Direct sales and party plan: The Facts

successNot everyone wants to invent their own product. This month we’re looking at what’s on offer if you want a business that is set up for you with low start up costs up to a couple of hundred pounds. Tupperware parties are legendary, and Avon ladies are seen in every town. You will probably know someone who is a rep for a direct selling company: there are over half a million people doing this in the UK. There are many different companies offering you the chance to sell their products direct to friends, relations and friends of friends, offering everything from baby wear to tools.

Selling as a rep

Becoming a rep is a good opportunity if you are looking for work to fit with the family, but you should enter into it with your eyes open.  The clue to success for any direct selling opportunity is in the word ‘selling’. You need to be prepared to twist arms, turn acquaintances into customers, and make the most of every occasion to sell.

What not to do

Watch out for scams. Reputable companies with a track record willoffer you a proper starter kit for your initial investment. There are always schemes to avoid. Steer clear of anything where it isn’t obvious what you will sell. If you have to send £10 in response to an ad for homeworking opportunities, you may find they just suggest you place a similar ad and ask people to send money to you. This, in one form or another, is the basis for many scams.

Assembly scams

Envelope stuffing and other assembly schemes are often a front for scams too. Beware if you have to send a payment for the materials you are to assemble. You may well find that however hard you practice the company refuses to pay you as your efforts are substandard, or just doesn’t get back in touch at all. Steer clear of opportunities that promise large rewards for little effort, or only offer contact through a PO box or mobile number. Read the Office of Fair Trading website for more information on scams to avoid.

Why not to become a rep

It can not be stated often enough. Becoming a rep requires hard work. You need to get a buzz out of selling to succeed. Weigh up how much spare time you have, and what part of that you can commit to delivering catalogues and orders, collecting and chasing payment, and promoting and planning parties. Additionally, you need to look at where your profits will come from, as you may make more money from recruiting new reps than selling products. In a survey, reps spent less than half their time selling, nearly one hour in five being on admin, and one in six on recruiting.

Long term gains

There is a high turnover in direct selling organisations, with more than half of all reps selling for less than two years. Only a small percentage find long term success. Direct selling is usually commission based, so there’s no regular income, and you have to feel confident about getting people to buy. On the positive side, though, you’re usually selling something with a bit of fun included, and you can arrange to work at times to suit you.

How to choose

Take a businesslike approach to working out what sort of opportunity would be right for you. Work out how much time you could spend promoting your products, and how this would fit with the children. Do you want to sell door-to-door, to local groups or at parties? Do you have a car to help your transport large boxes of samples? Some jobs will also require you to deliver customers’ orders. Find out if you will need to store large quantities of stock.

Love what you sell

Make sure you are genuinely interested in and like the products. It is hard to sell something you would not use yourself. And think whether what you sell will interest people in your area. Check if you can buy the same thing in your local shops more cheaply. Are customers likely to return to buy their favourite products again and again, or are purchases likely to be a one-off?

SLM or MLM

Some companies give you just the opportunity to sell, person to person or by party plan. This is called Single Level Marketing (SLM). Part time opportunities are likely to involve Multi Level Marketing (MLM), where, as well as selling the product, you can recruit other reps. For many companies, more money can be made by recruiting than by just selling the products. Have a think about whether this appeals to you.

Research your opportunities

Contact your local rep, if you know them, and ask whether there are any opportunities in your area. A rep will be keen to recruit you if they get a bonus for this. Parenting website Netmums is a good source of info on rep opportunities, and you can find out about the experiences of people who are reps already. Look through the list of direct selling companies in this chapter, visit websites or give the company a call.

Your area

When discussing opportunities, ask what area you will cover. Some companies allocate you a street, postcode or town. Others may allow any number of reps in each locality. It pays to find how much competition there is. Think about a different company if there are several other reps nearby. The further you travel, the higher your costs, which eats into your profits.

Agent or distributor
Find out if you are becoming an agent or a distributor. As a distributor, you buy goods, and are responsible for reselling them. This has a slightly higher risk than being an agent, where you sell on behalf of the direct selling company and take a commission. Ask whether you can be a rep for another company at the same time. Sell products from more than one company can increase their income.

Read more about direct selling next week.

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