Direct selling is a model that many companies use to sell their products. It involves paying your salespeople a commission on the sales they make. This business model works well for the distributing company because it doesn’t have to pay for salaries up front. Direct selling also works well for the salespeople in that they don’t need to buy any merchandise.

However, it is also one of the most misunderstood business structures out there.

Let’s go over some of the common misconceptions about direct selling.

Myth 1: Direct Sellers Lose More Money Than They Make

Direct selling is not a losing proposition. According to the FTC, roughly 5 percent of the people in the United States are involved in direct selling to some extent. All of these people would not be involved in a losing proposition. The reality is that more than half of direct sellers have positive income after accounting for their regular business expenses and almost just as many direct sellers reach that mark in their first years.

Myth 2: All Direct Selling Opportunities are Pyramid Schemes

Pyramid schemes generally fall under a multi-level marketing (MLM) structure. This means that they make money by selling products or services to distributors and those people make money by reselling those offerings. Direct selling is completely different. Direct sellers do not have to purchase anything. Their only function is to sell products or services. In exchange, they receive a portion of the purchase price.

Myth 3: Direct Sellers Expect You to Recruit

Many people also think that direct sellers are expected to recruit. However, given the way that most direct sellers are structured, the referring salesperson wouldn’t get much benefit, if any, by encouraging others to join the team. Recruiting may be one way for a direct sales company to expand, but it is not a requirement and it doesn’t influence how much money a direct sales salesperson makes generally.

Myth 4: Direct Sales Products are Overpriced

Some people charge direct sales companies with selling overpriced products. This is a fallacy as well. If they were priced so far outside of the range of similar products, why would customers pay that much more? The people of today can buy goods and services from around the world at the click of a button. The market would not support an overpriced competitor. Moreover, because direct sales companies only make money when their products or services are sold to end customers, overpricing anything is not in their best interests.

Myth 5: People Who Get Involved in Direct Sales are Not Entrepreneurs

Direct sales companies make things so easy for their salespeople that it can be easy to forget that these people are really more like entrepreneurs. While they may not have to invest money in inventory the way many business owners do, they do invest time and energy into building connections that enable more sales and providing value-add services, like product demonstrations or delivery.

For example, with Amway, direct sellers are called Independent Business Owners (IBO) and are treated as such. What does Amway do? The global company offers more than 450 products that span beauty, home and health. As an IBO, direct sellers can make extra money while also developing their sales and business management skills through proprietary Amway training programs.

Conclusion

Direct selling is a largely misunderstood business model. There are a variety of myths surrounding the sales strategy, and they are largely undeserved. While it is important to do your research before committing to any company, choosing an established direct selling company can be a great opportunity for the right person.

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