We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence. The offers that appear on this site are from companies from which TheSimpleDollar.com receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. The Simple Dollar does not include all card/financial services companies or all card/financial services offers available in the marketplace. The Simple Dollar has partnerships with issuers including, but not limited to, American Express, Capital One, Chase & Discover. View our full advertiser disclosure to learn more.
Direct Sales in the Age of Social Media: The Good, the Bad, and the Ugh
If you’re anything like me, your friends are selling stuff. A lot of stuff. And while we used to expect the occasional doorstep pitch for a Kirby vacuum or an invitation to a holiday party featuring Pampered Chef cookware, social media has made direct sales and its products seem more ubiquitous than ever.
Let’s just say it: Sometimes it gets annoying. We’ve all had the experience of accepting an old classmate’s friend request on Facebook, only to be immediately added to a virtual sales party for some sort of protein shake, house cleaner, or other direct-sales product. After that, it’s hard not to question whether that person wants to reconnect with you… or your wallet instead.
Sales etiquette aside, I found myself wondering why so many of my friends had started down this direct-selling rabbit hole. Why did they decide to do it? How much are they making? Why did they choose the products they’re selling? And most importantly, how do they manage the tricky balance between making sales and keeping friends?
What Is Direct Sales? Who’s Doing It?
First things first: “Direct sales” is simply what it sounds like — selling a product directly to a customer without using retail space.
Invited to a Tupperware party? That’s direct sales. Door-to-door magazine subscriptions? Direct sales. The Facebook friend who wants you to try some nutritional supplements? That’s direct sales, too.
I’ll be honest: I’m the last person you could ever coax to get into direct sales. Like a lot of writer-types, I’m an introvert. Trying to sell someone something — especially something they may not particularly want — is not my idea of a good time. But a quick glance at my own network on Facebook confirms that many friends don’t share my hangups.
According to the industry’s major trade group, the Direct Selling Association, more than 18 million people nationwide were involved in direct selling in 2014, an increase of 8.3% over 2013.
To put that number in perspective, the U.S. Census Bureau says there are about 246 million people in the U.S. over age 18, which would mean that roughly 7.3% of the adult population is somehow involved in direct sales. So if you have 500 friends on Facebook, roughly three dozen may like to sell you something at any given time.
Sales, unsurprisingly, are also on the rise: The industry amassed nearly $34.5 billion in sales in 2014, up 5.5% over 2013. If you feel like you’re most often getting pitches for weight-loss shakes, essential oils, or the like, you’re right: Wellness products make up the biggest piece of the pie, comprising almost 30% of industry sales in 2014.
Finally, if you can’t remember the last time one of your male friends posted about direct selling, that’s because the industry is dominated by females: Just under three quarters of participants are women. Almost 80% are white. And interestingly, there’s a decent amount of geographic variation, according to the DSA: 37.4% of industry sales in 2014 were made in the South, followed by 24.3% in the West, 20.5% in the Midwest, and just 17.4% in the Northeast. (If you really want to get away from direct sales pitches, move to New England — the region accounted for just 3.6% of sales in 2014.)
Kent Grayson, an associate professor of marketing at Northwestern University’s Kellogg School of Management who has studied direct sales, confirmed that I might not be a natural based on my personality, but says the ability to stay self-motivated is a much bigger predictor of success.
“We can say generally speaking that direct sellers are more outgoing, more extroverted than introverted,” Grayson said. “And yet I’ve seen some very successful quiet people who somehow have figured out their own way to be successful. The biggest thing is that you have to have a solid work ethic — you need to be comfortable being your own boss. Nothing is going to happen without you making it happen.”
Some of the sellers I spoke to said they don’t consider themselves naturals when it comes to their pitches.
“Historically, I haven’t been great at stepping outside of my comfort zone, which is definitely involved in creating a network,” said Elizabeth Madeira, 31, of Nashville, Tenn., who sells DoTerra essential oils. “So it’s not my favorite aspect of the business. But, the positive side of this is the personal development that comes with having to do things that aren’t easy or comfortable.”
Why Direct Sales?
While it’s hard to fathom for many — especially introverts like me — there are a lot of compelling reasons why people turn to direct selling.
Low barriers for entry
First, there are few external barriers for those who want to get started in direct sales. Generally, you just need the drive to succeed and enough money to cover startup costs — these will vary by company, but are often as little as $100. For anyone who’s recently spent $100 on an interview suit or hours crafting a resume and cover letter, that’s a big deal — especially when you’re competing with hundreds of applicants for an open job.
That can make direct selling especially appealing for anyone in a tight financial spot.
“I originally had no intentions of giving this a shot,” said MiSeon Cropper, 34, of Maryland, who sells Juice Plus supplements. “I’m not a very outgoing person and direct selling meant I needed to leave my comfort zone. So at first it was hard. Then it progressed to, I needed to do this because we had just filed bankruptcy and I had to find a way to help financially. I couldn’t allow my husband to carry the burden on his own.”
Grayson cautioned that just because it’s easy to get started with direct selling doesn’t mean it’s easy to continue, however.
“What is sometimes not emphasized enough is that it is a sales job, and an entrepreneurial one at that: You generate your own leads, run your own business, you need decent accounting skills, you need to understand things like markups and fixed vs. variable costs,” he said.
Unlike your normal 9-to-5 gig, direct sales allows the flexibility to work where you want, when you want. That makes it particularly popular among stay-at-home moms and other primary caregivers, but it can also mean extra cash for a retiree on a fixed income or someone with a traditional career who wants to make a little extra cash by moonlighting in direct sales.
“My children are my main job, and I do not like taking time away from them,” said Michelle Taylor, 36, of Dallas, Ga., who has sold both Jewelry in Candles and Norwex cleaning products. “I like that there aren’t big quotas to meet, and I’m able to work on my own pace. You’re able to spend as little or as much time as you want with the business, leaving more time to spend with your family.”
Alexandra Brownlee, 25, of Indiana, sells LuLaRoe women’s and children’s clothing. She agrees that flexibility is one of the biggest perks of direct selling, but says it can lead to new challenges, too.
“Time management and balance is honestly my biggest struggle,” she said. ”As convenient as it is to work from home, you never get to ‘leave’ work in this scenario, so it can be tempting to work when I should be spending time with my family. I have established a daily schedule for when I am available to my customers and team, and I try not to have my phone on me outside of those times.”
The products themselves also attract quite a few people to direct selling. Many sellers decide to sell something they’ve personally used and loved, often after a close friend’s recommendation. In fact, according to the DSA, 57% of direct sellers say they were motivated to get into the business at least partially because they received the product at a discount — more than any other reason cited.
“I chose Ava Anderson Nontoxic because I used the products on my kids,” said Alison Golden Goodnow, 27, of Cumberland, R.I. “I was about to place another large order and realized that it was the same cost to just join — and I’d get way more product in my starter kit than I was paying for in a retail order.”
Madeira said direct selling was a turn-off — until she found the right product.
“I was actually always pretty opposed to direct selling and multi-level marketing and swore I would never do it,” she said. “But, after using DoTerra, I knew I wanted to share them with others. So, instead of just bragging on the products to friends and family whenever they complained about an ailment, I thought I would share them in a more focused way, and make money as well.”
Finally, for many, direct selling is simply fun. It’s all about the social capital sellers can build while selling, Grayson said.
“Some people get a social benefit out of it, or if people are in a difficult time in their life, it can actually save people — they make new friends, they get their life back in shape, they find a new purpose,” he said.
“Giving permission to women to feel beautiful and often times see that transformation and self-confidence regained — it is beyond fulfilling,” Brownlee said. “I also love the sense of family I feel with this company.”
Cropper said being a part of a supportive team has been one of the best parts about selling Juice Plus. “My experience has been amazing. I have a great network in my uplines and sponsors. They are always guiding me in new directions. There is always something to learn through our Sunday and Monday night team calls, as well as Wednesday morning team calls.
“I enjoy getting to know people and learning new things about old friends that I wouldn’t have found out if I hadn’t emerged in their lives,” she said.
For Carolyn Wilker, 34, of North Star, Ohio, selling Norwex has given her a chance to contribute to the family budget and connect with other adults while remaining a stay-at-home mother to her five children.
“I wanted to have some ‘grownup’ time out of the house,” she said. “I make some extra money, contribute extra to our family budget … (but) I do not want to make this a full-time job. It is a lot of nights and weekends, and I am not willing to compromise being gone every night and missing my family time.”
What Kind of Money are Direct Sellers Making?
For the vast majority of sellers, the answer is simple: Not much. Half of the respondents in the DSA’s 2014 National Salesforce Study rdeported an income of less than $2,000 annually. About 12% earn $25,000 or more. As one MarketWatch article chided, “You’d do better slinging french fries” — even working just six hours a week.
Those unimpressive numbers demand some context, says Paul Skowronek, senior vice president of public affairs for the DSA. He noted that almost 94% of direct sellers work part-time.
“Unlike a job in a fast-food restaurant, direct selling lets you be your own boss and work how and when you want,” Skowronek said. “As long as people continue to seek more flexibility and work-life balance, direct selling will continue to be an attractive option.”
The sellers I spoke with said they work anywhere from five hours to about 25 hours a week, and reported an annual income of $1,200 to $35,000, with most at the lower end of that range. Most emphasized that they didn’t expect anything approaching a full income on those hours, and a couple of sellers also said family concerns had prevented them from devoting as many hours as they would have liked.
“It’s definitely ‘spending money’ with how little time I spend on it,” Goodnow said.
Friendship vs. Sales: Finding a Balance
Direct selling is nothing new. I remember painting my face with my aunt’s leftover Mary Kay samples when I was 4 or 5 years old, and Avon catalogues seemed to be a staple on the end table as I got older. My mom attended the occasional Tupperware party, and while she grumbled about it occasionally, she also seemed to have fun.
Enter social media and its ability to keep everyone within easy digital reach. For most people, that means everyone: the best friend who knows your darkest secrets, the high school classmate you haven’t talked to in ages, and the casual acquaintance that you’ve really only talked to a few times. All are fair game for direct sellers’ virtual parties, chat sessions, promotional contests, and product-heavy status updates.
Some sellers manage to find a balance. Others, not so much.
Grayson said it’s hard to say if sellers are really overreaching en masse.
“It’s called network marketing because it’s about leveraging social networks for gain,” Grayson said. “But with the way in which the Internet has increased our ability to do that, maybe people are being approached more than before, so it simply could be that their fatigue is higher than ever.”
Grayson’s research has shown that successful direct sellers more often start by building a professional network, which can then sometimes segue into friendships. Those that purely tap their social networks first may not get as much traction.
“In the end, it’s hard to sustain business just on the backs of your friends,” Grayson said. “You really have to find your own way in this business, and whether you are more of a social network builder or professional network builder is something you learn over time,” he said. “You’re either going to find you’re good at managing the social tension that comes from selling to friends and it works well, or you find you simply aren’t comfortable talking to friends about business.”
Goodnow said she’s frustrated by the heavy-handed tactics of some sellers, who she thinks have poisoned the well for others.
“I dislike the general hatred toward any direct sales because some companies have ruined it for everyone else,” she said. “I don’t push anything or message everyone I’ve ever known — I let people come to me. I posted a few times on Instagram when I first started out, and was blocked by two people I had been very friendly with, and deleted on Facebook. That was hurtful. I see it the same way I see anything — I may not agree with one’s posts about Jesus, or politics, or animal cruelty or whatever — I just keep scrolling. I don’t block or delete or shame anyone.”
For Taylor, a separate business page has helped her avoid alienating friends.
“I have a business page for my businesses and I try to keep most business related news there,” she said. “If there is something new or exciting that I want to share about my products, then I will post on my personal timeline. I try not to do that often, because I don’t want to push anyone away.”
Wilker said she’s learned how not to approach her friends by noting what bugs her about others’ pitches.
“I try to put some things on Facebook, and if I get some interest I will drop a line to one of my friends, but I don’t push. … I do get annoyed with some of my friends who only talk about their business and not their life. If I see one more ‘Advocare Champion’ I may puke.”
The DSA’s Skowronek said despite occasional grumbles, selling via social media remains a net positive for the industry.
“Like sales and marketing approaches used in any retail business, certain tactics will resonate with consumers, while others may not resonate as well,” he said. “Social media has been a good thing for direct selling – and all types of retail – because it gives sellers another way to build their business by more effectively targeting customers.”
Beyond Social Media: Overcoming the Direct Selling Stigma
Even if we take overreaching on social media out of the equation, direct sellers face other common questions from a skeptical public: Aren’t all these companies a pyramid scheme? Are the companies making inflated claims they can’t support? And if it’s such a good product, why isn’t available at a normal store?
As for pyramid schemes, a couple of recent high-profile cases have fed into consumer skepticism of all direct sales.
The Federal Trade Commission recently accused nutrition drink direct seller Vemma of operating a pyramid scheme in which sellers can only make real money by recruiting others. Direct-selling giant Herbalife remains under the microscope for the same suspicions.
Legitimate direct sales companies pay their salespeople for retail sales, Skowronek said. Pyramid schemes, on the other hand, pay primarily for the act of recruitment.
The former “have long been sanctioned by regulators,” he said, while the latter are patently illegal. He points to the DSA’s “robust Code of Ethics … which expressly prohibits pyramid schemes and sets best-in-class policies that protect the salesforce and consumers.”
Interestingly, one of the biggest names in direct selling, Avon, decided to distance itself from the DSA because it says that Code of Ethics doesn’t go far enough to protect sellers. The company doesn’t require sellers to buy excess products from others and has limited the amount of profits sellers can receive from their own recruits’ sales versus their own product sales.
Other direct-selling companies have been slapped on the wrist for making false health claims. In 2014, the Food and Drug Administration warned Young Living that its sellers had to stop saying oils could help cure, mitigate, or treat conditions including Parkinson’s, autism, diabetes, cancer, and even Ebola. Cactus juice company TriVita had to refund customers $3.5 million in a settlement over allegations that it claimed the juice helped treat respiratory and skin conditions.
Grayson said one of the biggest obstacles that direct sellers can face is simply would-be buyers’ inherent skepticism of products that aren’t sold on stores’ shelves.
“Traditional retail gives a cloak of legitimacy to products for better or worse. But people need to keep in mind that those companies are also vulnerable to false health claims and the like — that’s not an issue unique to direct selling. The bad apples get a lot of bad press. But there are also shady car companies that tinker with your exhaust system, and fast food chains that have E. coli, and so on.”
Some of the sellers I spoke to said retail simply isn’t a good fit for their products, which require a bit more consumer education.
Goodnow said Ava Anderson is ideal for direct sales because “they want people to learn what ingredients to avoid,” she said. “By just putting products on shelves they wouldn’t be helping increase education on ingredients in everyday products.”
“I think with a product like essential oils, education is key,” Madeira agreed. “So I love that DoTerra has chosen the method of training and teaching people how to use oils rather than just putting them on the shelves and expecting people to do their own research,” Madeira said.
Brownlee said whether they’re sold in a retail store or through direct marketing, inferior products won’t survive.
“The value of the product is not dependent upon the marketing technique, but the viability of the product,” she said. “In the case of LuLaRoe, the gig would be up (if the product was inferior) as the company has far surpassed the likely lifespan of a poorly made textile product.”
Despite industry efforts to protect sellers and educate buyers, Taylor said some people will always remain skeptical.
“I think there will always be people who think that direct sales companies are pyramid schemes,” she said. “There are some people who cannot get past that. I am always honest with my products and I love to show people how Norwex works.”
Love it? Hate it? Direct Selling is Here to Stay
After my deep dive into direct selling, I find myself a bit more sympathetic to everyone who’s hawking jewelry, skin cream, and whatever else on my Facebook feed. In most cases, they’ve simply found a flexible side gig that helps support themselves and their families. That’s not so different than what led me to freelance writing.
Still, the unsavory side of direct selling is real, and cyberspace has displayed it more prominently than ever. Whether social-media selling is more of a boon than a bust remains to be seen, and can vary from person to person, Grayson said.
“Some people say the Internet is great personalizer, others say it’s the great de-personalizer. It’s still an open question. Are we enhancing personal relationships, or are we doing the opposite and eroding them?” he asked.
One way sellers can try to avoid that conflict, he said, is by treating it like the business it is.
“Friendship is about doing things for your friends because you love them, while a business relationship is more give-and-take. If you introduce that give and take into a friendship, it’s not as helpful as if you introduce an element of friendship into what was purely a business relationship.”
Goodnow says she hopes people recognize that “not everyone is pushy and inappropriate.” She also cautions against shaming direct sellers as a group. “The only thing I dislike (about direct selling) is the hatred toward any direct sales because some companies have ruined it for everyone else.”
And what if, after reading this, you’ve decided you may give direct sales a shot?
First things first: Be sure to check out the company. You should primarily be making money by selling products, not by signing up other sellers. Start-up costs and related fees should be low. You shouldn’t be required to keep a huge amount of inventory, and the company should buy it back from you if you decide against continuing.
You may also want to consider the viability of the product itself. Is it something that someone will use up and need to reorder? Is it something like clothing or jewelry that will change according to seasons and trends? Or is it a one-and-done purchase that may be harder to sell long term?
Skowronek recommends making sure the company is a member of the DSA, but the sellers I spoke to said they were comfortable jumping on board after trusted friends assured them that the gig was legitimate.
“What initially grabbed me about the company was seeing (a friend’s) success after only one to two months of selling,” Brownlee said. “I was wary at first, but after talking with her, buying a couple of LuLaRoe dresses and becoming obsessed with them, and seeing the integrity and love within the company, I decided to give it a shot.”
Would-be sellers would also do well to keep their financial expectations in check. Despite the near-evangelistic speeches new recruits may hear from successful sellers, the reality of direct selling looks much different for most people, Grayson said.
“Most people are attracted by a financial goal, but the most realistic ones just need a little extra holiday money, a little extra to help with expenses. Others have the notion that if they work hard enough, they may be among the few that become quite wealthy. But there’s a reason there’s only a few who do that well,” he said. “It’s not easy to be your own boss.”