Direct Sales Offers Boost for Women in Hard Times
This article is originally from CNBC, posted on Thursday, Feb 24, 2011. Read it HERE.
MIAMI – Blair Critch tried to go back to work as a teacher after her two boys were old enough for day care, but she didn’t earn enough to make it worth the cost.
Shortly after, she stumbled on a cute necklace from Stella & Dot in a magazine. She became a stylist for the 7-year-old company last March, selling the trendy jewelry through trunk shows in people’s homes.
“It’s been amazing,” Critch said. “I get to choose when I want to work.”
Direct sales companies have been marketing to women around the world for decades, but they often attract extra interest during recessions as people look for new ways to earn income. They range from newer options like Stella & Dot to Avon, one of the largest (and turning 125 this year).
Amy M. Robinson, a spokeswoman for the Direct Selling Association, said overall direct sales dropped slightly from $29.6 billion in 2008 to $28.33 billion in 2009. But direct sales did outpace retail overall, which declined significantly over that period, she said. The number of direct sellers stood at 16.1 million in 2009, up a million from 2008.
“Direct selling has thrived for decades because it is made up of people — people who are trying to provide for their families and have a bit of enjoyment at the same time,” Robinson said by e-mail.
Critch is one of them. She signed up when her husband Ryan’s work in the mortgage industry slowed down. She now coaches more than 100 women at the company. She does about two parties a week herself, earning 30 percent off her jewelry sales in addition to commissions for coaching. She puts $5,000 to $8,000 a month in her pocket through Stella & Dot.
“I am (making) double if not triple a month I made when I was teaching,” Critch said.
She uses her earnings to pay for family vacations, a down payment for her new Honda Odyssey and the family’s health insurance. She has heard stories of women who didn’t have money to pay for gas and are now supporting themselves the same way.
“You don’t even have to have supportive family and friends. There are so many people who love the jewelry, you just have to get out there and network,” Critch said.
Avon CEO Andrea Jung said the $10 billion cosmetic company has more than 6 million — mostly female — representatives collectively earning $4.5 billion annually. Individually, Avon representatives can earn anywhere from a couple hundred dollars per month to six figures.
Avon rep Aletrice Mann, from North Lauderdale, Fla., started with the company in November and is saving her earnings for a family vacation and car payments. She has her own website at Aletrice.com for clients who want to order on the Internet and have their products shipped direct.
“It turns out you can make money,” she said. “If I had started this a year or two ago, I would definitely be able to support the family.”
Mann finds her clients by hitting the pavement and talking to women who seem to be open to buying the products. She will also go anywhere to deliver, bringing the products to customers’ jobs, homes or even meeting them at the grocery store.
Marshal Cohen, chief retail analyst for the market research firm NPD, calls this kind of personal contact between seller and customer “consumerology,” adding: “It’s exactly what direct branding does and that is they don’t just disengage at the point of sale. They continue the cycle all the way through.”
Charles W. King, professor of marketing at the University of Illinois at Chicago, said these days companies like Avon do more network marketing rather than direct sales. Network marketing is when companies urge sellers to create their own social networks to add more consumers and sellers to the company. Individuals buy merchandise at a discount, then resell it and keep a commission. They can also earn money by bringing others into the company.
King said the amount of money sellers must invest up front in the products is usually low — $50 to $500. So even if they don’t sell all the merchandise, they don’t lose much. But he urges anyone considering trying direct sales to be careful about online scams. Before signing up to sell, research the company’s reputation. Try to speak with people who have worked there.
New York-based Worth Collection Ltd., a clothing direct seller, has 1,000 sales associates selling from their homes, establishing a kind of private boutique. The 20-year-old company is looking to recruit associates and expand on technological tools like its two iPad apps.
Avon is also pushing technology as a way to improve sales. This year and next, the company will concentrate on phone apps, with an eye to markets around the world where women are more likely to have a smartphone than a computer to work from.
“Where it used to be door-to-door, it goes desk-to-desk and laptop-to-laptop and cell phone-to-cell phone,” Jung said.