Buying into direct selling for extra cash
Companies have long appreciated the profitability of getting people to sell to friends and strangers
Maybe you’re a stay-at-home parent, looking for a way to earn some extra income now that the kids have gone back to school. Or maybe you have retired and your pension isn’t quite enough to meet your spending habits.
Or maybe you just need the cash. Whatever the reason, topping up your income by selling goods in your spare time is a way anyone can boost their bank balance this autumn.
Direct selling is not new. From the days of Tupperware parties, companies have long identified the impact empowering people to sell their products to friends, neighbours and strangers, can have on the bottom line. And for the sellers, it’s a way of balancing the needs of their family, or their day-to-day job, with a way of earning some extra income.
What is direct selling?As the name implies, it means selling products or services direct to customers, without the costs associated with renting a shop.
“The concept is about selling products away from the retail environment,” notes Lynda Mills, director general of the Direct Selling Association of Ireland. In effect it’s a bit like running your own business, but with low start-up costs and low risks.
Once you pick a product to sell and join that company, you will typically get a mentor and some training to bring you up to speed with selling it.
However, the clue to whether or not it might work for you is likely to be in the title. If you don’t feel comfortable selling, and maybe pushing customers – who might be your friends or family – off the fence and into opening their wallets, it may not be the road you should take.
Who can do it?Anyone who’s looking for a bit of an extra income, really. Traditionally, direct selling was the domain of women, many of whom worked in the home but were looking for ways to generate an income. Now men are also getting involved, often working alongside their wife or partner.
“You don’t have to have any previous experience. Once you have passion the company will provide you with the necessary tools to do that job,” says Mills.
And it’s not just for the young. The Direct Selling Association of Ireland now has about 20,000 direct sellers across Ireland – of varying levels of activity. Of these, some 9,200 are aged 50 and over. It even has an Irish seller of Herbalife wellness products who is 81.
How much can I earn?This is the key question, naturally, and there is no easy answer. While the media may frequently run stories on people who have become millionaires by selling cosmetics door to door, it may be wiser to limit your expectations.
As Mills notes, it’s “certainly not a get- rich scheme”.
According to Mills, you can typically expect to earn commission of between 30-40 per cent on each sale, with some companies offering as much as 45 per cent.
“It’s down to each individual to set their own goals. You can turn direct selling into a career, and you can look at it as a full- time occupation and earn the amount you would if you were employed. But it’s not going to happen in the first month,” she warns.
Mary Kay Cosmetics for example, offers commission of 40 per cent on everything you sell. So, if you sell goods worth €50, you get to keep about €20. While it sounds good, it does mean that to get €200 in your pocket you’ll need to sell goods worth about €500, which may be no easy feat, given that people’s disposable incomes are still tight.
Jewellery brand Stella & Dot is quickly building up a presence in Ireland, and it pays commission of about 25-35 per cent, while Usborne books, which will be known to most parents across Ireland, is another option.
One way of boosting your income even further, if you have successfully proven yourself, is to bring other salespeople on to your team. If you do, the company will then pay you a small percentage on what they sell.
“It’s another way of earning money,” notes Mills.
How much does it cost to get started?To start selling, you’ll need to invest about €100 or so in an introductory pack, which will give you a range of the company’s products which you can then start selling. For example, NuSkin, the US skincare company, offers introductory packages from €358.96, rising to €1,875 for a selection of the company’s best-selling products.
With Mary Kay cosmetics you can get started from £100, or you can start smaller, opting for a “Go Kit”, which is valued at £51 but will cost consultants £29. To get started with Stella & Dot, you’ll need to invest €199 for a pack that includes samples worth about €400, catalogues and order forms. Thereafter, stylists can buy new collection samples at 50 per cent off. Neal’s Yard Cosmetics will charge you €125 for a kit of its top-selling products.
You should also check when investing whether or not you are entitled to a refund on your products if you are unable to sell them. After all, if you’ve parted with a significant sum of cash for products, you don’t want to be stuck with them if it doesn’t work out for you. So check the terms and conditions before you sign up to anything.
How do I sell my products?Traditionally, direct sellers sold their products through parties or coffee mornings, and this route to market still holds for many people. But direct sellers are also now using social media and the internet to sell their goods.
With Partylite, a maker of of candles and home accessories, you can open your own personal online boutique, while Stella & Dot also allows you to build a personal website. If you’re selling products off a catalogue, distribution may involve dropping the catalogues in your neighbour’s doors.
Do I have to pay tax?If you currently don’t have an income, or have one that is less than €16,500, direct selling is likely to be more attractive as you won’t have to pay income tax on earnings of less than this figure, but you may have to pay the universal social charge (USC) at a rate of 1.5 per cent. You can avoid USC if you earn less than €12,012 in a year.
If, however, you are looking to supplement your existing income, remember the Revenue is likely to treat this in the same way as other earned income. So, if you pay tax at the higher rate, you may find yourself in a position whereby you’ll have to pay tax of up to 51 per cent on your direct-selling earnings.
How do I pick a product that suits me?“I always suggest that people choose a product range that they can relate to and feel passionate about; if they’re a young mum, for example, they may be into selling children’s books, or selling clothes if they have a passion for clothes,” advises Mills.
Opting for an easily recognisable brand that is well marketed is another obvious choice. Herbalife, for example, is a nutrition sponsor of top footballer Cristiano Ronaldo and its high-profile sponsorships also include FC Barcelona and the American soccer club LA Galaxy.
However, a familiar brand may attract more consultants, which could diminish your selling potential, so another consideration should be to assess how many consultants of a certain product may already be serving your area.
And don’t necessarily go for the brand that pays the best commission rates. If it’s a difficult product to sell, with poor brand visibility, high rates of commission won’t matter unless you can bring in the orders.
Personal circumstances brought fiftysomething Ann Lenihan from Cork to direct selling back in 2001. She was struggling financially at the time, and had sought advice from a business consultant for help with a marketing business she had started from home herself.
However, when she visited him she saw Herbalife products in his office, and was hooked.
“I used the product myself and felt amazing really quickly. When you have more energy, you get excited,” she says.
“I don’t think I would have had the same interest if I wasn’t marketing a product that was as life-changing as nutrition is,” she adds.
Supplementing her income was Lenihan’s first goal, noting that in the early days, the extra income paid her rent every month, “and that made such a difference to my lifestyle”.
However, Lenihan soon turned her business into a full-time career, allowing her to build up a solid pension plan. But she warns that it’s not easy to do so.
“Direct selling isn’t a get-rich-quick plan and don’t let anybody tell you it is. We work hard for our income but the work we do isn’t difficult, we just do a lot of it. The income possibilities are only limited by the effort one puts in, how open they are to learning good business skills and what they want from life.”
But for Lenihan it’s not just about the business potential. When her mother moved in with her at the age of 92 in 2012 she was able to design her work around her mother and care for her, while her income has also allowed her make annual visits to her three children, who emigrated to Australia.
She even met her husband through the brand, when he came to Ireland from London as a guest speaker at a training event. He is also now based in Cork, selling Herbalife products with her.
Lenihan has never shied away from seeking support and advice from her mentor, and advises others looking to get involved to do likewise.
“Asking for help can be a whole new concept to us, something that might make us feel afraid of being seen as uncapable. In direct selling, our mentors love to hear from us, often even every day or several times a day. It shows them that we are working and eager to learn,” she says.