How Direct Selling Works? Daniel Kalenov

Daniel Kalenov host of VR software providers to integrate with their API, hosting local meetings in certain markets specifically for PMs, and even hiring local business development managers to serve as direct points of contact for property managers and high-end owners. For more information visit: https://issuu.com/globaldiversified/docs/tips_by_daniel_kalenov_for_smart_in

In direct selling, also known as multi-level marketing or network marketing, consultants (or distributors) sell products and services directly to customers without the use of a physical retail outlet. Typically sales take place through one-on-one contact--such as parties in the home--but sales also can be done via phone, in a customer’s home or office, through social media or on the internet.

Direct selling companies typically are structured as multi-level marketing (MLM) organizations. This means that compensation for sales reps is based on both product sales and recruiting other sales reps. Consultants who bring new associates into the fold then receive commissions based on the new reps’ future sales and their recruits’ sales. Pyramid schemes actually work the same way, except that the difference between a pyramid scheme and an MLM  is that a pyramid scheme relies on recruitment only, not product sales for revenue. For this reason, avoid direct selling operations that emphasize recruitment over sales. 

In an MLM, your recruits and their recruits are your “downline,” and the person who brought you in (and those before her) are the “upline.” Typically there are limits to how extensive the upline and downline can be.  Learn more about direct selling terms.

Most direct sales consultants work part-time, only supplementing their family’s income. According to Direct Selling Association, direct selling consultants earned a median income of $2,400 a year in 2011 (the last year the DSA released this information).  In 2014 the DSA reported that 94 percent of direct sales consultants worked 29 hours or less per week.

Direct Selling Works

Typically new direct sellers buy a start-up kit, most likely from the person who introduced them to the product. Costs of kits vary considerably, based on the price of the products sold. Typically kits start around $100 and go up from there. Fees and upline commissions may be deducted from sales, and products may have a variable wholesale pricing structure based on volume. Also, each company has its own set of rules in regard to selling back unsold inventory to the company.  

To best understand how direct sales works you must read contracts and documentation carefully and ask lots of questions before you start.