Direct Selling Comes Into a New Age

Posted: Updated:
Michael Foit founded Apex in 1998. Michael Foit founded Apex in 1998.

A $36 billion U.S. industry is the process of evolution – and the result will mean that both customers and business operators will be protected from the scammers and schemers that too often give that industry a bad name.

The direct-selling industry – or what you might know better as the door-to-door-selling industry – is a giant economic engine that grows bigger each year. But it’s also an industry that struggles against a bad reputation perpetuated by a handful of bad actors.

Fortunately, legislation being considered in Washington, D.C., and research being done by an industry association should make it easier for those of us who believe in the virtues of direct selling to stop wasting so much time explaining that we’re not the ones causing trouble.

You no doubt recognize door-to-door sales as a cornerstone of American lore and business. When direct selling was an emerging industry, you could expect to have people knocking on your door selling just about everything, from kitchen utensils to encyclopedias and from household appliances to beauty products.

What you might not realize is that one of the pros who literally “wrote the book” on door-to-door sales also sold his literary masterpieces on doorsteps. An ambitious writer named Samuel Clemens - aka, Mark Twain - once penned a direct-selling guide that is still considered a gem of marketing literature. Meanwhile, he sold The Adventures of Tom Sawyer and The Adventures of Huckleberry Finn through “subscription agents” who garnered pre-orders by going door-to-door with sample pages.

Of course, today direct selling is a very different industry, being dominated by massive firms such as Fuller Brush, Avon, Sara Lee and Tupperware. And it continues to grow: People like Warren Buffet sing its praises, and companies like Ambit, an energy company that leapt to the top of the Inc. 500 list in 2010, use it to great effect. Globally, direct selling is a more than $182.6 billion industry that employs millions of people, most of them women.

Unfortunately, a number of companies have claimed to be direct-selling businesses when in fact they run what is best described as pyramid schemes. Meanwhile, the industry as a whole has sometimes struggled to clearly define itself.

Now those challenges are being addressed. First of all, legislation proposed in July by Rep. John Moolenaar (R-MI) would define a pyramid scheme under federal statue and offer other language to help the industry describe acceptable and unacceptable practices. In time, it is hoped that such legislation will help to get the disreputable operators out of direct selling.

At the same time, the Direct Selling Association has conducted research to help the industry better understand the people and businesses that claim to be direct sellers. Broadly speaking, the research shows that 20.5 million people in the United States have signed agreements with direct selling companies making them eligible to purchase discounted products and resell them that at a profit, and to sponsor others individuals who also can sell the products.

However, that 20.5 million figure can be misleading. The DSA’s research shows that, actually, only 5.3 million of those people are actively building businesses as direct sellers, and only 800,000 of are full-time operators. The remainder are people who use their direct-selling affiliations simply to buy discounted products for their own use. While this is perfectly acceptable, including those people in the direct-selling total is misleading.

Even with these changes, I encourage everyone who does business with us or any other direct seller to do the kind of due diligence they should do before signing anything: Check the company out with the Better Business Bureau, Angie’s List or other resources; find out how long they’ve been selling in your community; ask for references; check technical information about products and services; and check on the company’s financial strength.

With the recent legislation and research that will help us clean up our industry, I see a bright future and continued growth for the direct-selling industry. In 14 markets across the U.S., Apex Energy Solutions has used that approach to help entrepreneurs launch their own businesses and employ hundreds of people.

And we’ve done it despite the scammer and schemers that, we hope, soon will no longer be a hindrance.

Michael Foit is chief executive officer of Apex Energy Solutions.

  • Perspectives

    • 3 Tips to Attract and Retain Employees in the Gig Economy

      The gig economy has been around ever since workers began looking for supplemental income, but, it has recently evolved with the introduction of technology. Companies emerging like Uber, Lyft and GrubHub, are changing the gig economy landscape of the workforce. The gig economy has attracted millennials and Gen Zers because of the flexibility and autonomy to work from anywhere, at any time.

    More

Subscribe

Name:
Company Name:
Email:
Confirm Email:
HTML
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections
INPower
Subscribe
Unsubscribe

Events



  • Most Popular Stories

    • (Industrial hemp photo courtesy of Purdue University)

      Hemp Processor Announces Expansion

      Indianapolis-based BDX Indiana has announced plans to bring more than 100 new jobs to central Indiana, with about a third of those going to a planned hemp extraction facility in Westfield. BDX extracts CBD oil from Indiana-grown hemp and is a sister company of Biodynamic Ventures, the largest hemp grower in Indiana. The city says the phase one build-out of the overall $50 million project is expected to begin this month with production to start in December. 

    • Butler Blue III is retiring next spring as the school's mascot. (photo courtesy Butler University)

      Butler Mascot Set to Retire

      One of the best-known ambassadors for Butler University is stepping down, all four legs of him, at the end of the current academic year. The university says their furry mascot, Butler Blue III, is ready to retire after nearly eight years of greeting visitors, students and staff. 

    • (photo courtesy of Indianapolis International Airport)

      Indy Airport Showcases New Retail Offerings

      Indianapolis International Airport is celebrating the opening of the first wave of new retail offerings. The new stores are part of the airport's multi-year Concessions Refresh initiative, which aims to bring a greater mix of nationally-known brands, such as FAO Schwarz and Vineyard Vines, with more local offerings, including Natalie's Candy Jar and Fountain Square Market. In all, nine new retail stores opened Tuesday morning. In an interview with Inside INdiana Business...

    • (image courtesy of Pixabay/VIN JD)

      Cyber Security Battalion to be Located in Indiana

      Indiana’s growing defense industry is further expanding into the digital battlefield. Governor Eric Holcomb has announced a National Guard cyber battalion will be located in the Hoosier state. The 127th Cyber Protection Battalion will be made up of nearly 100 soldiers focused on cybersecurity and cyber warfare. 

    • CEO of Knox County Development Corp. Steps Down

      The president and chief executive officer of the Knox County Development Corp. has resigned. Kent Utt had held the position for five years. Officials say Utt will continue to work with the corporation’s leadership to ensure a smooth transition going forward.