What is Direct Selling?

Guidelines of a Legitimate Business

Direct Selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through a party plan one-on-one demonstrations, and other personal contact arrangements as well as internet sales. Depending on the company, the direct sellers may be called distributors, representatives, consultants or various other titles.

An important component of the Direct Selling industry is multilevel marketing (MLM). We also refer to this as network marketing and it 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. Multi-level Marketing is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other people that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation.

Simply put, direct selling is a distribution method. Multi-level marketing refers more specifically to a type of management and reward structure which is found in direct selling. A direct selling organization that offers a multi-level compensation plan pays its distributors based not only on their own sales, but also on sales of others who they have brought into their business.  It’s interesting to note that over 95% of these companies are offering their products with a networking marketing compensation plan.
Understanding what Direct Selling is and what separates it from what we might refer to as ‘traditional’ or retail selling is important if you’re involved in the industry. This is a large, global industry and it is unique in many ways. That’s why so many people are deriving additional part-time income – or are earning their sole income, often quite a significant income through Direct Selling – or Multi-level marketing.

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Pyramid Scheme

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered. Pyramid schemes have existed for at least a century. 

Most pyramid schemes take advantage of confusion between genuine businesses and complicated but convincing money making scams. The essential idea behind each scam is that the individual makes only one payment, but is promised to somehow receive exponential benefits from other people as a reward. A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people. Each sale includes a fee to the original seller.

The distinguishing feature of these schemes is the fact that the product being sold has little to no intrinsic value of its own or is sold at a price out of line with its fair market value.

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• Tells you they are, why they're approaching you and what products they are selling.
• Explains how to return a product or cancel an order.
• Respect the customer's privacy by calling  at times that best suit their convenience and wishes.
• They will provide an accurate and truthful information on the price, quality, performance, quantity and availability of their products or services.
• They won't engage in any deceptive, unlawful or unethical recruiting or sales practice.
• When they're sharing the business opportunity with any prospective recruits into their business, they base all actual and potential sales and earning claims on documented facts.

Identifying Legitimate Opportunity

Legitimate opportunities have some very clear and identifiable characteristics. If, by the way, anyone tries to ‘entice’, to have you join or become part of anything which could be seen as a ‘get-rich-quick’ scheme or ‘financial success overnight’ without having to do any work, then that’s neither legitimate nor is it sustainable.

Characteristics which clearly identify a legitimate business opportunity.

• Startup cost should be minimal.
• Marketing business requires some commitment by you.
• No company should require you to buy large quantities of products.
• The money you'll earn should be based on the sale of products and services.