Parties for profit?

It's called "direct selling." Pitching products at parties is making economic sense to a growing number of local women.

Share on Facebook
Share on Twitter
Print

By LINDA DOWNING MILLER

The Avon lady has been around since 1886. The first Tupperware home party was held in 1948. I went to a Mary Kay cosmetics party as a teenager (1979?), hoping to transform my awkwardly adolescent face. Even the blue eye shadow couldn't do it.

Mary Kay survived without my support. So did Tupperware and Avon. In fact, the latter two are traded on the New York Stock Exchange, and party invitations mixing commerce with conversation seem to be circulating at a healthy pace. One friend recently groused about "people who invite you to their selling parties and not to their real parties."

The Direct Selling Association has some 170 member companies and climbing, according to Media Relations Director Amy Robinson. Their ranks include older businesses like Tupperware and newer entrants like Demarle at Home. DSA statistics show that more than 70 percent of the industry's 13 million independent salespeople are female sole proprietors.

Tupperware's website describes direct selling as a "welcome diversion" for women in the 1950s, when career opportunities were more limited. Why are women in the next century still embracing the same sales model?

Discovering toys

"I was looking for something to do from home to earn extra income after having my first son," said Oak Parker Talley Hann, who signed up to sell Discovery Toys in November 2001. "I started playing around on the Internet, and I found them online."

A former teacher, Hann felt the business might fit well with her background. "The next day, my friend called and said, 'We're having a play group tomorrow, and this Discovery Toys lady is coming.'"

The products themselves attracted Hannâ€"simple, educational toys with a lifetime guarantee. Before diving in, she researched the compensation plan.

Direct-selling companies require different levels of initial investments. They set different ongoing sales requirements and use different compensation approaches. The DSA categorizes compensation plans as either multilevel or single-level.

A single-level plan compensates representatives based solely on their own sales. A multilevel plan allows reps to earn additional income from the sales of people they recruitâ€"their "downline."

Discovery Toys and many others use multilevel plans. Hann is a group manager with 65 people on her team. She's built her business in less than four years, by "pretty consistently" putting in one to two hours a day, making calls to generate new business and preparing and holding parties.

"I have always worked at nap time," she said.

The concept of earning by recruiting others has negative connotations for some. In the late 1970s (about the time I was trying out that eye shadow), the FTC was establishing guidelines regulating pyramid schemes. The commission accused Amway of being one and later determined it wasn't, but the debate sparked legislation in many states.

According to FTC documents, pyramid schemes promise big profits based primarily on recruiting others. They may or may not claim to sell a product, but they often require high initial investments and produce little if any actual outside sales. They collapse when the recruiting machine peters out.

The DSA promotes anti-pyramid scheme legislation and requires potential member companies to undergo a one-year evaluation against a professional code of ethics. The FTC offers tips to consumers about avoiding pyramid schemes on its website, http://www.ftc.gov/bcp/conline/edcams/pyramid/. The Direct Selling Women's Alliance is another resource for assessing opportunities.

Discovery Toys allows Hann to earn money from "three generations" of team members. It makes financial sense to her.

"I can earn anywhere from 10 to 15 percent of what my team sells and 40 percent of what I sell," she said. "That's my payment for helping them build their business."

"My goal with new consultants is to try to get them started with six parties on their books," Hann explained. "I schedule two grand openings for her business. I come and do the first one for her. I help her book parties from that with the people who are present."

The idea of selling to friends can be daunting.

"You just want to bug your friends and family once, [let them know] this is what you're doing. Then you move beyond your friends and family. Church, your husband's work, your old work, so you have a mix of people," Hann said.

Hann started her initial business by making the rounds at local preschools, offering fundraisers that provide a percentage of profit to the school.

"An average consultant earns $100 every time she goes out," she said. "I make anywhere from $1,000 to $3,000 a month depending on the fluctuation of the season. I always thought I would go back to teaching once the kids are older. At this rate, I don't see why I would want to do that."

Hann also noted that having a home-based business provides tax benefits. It's not all about the money, though.

"I'm having a great time. I'm enjoying working with the women I work with," she noted. "I feel very passionate about providing play things for our kids that encourage parents to play with our children."

Working from home with Demarle

According to the DSA's most recent national sales force survey, the average annual gross earnings of a consultant is $14,680. Robinson said the more telling figure is median gross income (an equal number of people make more and less): $2,420 a year.

"You have to put it in the context of what people's goals are," said Robinson. "Most people who are in direct selling are in it to earn a couple hundred dollars a month."

"Who doesn't appreciate a little extra income?" asked Oak Parker Sarah Moore, a representative for Demarle at Home.

Operating in the United States since 2002, Demarle makes nonstick bakeware and related products. Moore got involved about a year ago because she wanted to buy products for herself.

"The business kit cost $150, and it included more than what I was going to buy, but for not much more [in cost]," she said. "To me, it was like, 'That's a no-brainer.'"

Moore estimated she earns about $200 for every Demarle party she holds. She averages three or four parties per month but is quick to point out that she's not obligated to meet that schedule.

"I'm in control of everything, so I can [choose to] not work a month," Moore explained.

She keeps minimal extra inventory, in case someone calls and needs an immediate gift. Demarle does not currently require representatives to sell specific amounts.

A former full-time teacher, Moore continues to work a few hours a week as a reading specialist. She sees her Demarle activities as "a way to experiment with something different." She has a daughter in preschool and a son in kindergarten, but even when both are in school full-time, "I don't know that I necessarily want to do the full-on teaching thing."

Moore admits that people have different preconceptions about direct selling. She's had to wrestle with her own "vague impression of these types of things in the back of my mind.

"I think all of that [pyramid scheme] stuff came out when my mom was our age, and so I have that sort of bias," she noted.

Attending Demarle conventions in July and January contributed to a change in Moore's thinking.

"This is a way to interface with people. It's a way to build a business. It's a way to do something part-time," she said.

Moore sees Demarle's newness in the market as an advantage.

"The people at the beginning end of any of these kind of businesses, you can end up making a decent salary," she said.

Renee Dickey, a friend of Moore's who also sells Demarle, appreciates the social aspect of direct sales.

"It's fun to host parties, and it's fun to see people," she said.

Dickey was experienced with direct sales before joining Demarle, as a representative in financial services and as a Mary Kay representativeâ€"a sideline she took up in the '80s.

"While I was working my way up the corporate ladder, I wanted to have a side business, so I could be my own boss," she said.

Ultimately, Dickey decided Mary Kay wasn't right for her. There were sales quotas to meet, and she felt some pressure.

"I'm not always one to put makeup on and run out of the house," she added.

Creating memories

Elizabeth Strand, a Creative Memories consultant in River Forest, calls herself a "hobby consultant. I've had scrapbooks since I was a little girl. It's always been an interest of mine, and it's just hard to find the time to do it. I thought that this would be a way to enable me to scrapbook more," she said.

She signed up to sell Creative Memories in May 2004 after attending a party. She invested $195 in a starter kit. To remain active, she needed to order $500 in supplies within three months' time. Balancing the schedules of her busy familyâ€"the youngest of her four children was about 6 months oldâ€"Strand ended up spending the $500 herself. She then held an open house with some of the merchandise.

"When I placed my first order, I was thinking about all the things that I wanted for myself," she said. "I did [a scrapbook] for my mom's 85th birthday celebration. I sent out pages to all my relatives. We came up with this amazing scrapbook for my mom."

Strand has since held another open house and offered a scrapbooking workshop through the River Forest Community Center. She has plans to host a workshop for the Oak Park/River Forest Newcomer's Club in May.

"I feel more comfortable doing it in a class situation," she said. "I enjoy helping other people create their albums."

Orders have also come to her through acquaintances who've heard she sells the products.

"I don't want to impose on anyone, but there are some people who really want what you have," she said.

Strand has put any earnings back into purchasing products for herself. "It puts a hole in your pocketbook," she admitted.

She also acknowledges that there are cheaper products out there, but she sees a difference in Creative Memories' quality.

"They keep improving the product. Everything in the system is color coordinated," she said. "Everyone loves our adhesives. The amount of testing that's been done on the productsâ€"they're fully guaranteed. You can return anything for any reason."

She has no plans to rely on the business for significant income and is cautious about becoming so sales-focused that people say, "Oh no, here she comes."

"I'm a real estate appraiser, and I make money that way. If you do go into it to make money, then you're always looking for a customer. It can consume your life. I just don't have the time for all of it," she said.

Making time for Mary Kay

Mary Katherine Krause doesn't go by "Mary K," but the River Forest resident is a beauty consultant for the company known for awarding pink Cadillacs to its top sellers. Though she works full-time in hospital administration and has two young children, she signed up with Mary Kay last summer.

"I was placing a $200 reorder and started to wonder what the consultant discount was. Economics started to play into it," she said.

She now sees it as something that will fit with her life over the long-termâ€"a back-up employment plan that offers her a connection to other women and that might one day interest her daughters. At the ages of 2 and 4, they're already helping their mom with the business.

"They can put return labels on my product. They make 25 cents when they do that, and they love to help me," she said. "Each week when I sort of look at the time I put into it and the money made, it's an hourly rate that justifies my time."

Krauss also appreciates the company's weekly conference calls that provide leadership and motivational training.

The DSA lists Mary Kay as having a single-level compensation plan, but Krauss said it's possible to earn commissions from team members. She dropped a brochure at my house that explained the system, along with a nice note and a "facial in a bag." Inside, a card-sized mailer included eye shadow samples in "spun silk," "hazelnut," and "double espresso."

I'm not sure what they'll do for my almost-40-year-old face, but I'm tempted to give them a try.

Reader Comments

No Comments - Add Your Comment

Comment Policy