The Rise of Alternative Job Markets

The failing economy may leave many feeling powerless, but some enterprising locals are taking matters into their own hands—and turning to direct sales for supplemental income, flexible schedules, and the opportunity to be involved with something they really love.

The industry used to be run by quaint 1950s housewives selling Tupperware door-to-door, but direct sales has since had a very modern facelift, and the name of the game now is cocktail product parties, mega advertising campaigns, and a fun, relaxed “try then buy” policy.

According to the Direct Selling Association, direct sales accounted for over $30 billion in 2007. There are almost 15 million direct sales representatives in the country, some of which are located right here in Scotch Plains and Fanwood. And the industry is growing, as evidenced by recent coverage on Good Morning America and Fox News.

A recent survey conducted by The Pampered Chef, a direct seller of kitchen tools, revealed that nearly half of all Americans are considering taking on a second job to earn additional income. Many times they or their spouses have lost jobs or bonuses. Direct sales provides a way for them to stay afloat or help out during these tough times.

“I first started direct sales two years ago to get out of the house and get a little ‘mad money,’” commented Kathy Regan, a senior independent sales representative for Silpada jewelry, who left her position at American Express to be a stay-at-home mom in Scotch Plains. “I started selling Arbonne make-up direct and then I switched over to Silpada. I wanted to help out with a bill or two. Since then, both of my daughters need braces, my car broke down last week, and different expenses have come up. My oldest daughter goes to college in four years. I think about it, and I realize this isn’t just for mad money anymore. This is getting more serious for me. I’m hoping that I can actually make a real business for myself. Because it’s either that or I have to get a job where I won’t have the flexibility to take my kids to school.”

Direct sales representatives are independent contractors who typically sell their products in homes and do not have a retail storefront. They are not employees of the company they’re selling products for, and as such, do not receive benefits, tax withholdings, or a salary from the company. Direct sellers are their own bosses, and their businesses are what they make of it.

There are a myriad of direct sales companies in the U.S. offering products for virtually every interest—from Southern Living to The Pampered Chef to Mary Kay Cosmetics. Most direct sales companies sell starter kits at varying price points to help prospective reps launch their businesses. For many companies, the financial obligation stops there. Most do not require reps to hit minimum sales levels, relying instead on a percentage of the reps’ sales for profit. The reps are also offered free and/or paid training sessions via the web, teleconference, or in-person seminars, and some companies provide reward incentives based on performance.

Molly Barber, a Westfield resident and independent sales representative for The Pampered Chef for the past seven years, has earned a trip to Disney World, a Royal Caribbean Cruise, and vacations in San Francisco and Paris—all from reaching The Pampered Chef’s highest sales thresholds.

“As were eating dinner on the final night of Disney, my daughter said, ‘Mommy I have been waiting for this day my entire life,’ Barber recounted. “I told her it was all because Mommy sold a few spatulas last year. I really do love this job!” 

The rest is up to the direct salesperson, who must spread the word, find the clients, organize and run the product parties in the clients’ home, put in the orders, and manage their personal Web sites. Another way direct sales reps can generate income is to recruit other salespeople, for which they receive a percentage of their recruit’s sales in addition to their own.

Depending on the individual, some reps have been able to make back their original investment even at their first product party. Many companies offer budget-conscious start-up kits, some for as low as $65.

“For a nominal, low-risk investment, you can run your own business and make a decent amount of money,” advised Regan. “I invested $1,500 and made it back in five weeks. What other business can you do that?”

Most people get into the direct sales business to earn extra income, although some can and do make a full-time career at it. According to the Direct Selling Association, the average rep makes $200 per month. However, it all depends on the amount of time, effort, and sales a rep puts into the business. Regan averages $350-375 per party, and she typically throws three parties per month in the spring/summer and twice that in the fall, the busy season for direct sales as well as bricks and mortar retail establishments. Nation-wide, the average Pampered Chef consultant earns $850 a month, working two shows per week.

Barber took a full-time job as a television producer shortly after starting part-time in direct sales—only to quit her new position and commit herself to fully to direct sales.

“I was stressed and I never saw my children,” explained Barber. “One evening I was crying to my husband about how stressed I was and that the career of my dreams was making me really frustrated. He commented that I came home happy from every Pampered Chef Party and why not just do more of them? He was right. All I needed to do was two shows a week, grow my team of consultants, and I soon replaced the income from the production job. This is now my full time business. People can really make a living in direct sales. But it is important to view it as a real business, not as a hobby. I have something of great value to offer, quality products with a great guarantee, a fun evening or afternoon, and great recipes to share. I also have a tremendous business opportunity that is growing in this uncertain economy.”

Aside from the money, Regan says that direct sales can cultivate important business skill sets and fill the gap on a resumé between jobs.

“I just never thought in a million years that this would work out for me as well as it has,” Regan admits. “I never thought I would be a good direct sales person or that I would be able to make cold calls. It sounds corny, but personally I have grown over the past year. I have become comfortable doing things I never thought I’d do.”

Dawn Sjonell, a Scotch Plains independent sales representative for Silpada and preschool teacher, decided to get into the business after seeing her friend’s success. According to Sjonell, the flexible schedule attracted her to the business and she wasn’t worried at all about competing with Regan, even in a town as small as Scotch Plains.

“We definitely have not reached a saturation point here in town,” Sjonell remarked. “Everyone has different friends and kids in different grades, and they have their own set of friends. Another great thing about direct sales is that it doesn’t interfere with what’s going on at home. My kids still get to swim practice and school. It’s not messing up any part of their day. I’m selling jewelry, making some money, and everyone’s happy. There’s something to be said about that.”

Direct sales companies are capitalizing on the economic recession to attract more sales representatives and clients. Avon ran banner ads on the homepage of Monster.com throughout the month of July, and jewelry maker Silpada bought back cover ad space on O Magazine and runs a national ad campaign in Allure and InStyle. Despite the financial crunch, customers are still attending product parties and buying.

“Some people have said that they’re hesitant to have a party because of the economy, and I always say, look, get your friends together, have some drinks, and see what happens,” explained Regan. “Personally I think people are not going out and buying a new car, furnishing a whole room, and renovating a kitchen. But I think women are still treating themselves to a little something. I’ve heard that women will buy makeup, jewelry, and chocolate no matter what happens in the world—and so far, that’s what I’m seeing.”

Barber agreed that the recession has not affected the business in a negative way. 

“More and more families are eating out less and therefore need our instruction on how to put a delicious and nutritious meal on the table in 29 minutes or less, at less than $2 a serving,” Barber explained. “At The Pampered Chef parties, I teach a budget friendly recipe and we all have fun. I’m finding that people enjoy an excuse for a party to take their minds off the economy. The Pampered Chef tools are an investment in the culinary future of the household.”

Beth Townsend, who works full-time and moonlights as an independent sales rep for Avon, has also had a positive experience since she launched her business this past March. But the Scotch Plains resident warns that direct sales is not a “get rich quick” proposition.

“Remember, you are running your own operation,” Townsend advised. “It's not as easy as one may think. I have to make time to do paperwork and marketing and keep careful records for expenses and taxes. I try to be patient and don't get discouraged. There are times where I don’t have any orders. That’s when I sit back and think about what I can do differently to gain more customers. I’ve had to be creative with marketing ideas. But even after a hard day at the office, I’ve found myself enjoying my Avon business and meeting new customers.”

Barber suggests prospective direct sales reps carefully research the business they’re considering to make sure it has been well-established in the industry and that it is a member of the Direct Sales Association.

“Most important,” said Barber, “is to find a product you believe in. Then talk to your friends and gather their support with dates for shows and willingness to order before starting the business. Friends will help to work out your nerves, give support, and help grow your customer base with guests you don’t know. It’s kind of like recommending a really great book, restaurant, or movie.  Friends do that all the time. Now they can recommend some really great products and a person to teach them how to use them—you!”

Direct sales parties are attractive for the host as well as the seller, since the host typically receives free products based on the amount of sales generated at the party. And everyone, the direct sales rep, the party host, and the customer benefit from a flexible return policy. Most companies do not penalize a rep if a customer returns a product or s/he decides to get out of the business.

“If I decided tomorrow that I can’t do this anymore, I can walk away free and clear,” said Regan. “But I have no intention of leaving the business. Direct sales is a relationship business which I think is something that women are good at. You can be casual about it or you can make a real effort to recruit people. The bottom line is, if it’s something you like, you can earn money doing it. It’s fun!”