Homepreneurs, this article is definitely of interest to you. Single-level selling and multi-level marketing (MLM) aka network marketing are more home business opportunities, especially for one interested in additional income or part-time work. Many companies are perfectly legal and been in business for years. Consider Avon and Tupperware as examples. Negative press has compared MLM to a pyramid scheme, at times unfairly casting a black cloud over the entire industry. A little research and homework will help separate the bad companies from the legitimate ones. An excellent source of information is found as www.dsa.org – the Direct Selling Associations site.
A brief comparison of these two Direct Selling opportunities:
Single Level Marketing
The simpler form of direct sales, a direct seller makes money by buying product from a parent company and selling them directly to customers. Avon, Tupperware, Kirby (vacuum cleaners), and Pampered Chef are well-known examples of single level marketers. According to recent statistics, this form of direct marketing brings in about $6 billion dollars annually or 20% of the direct sales industry.
Multi Level Marketing (MLM)
This more common form of direct selling is also known as network marketing or person-to-person marketing. MLM provides two ways of making money: by buying products from the parent company and selling them to customers or by sponsoring other direct sellers and making a commission from their sales. MLM is unique because the sales team has two jobs: Product distributor and recruiter.
The distributor role is simple sales from the parent company to the end customer. The recruiter signs up more distributors who in turn recruit more individuals to distribute, etc. The term downline refers to the group of distributors you recruit and their recruits. Upline is the opposite and refers to the distributor’s sponsor and their sponsors in the organization. Successful mid-level marketers make a large chunk of their money via the downline process.
Pros and Cons
Direct selling is intended and appropriate for home-based business model. Many companies have thrived using this model for 25 years or more: Mary Kay, Fuller Brush Products, Lia Sophia Jewelry and many others are examples of successful companies that use direct selling.
– Parent companies generally provide promotional and sales material along with bookkeeping and commission reports
– Schedules are very flexible and a direct seller can work as much – or little – as they like.
– Startup costs are low, minimizing financial risk if the parent company fails. Certainly the costs are lower than franchises or independent businesses.
– High earnings are possible (upwards of six figures) though few people achieve that level. But a few to several thousand per year is quite realistic with a good downline team.
– Direct selling parent companies can seem very attractive but disappear the next day. Companies such as Amway and Mary Kay have been in business around 50 years, but many others last only months. Refer to www.dsa.org for research and assistance.
– Direct sales typically is not a full-time business with about 90% of sellers working part-time. Of this group, about half make up to $5000 per year, the other 50% makes less than $1000 per year. Some make significant money, but these are the exception.
– Direct selling has a negative reputation with many, creating issues with recruiting a downline team. Motivating the team to sell and recruit more members can also be a challenge.
A Warning About Direct Sales
Over the years, several high profile cases involving DSA companies have led to pyramid scheme charges. A pyramid scheme occurs when an MLM recruits and collects fees from distributors without selling a product. These schemes are illegal in the United States and companies can face federal charges if caught.
Is it very important to identify a direct sales opportunity and get all information possible before jumping on the bandwagon. Talk to other sellers in the company, read the company literature, check the list of DSA members at www.dsa.org, and ask questions.
In summary, direct sales is not likely to bring fame and fortune, but can supply a little extra money for not much work. Pampered Chef and Tastefully Simple parties are always fun and tasty too!
** I recently received this in email**
Did you know that as an AVON Representative you can:
1. Work from home. Work online.
2. Set your own hours.
3. Have unlimited earning potential.
4. Start your business for a little more than the price of a lipstick.
Isn’t starting your own business worth the price of a lipstick?
By Dion D Shaw
Dion D Shaw is the founder and owner of Homepreneurs.
Homepreneurs. New Day. New Opportunity.
Homepreneurs does not endorse nor have any relationships with any of the services listed. Homepreneurs receives no compensation or consideration for its suggestions. Homepreneurs strongly urges all interested parties to conduct research and accepts no responsibility for any losses incurred.
© Homepreneurs 2011