What is Direct Selling: definition, examples, and tips
Direct selling can be an effective way to build a flexible, low-cost business. It allows you to reduce advertising costs, avoid overhead expenses, and build long-lasting customer relationships.
What is direct selling?
Direct selling is the selling of products in a non-retail setting, for example, at home, online, or other venues that are not a store. It eliminates middlemen who are involved in distribution, such as wholesalers and regional distribution centers. Instead, products are sent directly from the manufacturer to the sales company, then to the rep or distributor, and finally to the consumer.
Products sold via direct sales are not typically found in traditional retail locations. This means that finding a distributor or rep is the only way to buy them.
Direct selling is usually associated with party-plan and network marketing businesses. But they aren’t the only ones using direct sales. Many B2B companies use direct selling to target and sell to their end customers. For instance, many businesses that sell office supplies will send their reps directly into the stores that can use their services.
It’s important to note that direct selling doesn’t equal direct marketing. In the first case, individual distributors or reps reach out to customers directly. Meanwhile, in the second case, a company markets directly to clients.
Types of direct selling
Sometimes, these methods of direct selling are used in combination. They are not mutually exclusive.
Single-level direct sales
This type of direct selling is usually done face-to-face, e.g., through door-to-door or one-on-one presentations. Still, it can also take place online. As a result, salespeople earn their income from commission sales and occasional bonuses from the company they get their products from. They do not recruit other sales reps to receive more income.
Host or party-plan sales
This type of sales takes place in a group setting. The primary method of generating sales leads is by hosting a social event and offering products for sale. Salespeople then use the party-plan sales model as a source for future business by asking customers if they would like to host such selling parties, too. Think of Mary Kay for a classic example, as they often host social events to sell goods and find recruits when they aren’t making one-on-one sales.
Multi-level marketing (MLM)
If you’re a multi-level business salesperson, your primary focus is on recruiting members, not the actual product itself. What makes MLM different from other types of direct selling is that income earned through it is based on sales commissions and the sales made by other business partners recruited into the company.
MLMs are popular with people who want to work from home, but they can be risky to participate in due to hefty upfront fees, difficult-to-meet quotas, and pay dependent on one’s recruits. Most MLMs are generally not looked upon as a good thing. The examples of such direct sales companies are Scentsy, Mary Kay, LuLaRoe, Arbonne, and many others. They also use the party-plan model, but to recruit new salespeople while selling products.
Tips and pieces of advice
If you want to get into direct sales, here are some recommendations to follow:
- Focus on building relationships first, not making sales. Your first priority should be getting your clients to give you their attention and time. Establish a rapport and determine their pain points and needs so that you can offer a solution. Always follow-up on new prospects quickly to build new relationships.
- Keep consistent and detailed customer records. A thorough customer database allows building and tracking your networks, communicating periodically with clients, and distributing different marketing materials, such as product updates or email newsletters.
- Be passionate and knowledgeable about your products. Salespeople who have confidence in their products and their ability to meet clients’ needs sell more.
- Build and maintain your networks. Your network marketing strategies should be the core of your direct selling business. It’s important to have mutually beneficial relationships with your colleagues, communicate with them, and learn their selling tips.
- Organize your sales environment. Every detail matters, so plan your presentation space and product display thoroughly, as well as make sure you arrive early. Maintain eye contact with your customers and consider ways to remove all possible distractions in the room.
- Improve your sales skills. Your conversation and listening skills can help you build long-lasting customer relationships and grow a successful business.
Advantages and disadvantages of direct sales
- You don’t need to have an extensive team supporting you to begin direct selling. All you need is one person to create marketing materials to reach out to potential customers.
- Without middlemen, you control your image and message.
- You are in business for yourself, which means you can work from home.
- There are no prerequisites, so anyone can go into direct sales, regardless of education or job history.
- There are no set hours, leading you to be able to work when it’s convenient for you, which is a big reason so many stay-at-home mothers become direct sellers.
- If the seller has more incentive to recruit other sellers than to sell inventory, then it may be an illegal pyramid scheme.
- Direct selling is built for outgoing individuals with several active networks who are willing to buy. The business is nonstop and requires significant output to expand the network and grow sales continually. This leaves the major downside as it limits networking for many people.
- Direct selling is often uninvited. Many times the experience (whether over the phone, in person, or over social media) feels like you’re trying to talk the prospect into buying something that they don’t want.
Wrapping it up
There are a hundred more pros and cons to working in direct sales, but we would say those are some of the biggest ones. Either way, becoming a direct salesperson will require hard work, networking, and passion for what you are doing, plus research into whatever product you are trying to sell. Direct selling is business, and one has to run it like a business, or there will be little to no success.