What is Direct Selling?

Direct Selling Defined and Explained

Direct Sales Defined and Explained.
Direct Sales is a viable home business option for those who do their research and the work. Credit: Steve Debenport | Getty Images

Definition of Direct Selling

Direct selling is the action of marketing and selling products directly to the consumer in a non-retail environment. Instead, sales occur at home, work or other non-store location. This system often eliminates several of the middlemen involved in product distribution such as the regional distribution center and wholesaler. Instead, products go from manufacturer to the direct sales company, to the distributor or rep, and to the consumer.

 The products sold through direct sales are often not found in typical retail locations, which means finding a distributor or rep is the only method to buy the products or services. 

Don't confuse direct selling with direct marketing. Direct selling is when individual salespeople reach out to consumers directly, whereas direct marketing is when a company markets directly to the consumer, bypassing distributors or other middle-men.

Types of Direct Selling

There are a variety of ways business owners can sell direct to consumers through direct selling. 

Single-level direct sales: This type of sales is done one-on-one, such as through door-to-door or by doing in-person presentation. With the advent of the Internet and catalogs, sales can be done that way as well. Generally income is earned only on sales commissions.

Hostess or Party Plan: This type of sales is done in a group setting, usually involving the distributor or rep doing a presentation in her or in another person's home or other location.

Income can come from commissions from sales, and sometimes through the recruitment of other reps (see Multilevel marketing below).

Multilevel Marketing (MLM): Sales in multi-level marketing are made in a variety of ways, including single or party presentations, but also through online stores and catalogs.

Income earned through MLM is commission on sales, and the sales made by other business partners the distributor recruits into the company. 

Sometimes direct sales is called MLM or network marketing. While MLM and network marketing are direct sales, not all direct sales systems involve MLM. For example, in single-level marketing the sales representative is only paid commission on the sales he or she personally makes.

Is Direct Sales Legal and Viable?

Direct sales, and in particular MLM and network marketing, have suffered a bad rap. The first negative aspects came when Amway was investigated to determine if its marketing methods were a pyramid scheme. Amway was vindicated, but the damage had been done. 

The second challenge to direct sales involves over zealous representatives that often make big promises for easy money. Most direct sales companies strive to keep their reps honest. In fact, some companies worry so much about overzealous reps misrepresenting the business, that the company doesn't allow reps to use the company name in advertising. 

Finally, many myths abound about direct sales and MLM, such as the idea of saturation or that only the guy on top makes a living. However, a quality direct sales company will work for anyone who runs it like the business it is, regardless of when you sign up.

That's probably where most direct sales reps struggle. For some reason many don't view direct sales as a business. But direct sales involve a product or service that needs to be sold to a target consumer just like any other business. 

How to Find a Good Direct Sales Company

There are several factors that go into finding the right company for you. They include:

  1. Finding a company that has a product or service you can get behind. If you don't love the product, you'll have a hard time selling it.
  2. Checking that the company is a member of the Direct Selling Association. Member companies have to meet a threshold of policies and ethics to belong.
  1. You understand and can accept the compensation plan. Many direct sales companies pay you for a variety of things including commissions on you and your team and bonuses for achieving certain goals. Sometimes commission splits go up as your business grows.
  2. You understand and are willing to follow the marketing plan. Direct sales companies already have the marketing materials and systems in place. You just need to follow the plan.
  3. Be coachable without expecting your sponsor to do everything.You should get along with your sponsor and listen to what he/she says. However, it's your business, and therefore you can expect your sponsor to do your work for you.

Ultimately, finding a good company is about asking the right questions and research.

 

Also Known As: Direct Sales, Personal Sales, One-on-One Sales, Door-to-Door Sales
Often used interchangeably, though incorrectly, with terms Network Marketing and Multi-Level Marketing.

Common Misspellings: Direct Saleing, Direct Seling

Examples:

  • I joined Avon as an independent representative so that I could utilize my direct selling skills to reach out to consumers.
     
  • Direct selling can use many different types of marketing strategies, including door-to-door sales, phone sales and product parties.

Updated December 2015 Leslie Truex