Philippine Business Magazine: Volume 8 No. 6 - Cover
Up Close & Personal
Direct selling brings convenience to consumers and
higher sales to companies
By Maricar T. Manuzon

Small to big business entities utilize direct selling, one way or another. Strictly speaking, however, only a few corporations really make use of direct selling as a prime mode of selling their products. Most of these companies are members of the Direct Selling Association of the Philippines. The 25 member-companies of DSAP represent a combined sales force of more than two million independent distributors in all parts of the country. This translates to one direct seller for every 7.5 households, enabling DSAP members to register estimated sales of P14.9 billion in 2000, an increase of 20% over 1999 level.

These numbers demonstrate the potential of direct selling as an answer to the problem of joblessness in the country. One of the simplest entrepreneurial undertakings, the direct selling field is one where the direct selling agent gets compensated from and in proportion to the cash flows from his own product sales. It is a field where he is free to enter and exit the business as he is basically a sovereign entrepreneur.

According to Jose Mari Franco, Chairman of the Direct Selling Association of the Philippines and President of Avon Philippines, direct selling or personal selling can best be described as the marketing of products and services directly to consumers in a face-to-face manner. The selling is done generally in consumers’ homes or the homes of others, at their workplace and other places away from permanent retail locations. Direct sales typically occur through explanation or personal demonstration by an independent direct salesperson.

Franco further explains that direct selling is a marketing mode where the sales agent tries to be as personal as he can get, utilizing a communication process where he makes use of all his senses – seeing, hearing, smelling, and touch with the intention of producing the greatest communication impact.

Independent Sellers
Independent direct sellers are those individuals engaged in selling — either on their own behalf, or on behalf of a direct selling company — products and services to prospective customers via personal presentation. Only a negligible percentage of direct sellers are employees of the companies which produce or own the products they sell, making direct selling a real entrepreneurial pursuit.

To the direct selling agent, the endeavor involves almost zero monetary investments. Usually, an affordable sales kit and a short training exercise are the only requirements for one to get started, and there is little or no required inventory or other cash outlay to commence. This is in stark contrast to franchises and other business investment opportunities which involve substantial investments thereby exposing the person to greater financial risk. All it takes to qualify as a direct seller is an ability to interact with clients: there are no requirements for age, gender, educational attainment, prior work experience, financial stature, or physical fitness.

Moreover, direct selling has the promise of fast tracking one’s dream for financial mobility while freeing one from the four walls of the office. This arrangement gives the direct seller the freedom to be his own boss — choosing when he wants to work, or how much effort he wants to put into his work, according to his own earnings targets.

Buying from a direct seller offers the advantage of personalized expert service because a direct seller is usually an authority in the products he markets, the knowledge resulting from a first-hand experience of the use of these products. Consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees.

Products sold by direct sellers are in great variety and may be any of the following: cosmetics and skin care products; laundry and personal care items; vacuum cleaners and home appliances; household specialties; household cleaning products; food and nutrition products; toys, books and educational products; and clothing, jewelry and fashion accessories, among others. Generally, these products are sold either via person to person or group presentations. In a group presentation, the direct salesperson explains or demonstrates products to an invited group of guests, usually over snacks or meals. This mode is also known in direct selling parlance as the “party plan approach.” Otherwise, a direct seller carries out his selling via one-on-one product demonstrations with personal sales contacts.

Women Empowered
Richard Bartlett, a U.S.-based direct selling industry pioneer and a Mary Kay executive, says that majority of direct sellers are women and most work in their direct selling businesses on a part-time basis. This arrangement takes women out of the dilemma of being torn between wanting to be full-time mothers and having to work full time.

The respective sales forces of Avon and Mary Kay, for instance, predominantly consists of women. This female orientation is seen in their sales awards – pink cadillacs (or Honda cars, in the case of the Philippines) for successful Mary Kay salespeople. Avon pins roses on awardees who become members of its elite President’s Club. Nonetheless, men still figure in performance awards in these companies.

Interestingly, according to Malu Dy Buncio, country general manager of Avon Philippines, there are cases when wives are able to convince their husbands to help them in the business, and this often results in even better sales performance. This is also true in other direct selling organizations. In fact, at the 6th Annual Industry Awards for 2001 organized by DSAP, Nu Skin awarded a husband and wife team distributor the Top Group Sales Volume Award for the second time.

Multi-Level Marketing & Multi-Channel selling
An important component of the direct selling industry is multi-level marketing (MLM) a.k.a. network marketing or multi-level direct selling. Multi-level marketing refers to the downline system where the original recruitee gets one or more people under him. Salespeople earn compensation from their personal sales of goods and services to consumers as well as from their share in the earnings of all the people they have brought into the organization. Simply put, multi-level marketing is one of the various methods of organizing and compensating salespeople in a direct selling business. It is a growing sector of the Philippine direct selling industry, currently with 14 multi-level marketers among DSAP’s membership (56% of total association members).

Some direct sellers are also doing multi-channel selling. One example is Avon which also sells through boutiques in the Philippines – they have five boutiques locally — and abroad (although in very few places only). On the other hand, Amway is one of the industry pioneers in the use of the Internet.