You just came home from an in home party where your friend was the hostess so she could earn some free products. You had a wonderful time, the food was great, the company was stimulating, and the product was enticing. The hostess did a wonderful job of telling you all the merits of this business and why you should join.
It sounds tempting, but is this for you?
Network Marketing and Direct Sales
Here is what I know about the differences in network marketing and direct sales. When I was first involved in network marketing, I primarily made money signing up others, who signed up others, and so on. Whereas, in direct sales, I made more money on the direct sale so to speak than on those I signed up. However, if you work your direct sales business for a long time, you can create a great referral business.
Network marketing doesn’t always require some form of buying products and hosting parties, although it could be done. It’s more of a, “show people the business” and sign them up to buy wholesale. Whereas, direct sales is where you purchase products wholesale (or at least less than retail) and resell them at home parties, vendor fairs, or through catalog parties. You receive the products and match them with the orders from your customers, and then deliver them.
I went looking for what the experts say are the differences between network marketing and direct sales. Here’s an article from Entrepreneur: Direct Sales vs. Network Marketing
When I sold many different products through direct sales and network marketing, my accountant would grumble at me that I was barely making $1 an hour after investing all the time to work the business. Mind you, this was back in the 80s and 90s. I would tell him that I get freebies, so when I sell those I’ll make more money. That rarely happened though because I initially got into whatever business it was to get my products for free or at a discount.
He sat me down one day and showed me how many hours I was putting into the business and how much I was actually making by the end of the year. Sad to say it wasn’t much, but it was my social time and it afforded me the products I wanted for free. Sometimes the ends justified the means. However in some of the businesses, I just took precious time away from my family with no return on my investment.
Many people get into direct sales or network marketing businesses to make money. Though, sometimes the amount of time it takes and financial output does more harm than good. So let’s help you find the right questions to ask before jumping into a new network marketing or direct sales business in order to save you time and money.
1. Do you LOVE and USE the products?
Passion is a great sales tool. If you’re going to sell a product, you need to LOVE it. It’s easier to sell something you love and use. If you love it, then someone else will love it too. This makes you a living testimony. If you like it but can take it or leave it, don’t sell it. The passion won’t be there.
2. How many items does the company sell?
If there are only a few items in the company’s catalog, chances are inventory won’t be too much of an issue, especially if the company drop ships. However, if there are many items in the catalog, you need to think about other issues such as:
a. Does the company drop ship?
If the company drop ships, this COULD take care of any inventory issues you might have. If they don’t, then you’ll have to start purchasing shipping materials and learning about different shipping options.
b. Do you have to carry the inventory so that the product is on hand at all times?
If you have to carry inventory, related issues become housing, paying for it, and keeping track of it.
3. Does the company offer business cards and other promotional material for you at a low rate?
If the company has promotional items for you to purchase and they aren’t charging you all of your profit from sales to pay for them, you’re fine. However, if they charge a lot or don’t have them available at all, the costs will start to mount as you either print them on your own or hire a professional printer. Either way, unless you purchase in the thousands of any one item, the costs are phenomenal. Much of a your profits can be eaten alive purchasing catalogs, yet alone, business cards, stationary and many other items needed to run your business.
4. Are there required minimums you have to maintain?
If there are required minimums, does the company allow for illness (whether it is you or family) for extended periods of time before requiring that you start all over again? How about if you fall short one term. Will they make you purchase a large order to keep in good standing? Do you lose your position if you have a down line and they don’t keep up on their minimums for you to get your bonuses?
5. Can you sell on the Internet?
If Internet sales are allowed, this can be good and bad. It can be good because you’ll have a much larger market to go after. However, you will have to learn about online marketing and social media. You can even learn web site design so you don’t have to pay someone else to do it for you. It’s the TIME involved that can swallow you up.
If you choose a product that does better when seen up close, you’ll really need to concentrate on your local market for sales. Back when I was selling toys, the company didn’t allow online sales or advertising. These are only suggested issues to consider. They may not be issues at all for you. I’m just giving you food for thought.
If you set up a budget for the business, you might be able to make a little cash as well as freebies. It’s only when you start getting into the higher levels of the company that you can start to make an actual salary of sorts.
In order to do this you must stick with it for a long time! If you love the socializing like I do and you like what you do over all, it may just be something wonderful. For the three years I sold Discovery Toys®, it was fun! I could afford all the BEST toys on the market. I absolutely LOVED getting out of the house. It was a win win situation for the duration of my time with them. As the children got older and I had just about every toy DT made, the time to do in home demonstrations became limited, and it was time to move on.
(I enjoyed using and selling The Busy Woman’s Daily Planner SO much, that I purchased the company! And I STILL enjoy helping women find just the right product to help in their endeavors to get organized. You never know what’s around the corner.) (smile)
When I sold other products so I could purchase them at a discount, it often wasn’t worth more than the original investment. BUT, I did enjoy all the goodies I received with my kits. Those were well worth it.
If you’ve decided to “Go For It!”, click here to read on…
Blessings and Peace,
©2003, 2015 Susie Glennan
All Rights Reserved.