STOCKTON – Jon Hernandez sells a product. But he
doesn’t work at a retail store. He doesn’t have a manager. Doesn’t
clock in. And doesn’t deal with inventory.Hernandez, a 28-year old from Stockton, is a direct salesman of Ageless (Xtra) nutrient and energy drinks (from Univera LifeSciences).
Direct
sales, the process of soliciting a company’s products as an independent
salesperson, has long been dominated by women. Most people have
associated the marketing method with Avon, Mary Kay and Tupperware.
That idea is fading away.Over
the past 20 years, outside industry observers predicted direct sales
would eventually plummet. The reasons: as more women entered the
workplace, fewer were available to hold events such as Tupperware
parties; and with the boom in Internet sales, why would anyone be
interested in selling face-to-face?But time
has proved those predictions wrong, said Joseph Mariano, executive vice
president and secretary of legal counsel with the Direct Selling
Association, a national organization.
Some
customers, like Becky Navarro, prefer the one-on-one interaction with
direct sales people. Navarro, one of Hernandez’s customers, is on an
ongoing purchase plan for the drinks.
"It’s
more convenient than going to the store. The charges come out of your
credit card monthly and its here the next day," said Navarro.
Direct sales have climbed every year for two decades.
In
1996, direct sales brought in $20.84 billion nationally. There were an
estimated 8.5 million people in the United States working in direct
marketing.
By 2005, national direct sales
were $30.47 billion, nearly 1 percent of total U.S. retail sales.
Currently there are more than 14.1 million people selling directly to
customers.
Over a 10-year period, direct sales have climbed at an average annual growth rate of 5.5 percent.
So
what brings people to make a living this way? About 36 percent of
people do it for additional income. An estimated 31 percent have made
it a full time job. About 29 percent of people do it to get free stuff.
And the 4 percent left do it for other reasons, according to the Direct
Selling Association.
For Hernandez, one of
the highest ranking associates with Univera (parent company of
Ageless), it started as a trial use. His wife, Elissa, is a diabetic.
After she used the Ageless drink, the couple decided to sell it.
"You
are doing it to help other people get healthier," said Hernandez with
enthusiasm. Hernandez, who also owns a wedding video production
company, said sales from his Ageless product make up 20 percent of his
income.
"There is a lot more freedom. I am my
own boss. I can do as much work as I want. You can make anywhere from
$200 a month to a six-figure income, depending on the person’s
motivation," said Hernandez.
Diverse products
Direct sales have been able to hang on by adding diverse products and embracing the Internet, said Mariano.
The
products offered today include anything from long-distance telephone
service to vitamin drinks. Big name companies such as Hallmark, Time
Warner and Jockey are slicing a piece of the pie by commissioning
direct sellers. From a corporate standpoint, direct selling allows
companies to penetrate markets with minimal advertising, since the
independent sellers do the marketing. Also, they don’t have to purchase
shelf space and are able to move products with little capitalization,
said Mariano.
These changes have formed a
place for men like Hernandez. A 2002 survey by the Direct Selling
Association shows that 17.8 percent of direct sellers are men.
However, women still make up the largest number of people in direct sales.
Victoria Brunn, a team leader with Two Sisters Gourmet, has two small children, plus she teaches during the day.
"This
allows me to have flexibility. I can interact with adults, while my
husband is home with kids," said 33-year-old Brunn of Manteca.
Through the Two Sisters program, Brunn hosts cooking parties to sell recipes, which include grocery lists.
"I invite my girlfriends over, set up four cooking stations and each group cooks a portion of the meal," said Brunn.
"You have fun with your friends and learn how to replicate the recipe."
Online vs. face-to-face
The Internet has given more traction to the industry, offering another tool to recruit sellers and lure buyers, said Mariano.
Internet
sales, in general, for 2006 ballooned to $108.7 billion, a 23.5 percent
jump from 2005, according to a quarterly report from the U.S. Census
Bureau.
E-commerce accounted for 2.8 percent of total U.S. retail sales last year. So, direct sellers have been adapting.
"The
Internet makes it easier to check my sales volume. I can check my
commission for last months paycheck. I can order products online. My
clients can research the product online," said Hernandez. (Hernandez
only takes phone orders at (209) 242-4763.)
Terri
Lomeli, a unit leader with PartyLite, also conducts business through
the Internet. (Lomeli takes phone orders at (209) 954-9448.)
"It’s
easier to sell PartyLite (candle products). The products ship directly
to them (her customers). If there is a problem with the product, we
just go on the computer and replace it," said Lomeli.
"We don’t have to go through people anymore. Customers get products quickly."
Victoria
Brunn, a direct seller of Two Sisters Gourmet has a site with the
company (www.twosistersgourment.com/web/yummy), something most of the
consultants have.
"It creates ongoing business for you. That’s what Internet does," said Brunn.
"You’re in a better position. You can do things faster. But you can do it without it."
But no matter the appeal of Internet sales, there will always be a need for human contact, said Mariano.
"We saw that direct selling is more flexible when you’re able to use Internet as part of business."
Pyramid schemes
The Internet also fueled more opportunities for pyramid schemes.
"Pyramid schemes have been able to use the Internet to propel themselves," said Mariano.
The operations attempt looking like legitimate companies to entice investors.
"Essentially, they take your money and run," said Mariano. "Pyramids prey on people, who want to get rich quick."
But how can you tell a legitimate network marketing company from a pyramid scheme?
Fundamentally,
a pyramid operation pays compensation primarily for recruiting other
investors. A direct selling company is just that: direct sales of
products.
Here is where the confusion might
lie: legitimate direct sales companies promote recruiting people to
sell the product, not to make and investment. The recruiter, in turn,
receives a commission based on that person’s sales, not on an initial
investment.
Mariano urges anyone who thinks
they are a victim of a pyramid scheme to contact their local Better
Business Bureau, the state attorney general’s office or the local
district attorney.
Contact reporter Jennie Rodriguez at (209) 943-8548 or jrodriguez@recordnet.com.
