Even in a down economy, entrepreneurs can find success with direct sales. From Avon to Tupperware to Stella & Dot, direct sales businesses provide motivated people the chance to market their wares in the comfort of their own homes or by going to door-to-door.
The Direct Sales Business Model
How does direct selling work? It’s a fairly straightforward business model:
An interested seller signs up with a company, typically investing some of their own money upfront to pay for initial products to sell. It is then this person’s responsibility to sell those products. The money is then passed on to the company, with the salesperson receiving a commission based on what he or she sold.
What Can Be Sold Through Direct Selling?
Almost anything can be sold through the direct sales model. The most important aspect of direct sales is that products can be transported to salespeople in various locations, and their inventories can be resupplied and orders fulfilled in an efficient manner. Additionally, a well-organized and competent finance team is needed to figure out commissions and issue checks to salespeople in a timely fashion.
What Is Needed to Start a Direct Sales Business?
Starting a direct sales business is similar to launching any small business. To start, you will choose whether to sell for an established company, such as the ones mentioned above, or go on your own, selling goods from wholesalers or manufacturers. As a salesperson, you might need:
If you choose to start your own business, you’ll want to find reputable wholesalers and manufacturers that will work with you, meet your needs and be willing to negotiate a fair deal with you. A good place to find wholesalers is the National Association of Wholesaler-Distributors.
There are two important questions to ask when considering a wholesaler or distributor: Does the company drop-ship products? And can products be ordered in single quantities at wholesale prices?
How Do Direct Sellers Find Buyers?
Direct sellers typically start very close to home, looking to friends and family for their initial customers. There’s nothing wrong with this model. Many direct sales take place at “parties,” where a host invites friends, and the seller is given the opportunity to display and demonstrate the merits of the product. Ideally, once you’ve done a few of these parties, word will spread regarding how great you are, how great the products are, how much fun the party is or some combination of the three. From there, you should find it increasingly easier to book multiple parties without needing the help of your friends and family.
Is Direct Selling Right for My Business?
If you’re a business owner that’s considering adopting a direct sales model, a good place to start is to learn about the companies that have done it successfully. Some of the more recognizable brands are:
The best way to determine if your company is ready to start direct selling is to first ensure that you have an established infrastructure that focuses on supply and finance. Once you have ensured this, experiment with direct selling to see if it works for your business. You’ll also want to ensure that your wholesalers are able to fulfill orders quickly and at a competitive rate. And you want to be sure that your merchandise can be easily packaged and sold by others with little oversight.
Using direct sales as a sales model can help establish your brand and increase its reach. When implementing this model, just be sure that you have a well-run organization that can handle the added stress of multiple salespeople in different locations and fulfilling orders as frequently as needed.