesses have taken the world by storm.

You can find two main types of direct-selling opportunities:

  • Single-level marketing: Single-level marketers make money by buying products from the parent company and selling them directly to their customers.

  • Multi-level marketing: Multi-level marketers make money both by buying products from the parent company and selling them to customers, and by sponsoring new direct sellers.

    Multi-level marketing uses a unique system of selling, in which salespeople take on two key roles:

    • Distributor: As a distributor of a product, your job is to buy product from the parent company and sell it directly to the public. Every time you sell an item, you make a profit.

    • Recruiter: As a recruiter, you sign up other distributors to work for you. Every time your distributor buys an item from the parent company, you receive a percentage of the profit.

    It’s against U.S. law for a multi-level marketing organization to only recruit distributors — and collect fees from them — without also selling products. Such an arrangement is called a pyramid scheme, and it is set up specifically to make its creators rich while relieving everyone else of their hard-earned money.

Because startup costs are generally low, you have little financial risk if a direct-selling business fails. Also, your direct-selling parent company generally provides you with sales and promotional materials, as well as bookkeeping, sales tracking, and commission data.

But direct selling has a poor reputation with many people, often making recruiting new distributors (and selling products) a difficult proposition. Few people in direct selling make enough money to make it a full-time profession.