Monetization of Direct Selling | Profit and Losses
|Direct Selling Industry|
Direct Selling Industry is the fastest growing industry in the world.
What is Direct Selling Industry?
A direct selling industry is that that sells products and services directly to the consumer by eliminating the middleman such as wholesalers. These products can’t be found in a retail shop. You can only buy from them. These sales are made through the party plan, personal arrangements, one demonstration and internet sales. In direct selling, the seller has a direct connection with the customers. Because of the direct connection to the customers, the sellers can see the customer’s reaction face to face.
Direct selling is usually related to network marketing businesses. B2B companies use Direct selling for targeting their audience. This type of sale can be adopted by both small and big businesses. Small business uses it because of a lack of funds for a retail store. Another reason for using direct selling is to reach out to most of the population. Direct selling is more popular because it is non-retail.
It has more profit margin that’s why many entrepreneurs adopt direct selling. Small entrepreneurs have low funds in starting that’s why they prefer direct selling to increase their profit margin. In other selling people spend a lot of money on advertising but in direct selling, there are no advertising and marketing expenses.
Types of Direct Selling
Direct selling includes three types of selling which are Single-level, Party plan and Multi-level Marketing.
Single-level Direct Selling
Single-level direct selling can be done face to face. It can also be done online, door-to-door is not compulsory. The salesman earns most of their income through occasions and commissions. They do not enrol on any other sales to receive more income.
Party-plan Direct Selling
Party plan sales are also known as Host sales. These take place in group settings. This type of sales is generated by offering products for sale and by hosting social events and gatherings. It mostly includes home party sales where the salesperson hosts a party for the future of the business. The salesperson asks the attendees whether they would like to host parties. This plan is mainly used to sell items from women to women which include cosmetics, jewellery, utensils, handbags and many more.
Multi-level Marketing (MLM)
Multi-level marketing is also known as network marketing or pyramid selling. The main focus of Multi-level marketing members is to hire more and more people, not on the product selling. In MLM the income earned is based on sales commission and these sales depend on the recruitment of the number of people in the company. This makes the MLM different from other types of Direct selling. MLM is popular with people who want to work from home. It can be risky because of heavy upfront fees. Most MLMs are generally are not looked upon as a good thing. MLM can be an illegal pyramid scheme. MLM salespeople are expected to sell products directly to the customers without involving middlemen. They encourage people to join their company.
Manufacturing Plan ⇨ Distributor ⇨ Customer
Profit and Losses of Direct Selling
- You don’t need any middleman to control the Images and messages.
- Anyone can go to direct selling despite educational jobs, without any prerequisites.
- You don’t need any team to support you for direct selling. All you required is a person to make materials for the market and sell them to potential customers.
- In direct selling, you are in a business with yourself which means you can work from home.
It is convenient for you because there are flexible working hours. This is the big reason most the people are doing work from home by direct selling, even mothers can also work.
- Direct selling is made for friendly individuals with several active networks who are willing to buy.
- It is a nonstop business that requires continuous growth in sales and to expand the network.
- If the seller has more incentive of recruiting people rather than selling the product, then it can be illegal direct selling.
- It is uninvited. Sometimes it feels like you are trying to talk in the hope of buying the product you don’t want.