Erin Clausen had no luck finding a summer job when she returned home from the University of Wyoming this year. So she turned to lia sophia. As the recession continues, more people have turned to direct-sale opportunities, including Mary Kay and Arbonne, to bring in extra cash.
Erin Clausen had no luck finding a summer job when she returned home from the University of Wyoming this year.
So she turned to lia sophia.
The at-home jewelry sale company allowed Clausen to keep her one-month internship with John Morrissey Accountants while selling baubles on nights and weekends.
“If you have a decent party, depending on what you sell, (it) could mean a paycheck of $300,” the college sophomore said. “That’s more than a lot of college students would make in a week.”
As the recession continues, more people have turned to direct-sale opportunities, including Mary Kay and Arbonne, to bring in extra cash. In 2008, the most recent figures available, 15.1 million people sold a product through a direct-sales organization, according to industry group
Direct Selling Association. That’s an increase of about 100,000 over 2007.
Neil Offen, the group’s president and CEO, has heard from several companies that sales and recruits are up in 2009.
“January and February started off weak, but July and August have been superb,” he said. “More people are coming in, and customers are spending more money for the first time in ages.”
Why they join
Some people started selling when they were unable to find a job. Others did it to help their checkbooks when a family member lost their job.
“It’s helped me pay bills that I wouldn’t normally be able to pay on top of my credit card and the dreaded student loans,” Jeannie Hoffman of Courtland said. “That extra income has gone to things like that so I don’t have to worry about those extra expenses.”
Hoffman and several other direct-sales merchants are holding a home-based business job fair Nov. 7 in Oregon to help people find out about opportunities.
Hoffman, who sells Arbonne cosmetics, said the idea came about after another saleswoman suggested it in light of the area’s high unemployment rate.
“I know that for some of the other women, one in particular has increased her sales team 150 percent,” she said. “The majority of new people already have a job, but their husbands have been laid off or their hours have been cut back and they need some business on the side.”
Nancy Ryan of Rockford has been selling Mary Kay cosmetics for three years. She said she joined mostly to buy the products at a cheaper price for her own use, then turned it into a profitable enterprise.
“I’ve had a lot more people asking me about selling before I have a chance to tell them about what we have to offer,” she said. “They’re more open to opportunities and looking to supplement their income.”
Legitimate direct-sales opportunities can be a good way to bring in extra cash because it’s easy to enter the business and costs the seller relatively little overhead.
“It’s the opportunity to choose a product you like and feel comfortable with and be your own microentrepreneur,” Offen said. “You’re your own boss with your own hours doing business your own way.”
Opportunities for a direct-selling business are many, but recession creates fertile ground for companies trying to scam would-be sellers with the promises of rosy profits and no work.
Offen said the DSA’s 250 member agencies have to sign on to its code of ethics, which includes requiring companies to repurchase inventory, sales or training aids at 90 percent of their cost if a seller decides to not participate.
“The difference between direct selling and a fraudulent pyramid scheme is, the money in a legitimate enterprise is only earned through sales to the consumer,” he said. “If it’s just earned through headhunting fees, inventory purchase, educational fees — anything other than the sale to the consumer — it is a fraud. That’s an important distinction.”
Other critics have even stronger stances.
“They are often selling bogus business opportunities,” said Robert FitzPatrick, co-founder of Pyramid Scheme Alert. “It’s an illusion that, for a thousand people, each could have (another) thousand people under them because the guy you’re talking to has a thousand people under him and makes a lot of money. It’s selling somebody an investment in a business in which the return does not really exist. Or it certainly does not exist anywhere close in how it is represented to you.”
FitzPatrick has studied these multilevel marketing organizations, in which payment is predicated on recruiting new members. The newest members pay the most for the product, he said, with the bulk of the products going to top-level recruiters and new members getting little commission for their sales.
People interested in such an opportunity should ask several questions before signing up, he said: Is there a growth market for the product being sold? Who is buying the product? Most importantly, how does the company reward people?
“If the plan pays richly toward the recruiter and poorly toward the retailer, that is another enormous red flag,” he said.
Sean F. Driscoll can be reached at (815) 987-1346 or firstname.lastname@example.org.