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Direct selling is a dynamic, vibrant, rapidly expanding channel of distribution for the
marketing of products and services directly to consumers. The purpose of this paper is to
describe direct selling and the benefits that it brings to the marketplace.

Founded in 1978, the WFDSA is a non-governmental, voluntary organization representing

the direct selling industry globally as a federation of national Direct Selling Associations
(DSA's). There are presently over 50 national DSA's represented in its membership, and in
1997 it is estimated that worldwide retail sales by its members accounted for more than $80
billion US through the activities of more than 25 million independent salespersons.

The World Federation and its national DSA's have always understood the necessity for
ethical conduct in the marketplace and as such the WFDSA has developed a World Codes of
Conduct for Direct Selling which all national DSA's have approved and implemented in their
national codes. All direct selling companies agree to be bound by these codes as a condition
of membership in a national DSA.

 


Direct selling can best be described as the marketing of products and services directly to
consumers in a face to face manner, generally in their homes or the homes of others, at their
workplace and other places away from permanent retail locations. Direct sales typically occur
through explanation or personal demonstration by an independent direct salesperson. These
salespersons are commonly referred to as direct sellers.

The strength of direct selling lies in its tradition of independence, service to consumers, and
commitment to entrepreneurial growth in the free market system. Direct selling provides
accessible business opportunities to people looking for alternative sources of income, and
whose entry is generally not restricted by gender, age, education, or previous experience. It
should be noted that around the world a substantial majority of direct sellers are women, and
most work in their direct selling businesses on a part-time basis. A very small percentage of
direct sellers are employees of the companies whose products they sell.

Independent direct sellers are those individuals engaged on their own behalf, or on behalf of a
direct selling company, selling products and services through personal sales contacts, and are
commonly referred to in some jurisdictions as independent contractors. Essentially, this
means that these independent salespersons are not employed by the company whose products
they distribute, but are independent business persons operating their own businesses. These
independent direct sellers have an opportunity to earn profits from their business, and also
accept the responsibility for the risks associated with operating a business.

The products sold by direct sellers are as diverse as the people themselves and include:
cosmetics and skin care products; laundry and personal care items; vacuum cleaners and
home appliances; household specialties; household cleaning products; food and nutrition
products; toys, books and educational products; and clothing, jewelry and fashion
accessories; just to mention a few.
enerally, these products are sold in the context of group presentations (Party Plan), or on a
person to person basis (one-to-one). In a Party Plan approach, the direct salesperson
demonstrates products to a group of guests, invited by a host in whose home or other location
the direct selling demonstration takes place. By contrast, other direct sellers will often explain
and demonstrate the products they offer to consumers in the comfort of the consumers'
homes, at a time which is convenient for them.

Direct selling provides important benefits to individuals who desire an opportunity to earn an
income and build a business of their own; to consumers who enjoy an alternative to shopping
centers, department stores or the like; and to the consumer products market. It offers an
alternative to traditional employment for those who desire a flexible income earning
opportunity to supplement their household income, or whose responsibilities or
circumstances do not allow for regular part-time or full time employment. In many cases,
direct selling opportunities develop into a fulfilling career for those who achieve success and
choose to pursue their independent direct selling business on a full time basis.

The cost for an individual to start an independent direct selling business is typically very low.
Usually, a modestly priced sales kit is all that is required for one to get started, and there is
little or no required inventory or other cash commitments to begin. This stands in sharp
contrast to franchise and other business investment opportunities which may require
substantial expenditures and expose the investor to a significant risk of loss.

Consumers benefit from direct selling because of the convenience and service it provides,
including personal demonstration and explanation of products, home delivery, and generous
satisfaction guarantees. Moreover, direct selling provides a channel of distribution for
companies with innovative or distinctive products not readily available in traditional retail
stores, or who cannot afford to compete with the enormous advertising and promotion costs
associated with gaining space on retail shelves. Direct selling enhances the retail distribution
infrastructure of the economy, and serves consumers with a convenient source of quality
products.

An important component of the Direct Selling industry is multilevel marketing. It is also

referred to as network marketing, structure marketing or multilevel direct selling, and has
proven over many years to be a highly successful and effective method of compensating
direct sellers for the marketing and distribution of products and services directly to
consumers.

Direct selling should not be confused with terms such as direct marketing or distance selling
which may be described as an interactive system of marketing that uses one or more
advertising media to effect a measurable response and/or transaction at any location, with this
activity stored on a database. Some commonly known types of direct marketing and distance
selling techniques are telemarketing, direct mail, and direct response.

Although direct selling organizations occasionally use some direct marketing or distance
selling techniques and technology to enhance their businesses, the primary difference
between the two methods of marketing is the face to face, or personal presentation that is
always an aspect of the direct selling relationship.


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