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Direct-Selling Businesses: The Myths and the Truths

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When it comes to business models that few people truly get, it’s hard to beat direct selling. In reality, many direct-selling businesses are reputable and offer people from all backgrounds and interests a way to earn some nice money – either as their main gig or a side hustle. But sometimes people hear “direct sales” and think “multi-level marketing scam” and run.

To clear up some of these myths about direct-selling businesses, as well as discuss the truths associated with how the business model works, consider the following points:

Direct Selling 101

In a nutshell, direct selling refers to selling products directly to a customer in a non-retail place. Sales usually happen at home, at a party or at work. The products go from the manufacturer to the direct sales company, where they are sent to the person who is selling them-often called a “distributor,” “independent business owner” or “rep,”- and then to the buyer.

In most cases, these items cannot be found in stores; they have to be purchased via the direct-selling method. The independent business owner will sell the items either one-on-one-this can be through an in-person presentation or even going door to door-or they can have a group sales setting like a party.

Direct Sales are Not Always MLMs

One of the most common myths regarding direct selling is the assumption that all direct sales companies use multi-level marketing (MLM) methods. Direct sellers make money when they sell a company’s products. MLM sellers earn income on commissions from products sold, and also from the sales made by other business partners who they recruit into the company.

Is Direct Selling a Pyramid Scheme?

A pyramid scheme can seem similar to multi-level marketing, only it’s far more sinister and typically illegal. Pyramid schemes require you to invest a ton of money up front to become a distributor, and the main goal seems to be in getting other people to sign up to work for the company. Single-level direct selling does not do this-people are not required to shell out big bucks to purchase items up front, nor are they asked to recruit others.

For example, Amway is a global direct sales company that offers home, health and beauty products. According to it’s website, its “IBOs make money through the sale of products … and don’t make any money by bringing more people in – not a single cent.” So is Amway a pyramid scheme or multi-level marketing company? No, it’s neither. As you research other direct sales companies, look for these key features to differentiate between business models.

Direct Selling is for Everyone

Another persistent rumor about direct selling is that it’s only done by stay-at-home moms. Although there are plenty of moms who sell products to earn some money while working around their family’s schedule, lots of people from all types of backgrounds are distributors as well. Many are college students, or adults with full-time jobs who are earning some extra money on the side.

Debunking the Myths

While some of the myths surrounding direct sales may persist for awhile, you now know the complete truth about this great way to earn income. Who knows? Maybe you’ll be inspired to become a rep-whether it’s as a hobby or a full-time job, direct selling is an honest and flexible way to make money.

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