What if you held a party and everybody actually came? What if you served up some food and drink, chatted and laughed with your friends and closed the door at the end of the night—tired, buzzed and a few hundred bucks richer?
Welcome to the world of multi-level marketing (aka direct sales). This model of moneymaking has come a long way since the Fuller Brush man went door-to-door or the Avon lady rang your bell. These days sales entrepreneurs rely on a network of friends eager to get together for some good old-fashioned girl time while shopping for cosmetics, clothing or jewelry. The fact that they don’t have to go to a store is icing on the cake (which is likely to be gluten-free, just like the cosmetics).
At a recent party in North Baltimore, a dozen or so women gathered at the home of Megan Oster to hear a presentation about health care company Arbonne and to try out some products. Oster, a 37-year-old mother of two, is just dipping her toe into the waters of multi-level marking and had enlisted two of her friends, both Arbonne reps, to do the initial pitch: Anne Puckett, a regional VP, and Genie Arnot, 40, an area manager. Although each woman works for herself, she also works for the woman above her, who brought her into the Arbonne fold. So Puckett gets a commission on Arnot’s sales, and Arnot will get a commission on Oster’s sales. Then Oster, if she recruits anyone, will get the same. Thus go the concentric circles.
Puckett, 38, a part-time music teacher at The Bryn Mawr School, has been selling Arbonne for nine years. When she started, she says, she and her husband were in debt. “He was in a Ph.D. program, and we needed more income,” she tells the assembled group. “I didn’t want to do any of the things teachers usually do to make extra money—being a waitress or bartender, dog walker or baby sitter. I didn’t want to tutor on the side or go to work at the mall.” She tried Arbonne’s products, liked them and began telling her friends about them. When they started buying, she started selling. Slowly, over time, she built up a part-time business to supplement her teaching salary.
A regional VP, says Puckett, can expect to make $5,000 to $8,000 a month. She has also earned several vacations (most recently a Caribbean cruise) as performance bonuses over the last nine years. Oh, and remember those pink Cadillacs the top Mary Kay consultants used to drive? Puckett drives a Mercedes Benz GLK 350—her third vehicle after after earning her first car allowance in 2008, just 13 months after joining the company. “We can choose any model we want; it just has to be white to represent the purity of our products,” she says.
The big dogs are the national VPs, who are reputed to make as much as $21,500 a month.
These kinds of numbers apparently are possible because of what’s known as residual income. Once you do the work of selling and, more important, recruiting other people “down-line” to sell, you get a cut. You get a percentage of everything your people sell (paid by the company, not taken out of your sellers’ profits). So that money just rolls in.
If all this sounds a little too good to be true, maybe it is. After all, if it were that easy, wouldn’t everybody be doing it, especially in these still recessionary times? Wouldn’t everybody be, well, rich?
“You still have to work at it,” says Arnot, who doubles as an art teacher at Bryn Mawr. “You have to put time into it. But you make your own schedule. You set your own goals. You could just buy the products and use them yourself and never sell. But if you want to make it a business, if you’re doing it because you believe in the products and believe you’re offering a service, you can make money.” (According to Arbonne, area managers like Arnot have the potential to make $1,200 to $3,000 a month within the first year.)
Krista Demcher, a direct sales stylist with jewelry company Stella & Dot, agrees. A 36-year-old stay-at-home mom of three small children in Bel Air, she has been selling Stella & Dot jewelry since 2010. She calls herself a skeptic.
“I kind of stumbled into it,” she says of her selling career. “I always thought of direct sales, like old school Tupperware parties, as pushy. I didn’t like it. But I fell in love with Stella & Dot jewelry. I really wanted this one chunky necklace. I thought I’d hold a party just so I could get it.”
Then she did some research. She discovered that the founder and CEO of Stella & Dot is a graduate of the Stanford School of Business and had also started WeddingChannel.com.
“I had a misconception about housewives with no career options,” says Demcher. “Then I realized that the women who run this company and work for it are high-powered, accomplished women. They could be doing a bunch of different things.”
From an initial investment of $199 for a starter kit of books, signs, catalogs—plus $350 for sample jewelry of her choice—Demcher started selling. (Arbonne’s initial investment is $79.) She estimates that by now, she’s spending 30 to 35 hours a week on the business.
“It’s work like everything else,” she says. “It’s not some magic trick. Hanging out with friends and drinking wine is fun, but it takes time and persistence to get the business to work. People fail
because they think it’s going to be easy. It’s not easy.”
Demcher says she now has a team of about 200 women and therefore spends only about 20 percent of her time selling and the rest of it managing her team—coaching, doing business reviews, analyzing sales and figuring out what promotions work best. She says she’s on track to make close to six figures this year.
Another woman making that kind of money is Courtney Creamer, 45, former owner of the Stoneleigh-area gift shop With Gratitude, and a representative of Rodan + Fields. Started by dermatologists Dr. Katie Rodan and Dr. Kathy Fields (you may know them from their “Proactive Solution” acne treatment commercials), the company also markets its products directly to women, à la Arbonne. Creamer recently closed her shop because she was losing money.
She was making more selling Rodan + Fields on the side—enough, in fact, to pay for her daughter’s private school tuition last year.
Also a busy mother, Creamer started out like everybody else interviewed for this article—dreaming and dabbling. She liked the products and started telling her friends about them. In 2013 she began selling. She soon discovered she was making a profit. But she didn’t start actually working on it, she says, until September of 2014. And she credits social media for helping.
“Facebook has transformed this business,” she says.
“I don’t do parties,” says Creamer. “I like one-on-one. I don’t push. I just tell people what I think about these products. I believe in them. This business is based on trust.”
Creamer said she tried at one point selling products from Melaleuca, the Idaho-based home and body products company. But she didn’t like what she sensed was a high-pressure selling model. Unlike with Arbonne and Rodan + Fields, once you sign up with Melaleuca, you’re forced to spend a certain amount of money every month, whether you want to or not. Your credit card is automatically charged. (Note: Rodan + Fields offers new consultants four initial packages to choose from, priced at $45, $395, $695 and $995.)
One difference between skin care companies and clothing/accessories companies is that the former make claims that the latter obviously don’t. You either like a necklace or you don’t. It’s not going
to do anything for your physiology.
Skin care companies, or “health and wellness” companies, as they prefer to be called, make all kinds of claims about their products and how they’ll transform your skin—or, in the case of Arbonne’s nutritional supplements—possibly your health and longevity.
“Pure,” “natural,” “green,” “plant-based” and “organic” are buzzwords here just as they are elsewhere in retail. The evils are said to be petrolatum, mineral oil, parabens, preservatives, synthetics.
But poison mushrooms are natural. That doesn’t mean they’re safe. And lots of plant-derived oils and fragrances can be irritating to the skin. Just because they’re “botanically based” doesn’t mean they’re soothing. Carol de Neufville, one of the women at the Arbonne party, learned this long ago. She says she has sensitive skin and has to be careful what she puts on it. When she sampled some of the Arbonne products, she got that familiar, stinging sensation she’s felt so many times before.
Steven Fletcher, an assistant professor at the University of Maryland School of Pharmacy, cautions that “natural” doesn’t necessarily mean “better.” Take salicylic acid, for example, an exfoliating agent contained in many products by skin care companies, including Arbonne and Rodan + Fields. It’s derived from willow bark (as is aspirin).
“Salicylic acid is a chemical compound,” says Fletcher. “Whether it’s taken from a plant or made in a laboratory, it’s still the same chemical compound, exhibiting the same chemical structure. If the natural compound is safe, then it stands to reason that the synthetic version, provided it’s synthesized and purified carefully, will also be safe.
Besides, our entire bodies are made of chemicals. Chemicals are the building blocks of life.”
But not the building blocks of multi-level marketing. For that, you need savvy, perseverance, networking skills and an indomitable belief in the products you’re selling.
Rodan + Fields offers “Empty Bottle Guarantee,” meaning it will refund your money—or give you a different product—if you stick with a certain skin care regimen for eight weeks and are dissatisfied. (We didn’t test the policy.) And all the women we interviewed, along with many guests at the Arbonne party we attended, say it’s the results they see that keep them coming back for more moisturizer.
Those products, however, can be expensive—along the lines of high-end department store brands. And anyway, aren’t you afraid of bugging your friends?
“That was a stumbling block at first,” says Arnot. “But you learn how to walk that line. You have to have confidence that what you’re offering is helping someone or changing someone’s life.”
Judging by the statistics, thousands of women agree. The Direct Sales Association indicates that direct sales grew 3.3 percent in 2013, and says the upward trend is continuing. The size of the direct selling sales force increased by 5.7 percent, to 16.8 million people, a record high. Not all those people will stick with it, of course, so the DSA estimates that 15.9 million people are engaged in direct sales in the U.S.
What can’t be quantified is the satisfaction women get from socializing through direct sales.
“That’s a big part of it,” says Oster. “I want to make money, but it’s fun.”