by Glenn Brittany

Created on: October 26, 2008   Last Updated: February 22, 2009

According to the Direct Selling Association (www.dsa.org), direct selling is "the sale of a consumer product or service, person-to-person, away from a fixed retail location." Direct selling is unique in that instead of selling products through traditional outlets such as in retail stores, products and services are marketed to customers by independent salespeople, often called distributors.

A direct selling company's corporate headquarters staff exists to support the salespeople in the field through marketing, customer service, order fulfillment, infrastructure, etc. Many of the larger direct selling companies are publicly traded such as Herbalife, Nu Skin Enterprises, Pre-Paid Legal Services

Direct selling companies have two types of selling strategies: person-to-person and party plan. The person-to-person selling strategy refers to selling items and spreading the message of the opportunity by word-of-mouth, usually to one or two people at a time. The party plan strategy refers to hosting parties where products are demonstrated and attendees are encouraged to purchase items and/or sign up as distributors themselves.

Examples of network marketing companies include Amway/Quixtar, Nu Skin Enterprises, Herbalife, ACN, USANA, Shaklee, Mannatech, Nikken, Pre-Paid Legal Services, 4Life Research, AmeriPlan, FreeLife International, Tahitian Noni and others.

Examples of party plan companies include Avon, Mary Kay, BeautiControl, Pampered Chef, Tupperware, Silpada, Tomboy Tools, The Body Shop At Home, Signature HomeStyles, Tastefully Simple, Inc., U Design Jewelry, Creative Memories and others.

Both network marketing and party plan companies typically have multi-level compensation plans, meaning distributors are compensated based on their own product sales as well as the product sales of their downlines (those distributors whom they recruited).

Direct selling offers many benefits to those who are seeking to be self-employed or start their own business without having to invest a lot of capital. Distributors sign up to become salespeople for direct selling companieswhether party plan or person-to-personwhich require very modest startup fees if any at all.

In return, they receive free training from the corporation and mentoring from their "upline" representatives. They also enjoy the freedom of being their own boss, planning their day according to their own schedules, spending lots of time with their children and not being tied to a corporate tether.

As of September 16, 2008, worldwide retail sales were $114 billion in the direct sales channel (including person-to-person and part plan companies). The United States is the No. 1 leader in direct sales, grossing $30.8 billion. Japan is the second-largest income-producing country in direct selling, with sales of $20.39 billion.

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