Direct Selling: Top 10 Questions, Answered

For those involved in the direct selling profession, especially in a country like India where this industry is constantly under attack, and efforts are still underway to frame a legislation to govern this thriving industry, there are some standard questions you are probably subjected to.

Usually, these questions arise due to misinformation, lack of awareness or purely due to prejudice.
The World of Direct Selling has put together a list of 10 questions that are frequently directed to players in the direct selling industry, everywhere in the world.

This is how they answer these top 10 questions:

1.Do network marketing and pyramid scheme mean the same thing?

No! They might seem similar but they are very different from each other. The participants’ incomes depend upon sales of products and services using the network marketing model. In a pyramid scheme on the other hand, it is dependent only on the inflow of new participants.

2.What is a “Ponzi Scheme”? 

In short, it is the finance industry’s pyramid scheme. Here, participants’ incomes are paid not from the profits generated through their own investments, but through the investments of newcomers. Needless to say, the system collapses shortly when there are fewer newcomers.

3.Is direct selling a sustainable business model?

This question can be simply answered by pointing to direct selling companies operating at the moment, mentioning when they were established: Southwestern (1855),  J.R.Watkins (1868),  Vorwerk(1883), Avon (1886), Kleeneze (1923), Tupperware (1946), Shaklee(1956), Amway (1959), Mary Kay (1963), Oriflame (1967) and Natura (1969).

Considering how long these direct selling companies have been operating using the network marketing business model, clearly this is a long-term business.

4.Is this channel only good for beauty products and food supplements?

Beauty, personal care and food supplements together are estimated to generate more than half of the global revenue in direct selling. That being said, all categories that one can think of are making very good use of this channel: Jewelry and accessories, coffee and tea, kitchenware, phone services, financial products, books and toys, to name a few. With the more and more new categories incoming in the developed markets, the total share of cosmetics and nutritional products is lower than the world average.

5.Is direct selling an opportunity for individuals to get rich quick?

Direct selling provides an opportunity to individuals to reach very high income levels regardless of what their educational backgrounds and work experience may be. In economic terms, it is a micro-entrepreneurship model. However, one should not expect to get rich quick. Just like it is in any other business, here too, effort, sacrifice and time are required.

6.How important is being one of the first members of a network marketing organization?

There is no direct link between being one of the founding members of a field organization and high earnings. In other words, this does not guarantee a higher income. Looking from another perspective, if this was true who would want to join an organization after a while?

7.Can individuals make a career in direct selling, working for many years?

Absolutely! They can work for many years and their businesses can be inherited after they pass way. Many people in US and Europe have been doing direct selling for over 20 years now. This is a career!

8.Is direct selling more suitable for women? 

Globally, it is estimated that 75% of direct sellers are women and 25% are men. Direct selling can be easily done on a part-time basis. And this characteristic appeals to women very much. There are many organizations where there are much more men than there are women. Being a typical micro-entrepreneurship, this business offers a level playing field to everyone, so it is difficult to say it suits on gender more than the other.

9.What is a compensation plan?

A compensation plan shows how a direct seller will be compensated against meeting certain criteria of success. Some of these plans are quite simple while some are quite complex. The complexity of a compensation plan does not necessarily show it is a solid one.

10.Do the advances in the digital world pose a threat to direct selling’s future?

Some thought it would. However, technology has only enhanced the way people do this business by providing powerful tools to support the activities in the field. The growth of social media and use of various apps has made keeping in touch with the team/downlines/uplines, tracking the growth of the business and providing instant support to newcomers very easy.