Direct selling

From Wikipedia, the free encyclopedia

Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling.^[1] Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales.^[2] A textbook definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."^[3][4]

Industry representative, the World Federation of Direct Selling Associations (WFDSA), reports that its 59 regional member associations accounted for more than US$183 billion in retail sales in 2014, through the activities of more than 62 million independent sales representatives.^[5] The United States Direct Selling Association (DSA) reported that in 2000, 55% of adult Americans had at some time purchased goods or services from a direct selling representative and 20% reported that they were currently(6%) or had been in the past(14%) a direct selling representative.^[6]

According to the WFDSA, consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees.^[5] In contrast to franchising, the cost for an individual to start an independent direct selling business is typically very low with little or no required inventory or other cash commitments to begin.^[5]

Most direct selling associations around the world require their members to abide by a code of conduct towards a fair partnership both with customers and salesmen...

Most national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA).

Direct selling is distinct from direct marketing because it is about individual sales agents reaching and dealing directly with clients. Direct marketing is about business organizations seeking a relationship with their customers without going through an agent/consultant or retail outlet.

Direct selling consists of two main business models: single-level marketing, in which a direct seller makes money by buying products from a parent organization and selling them directly to customers, and multi-level marketing (also known as network marketing or person-to-person marketing), in which the direct seller makes money from both direct sales to customers and by sponsoring new direct sellers and earning a commission from their efforts.^[7]

Largest direct selling companies[edit]

According to Direct Selling News, the largest direct selling companies globally, by revenue in 2015,^[8] were:

2015 Rank	Company Name	2014 Revenue
1	Amway	US$ 10.80 B
2	Avon Products	US$ 8.90 B
3	Herbalife	US$ 5.00 B
4	Mary Kay	US$ 4.00 B
5	Vorwerk	US$ 3.90 B
6	Natura	US$ 3.20 B
7	Infinitus	US$ 2.64 B
8	Tupperware	US$ 2.60 B
9	Nu Skin Enterprises	US$ 2.57 B
10	JoyMain	US$ 2.0 B

Personal Selling

Personal Selling as a form of direct selling is the verbal and personal presentation of a need-satisfying product, service, institution or idea to one or more potential buyers.^[9] This platform differentiates itself from non-personal selling forms of Marketing Communications through its personal nature of method. This flexible method is used for establishing and nurturing customer relations. Advantages of using this platform are that the messages can be tailored for specific situations, there is less “noise” to disturb the message and it is effective when communicating complex information. Disadvantages include a high cost per contact and reach can be relatively low. For this platform to work effectively, businesses need to have competent salespeople to consult and help problem solve for the customer. There are several roles and functions for salespeople in the area of personal selling. Marketing managers should understand these functions in order to train and hire sales staff. The roles/functions are: Create new customers, Sell more to current customers, Build long-term relationships with customers, Provide solutions to customers’ problems, Provide service to customers and Help customers re-sell products to their customers.^[10] The function to create new customers can be called prospecting and it involves identifying potential customers. The function to sell more to present customers implies that future growth in sales is dependent on current customers. The function of providing a service to customers’ means they handle complaints, returning damaged goods and ensuring the customers are satisfied with the services accompanying a product.^[9]

There are many qualities and attributes that a salesperson should have. Essential attributes are Communication skills, Sales Knowledge, Trust and Self-leadership. Communication skills consist of 3 elements: Verbal, Non-Verbal and Listening.^[9] Verbal communication is the transmission of words either in face-to-face, over the phone, or through written messages. Verbal communication should be articulated so the customer can easily hear and understand the information. Non-verbal communication comes in the form of expression and body language. This element of communication skills uses appearance to communicate emotion and thoughts without using words. Listening is an essential part of communication skills. It allows the seller to understand the point of view of the customer’s objectives. One strategy that is deployed in the listening element of communication skills it the LEAN strategy: Listen, Evaluate, Ask strategic customer-focused questions and Never interrupt the customer. Sales knowledge means that the salesperson has the sound knowledge of the organisation, competitors, industry, their customers and their products. This builds their self-confidence in turn, building the buyer’s confidence in the salesperson. Self-leadership is an important attribute to a salesperson because it is a measure of how well their selling activities are aligned with their goals.^[9]