The direct selling industry globally has witnessed significant growth in the last few years. With over 116 million entrepreneurs representing direct sales companies around the world, according to the WFDSA (World Federation of Direct Selling Associations), global retail sales from direct selling stood at $190 billion in 2017.
However, despite its proven success and scale, the industry continues to grapple with frequent and usually unsubstantiated allegations.
In this post, we debunk some of the most common myths about direct selling and help you understand this growing industry better.
Myth 1: Direct selling is a pyramid scheme
This is a common misconception because pyramid schemes often present themselves as direct selling companies to gain credibility in the market. However, there are significant differences between the two. Direct selling companies are legally recognised organisations that compensate direct sellers for selling and referring products and services.. A pyramid scheme, however, may also offer products and services, but making money from recruiting new members takes precedence over selling products.
Myth 2: Direct sellers are not ‘real’ entrepreneurs
Some people hold the opinion that direct sellers are not true entrepreneurs due to the ease of access this industry offers to people from all walks of life. Also, direct selling does not require large capital to start with and can be done part-time as well. While some pursue direct selling as a hobby to generate supplementary income, the fact remains that direct sellers have to invest their time and effort to produce results. Product expertise, business acumen, exceptional communication, and organisational skills are just some of the abilities needed for success in the direct selling business, making each direct seller an entrepreneur in their own right.
Myth 3: Direct Selling industry is unregulated
Just like any other regulated industry, the direct selling industry has codified laws, business policies and clear guidelines to comply with. In the USA, the Anti-Pyramid Promotional Scheme Act of 2016, titled H.R.5230, was created to prosecute illegal pyramid schemes, thereby ensuring consumer protection. Direct Selling Associations throughout the world fully support this act. This ensures that both the direct selling company and the marketer are bound by strict guidelines.
In India too, the Ministry of Consumer Affairs put in place Direct Selling Guidelines in 2016 to be implemented by each state. The guidelines have been formulated to distinguish between fraudulent companies and genuine direct sellers, and also protect consumers.
Myth 4: Only the highest-level executive makes all the money
This misconception has its roots in likening pyramid schemes to direct selling companies. In pyramid schemes, people that join early on make most of the money while new recruits struggle to make much less an income. In a direct selling company, however, there are rigid and transparent compensation plans in place to determine incentives, commissions, and rewards. Compensation plans vary between different direct selling companies, but they ensure that everyone in the company has an equal opportunity to earn income, irrespective of hierarchy.
Myth 5: Direct sale products are of low quality
Due to the stigma around direct selling companies, it is assumed that their products are inferior to similar ones found in the market. This is far from true because oftentimes direct selling companies invest millions of dollars into research and development. They end up creating unique and exceptional products that in most cases cannot be found in any retail store. This wouldn’t be the case if the products offered by these companies were below or even on par with similar products in the market.
The business of direct selling comes with a host of benefits. Anyone can become a direct selling entrepreneur, regardless of gender, educational qualifications, age, race, and experience. It gives you the flexibility to choose your working hours, which in turn lets you choose direct selling as your main or supplementary source of income.
Despite the legitimate status of the direct selling industry, some myths continue to persist. Don’t let them influence you when you consider a career in this industry. Choosing a firm with a strong global track record is usually a safe way to enter the field.
Always look to gain a proper understanding of this business model and choose a company after careful research. This diligence will help you make an informed decision and ensure that you have a successful start to your direct selling career.