Direct Selling is a channel for retailing consumer products. It is marketing and selling goods and services, person-to-person, away from a fixed retail location.
This distribution is undertaken by independent small business people, variously described as distributors, consultants or representatives, through networked party plan and other sales methods. According to the DSAA, women comprise almost three quarters of these sales people.
Parties are arranged so a sales consultant can come to the home or workplace to display or demonstrate a product to a prearranged group of people. Sales Consultants invite hosts to organise the social gathering in a home or workplace where products are displayed, usually in a practical setting and in the case of UnderCoverWear guests are invited to be fitted and try clothes and lingerie. The idea is that guests and party hosts can closely assess products in a relaxed environment. Benefits tied to the volume of sales from parties generally provide the hosting incentive. These gatherings are also a great way to ascertain if a party guest may be interested in becoming a sales consultant.
The DSAA describes multi-level or network management (MLM) as a structure for distributing products through party plan or individual person-to-person activity. MLM operators recruit, train and develop contractors and benefit from their own sales and those of others, called “down lines”, they directly or indirectly recruit to their network. MLM operators often use products themselves, sell to their own base of customers, and recruit and develop others for the same activity. Underlying this network management is that profit comes from sales, not merely recruiting distributors. This distinguishes MLM from illegal pyramid schemes.
Direct selling should be distinguished from direct marketing. Telemarketing, direct mail and catalogue techniques are characteristics of direct marketing and while these methods are sometimes used in promoting direct sales it is the person-to-person aspect of the sale that distinguishes this retail channel.
Direct selling is ideal for products that require more demonstration or explanation than provided in retail stores. It is also an attractive channel for suppliers who can’t compete for space on retail shelves. Approximately 620,000 people are involved in Australia’s $1.3 billion direct selling industry.