The world of direct selling is an expansive opportunity held to the highest ethical standards. Some rumors portray a seedy, unregulated group of scammers out to get your money. But the truth is that direct selling is a thriving community of entrepreneurs who represent some of the best-loved brands. The standards are set, and here’s the best way to tell if a company is meeting them.
Making a little effort to check into a company you’d like to do business with will pay off in the end. Use these quick tips from Forbes to spot legitimate, reputable companies.
Features of legitimate direct sales businesses:
• Participation is free or low cost
• Representatives earn through sales to consumers and not through recruiting
• Products and services sold are high quality and in demand
• Inventory storage should be low or not necessary with a buyback policy
Characteristics common to illegal pyramid schemes:
• Promises high income with little effort
• Product sales have little or no impact on earnings
• High fee requirements and purchases to join
• Pressure to recruit
• Few people benefit from the work of many
Regulation
The Direct Selling Association (DSA) exists to support and protect direct sellers. It’s a national trade association for companies that market products and services directly to consumers through an independent, entrepreneurial sales force.
The DSA serves to “promote, protect, and police the direct selling industry” while helping companies and their distributors succeed, and they monitor over 200 companies with proven track records of product quality and integrity—like Mary Kay, USANA Health Sciences, and Tupperware.
Members of the DSA apply and recommit annually to its Code of Ethics. A quick online search will verify if a company is a member.
The Direct Selling Education Foundation (DSEF) partners with the academic community to expand knowledge and understanding of fundamental direct selling principles. Their vision is to educate the public on the value of the direct selling industry and its role in strengthening economies around the world.
Federal Trade Commission (FTC) protects consumers by preventing deceptive and unfair business practices. They monitor and guide companies to ensure they conduct business legally and ethically, and evaluate claims case by case to weed out bad actors. When companies violate laws and standards, the FTC takes legal action.
While these organizations police regulations, here’s an in-depth view of what you should look for when considering buying from or selling for a direct selling company.
Transparency
Full transparency includes being open and honest about the company’s story, mission, and products—and their compensation plan. It’s easy to confirm income claims by looking at a few details. Income from direct selling comes through hard work, building relationships, and consistency—you should expect to earn from the effort you put in. But any “get rich quick” promises are red flags and should be avoided.
Compensation Plan Basics
If you’re interested in joining, look for a generous but realistic compensation plan. You may earn money in one of the following ways:
Commission. Receive a percentage of what you sell, whether in person or online.
Team commissions. Earn a percentage of your enrolled team members’ sales, providing you’re an active seller. Team commissions are the fastest way to earn.
Bonuses. You may be eligible for matching bonuses based on sales growth or other metrics.
Incentives. Contests, incentives, and rewards are incredible motivation for some. Meet certain qualifications to earn exotic trips and valuable prizes.
Signup Fees
A perk of direct selling is starting a business for a low cost. Your initial investment should be reasonable—you’ll likely pay for a starter kit and may want to invest in additional products. Evaluate each charge and be wary of unexplained fees or inventory requirements. You shouldn’t have to carry a large amount of inventory, if any.
Quality Of Products And Service
One of the first signs of a trustworthy company is a distributor you can trust. They should genuinely believe in their company, and when you research online, you’ll also find positive reviews and recommendations to back up their experience. Once you’ve found these, order a few products and test them for yourself. If you’re impressed with the quality and customer service, keep exploring.
Customer Service
Outstanding customer service will make or break lasting relationships and maintaining trust. The most obvious way to measure service is through a return policy and, for sellers, business offerings.
Return Policy
Return policies can vary. Terms and conditions should be easy to find and understand, and a trustworthy company will also provide a customer service number for questions and concerns.
For example, USANA Health Sciences offers a 100%, unconditional, 30-day money-back guarantee for all retail customers.
Direct Selling Is Good For The Economy
With hundreds of companies and millions of independent representatives, the direct selling industry is a growing industry that consistently boosts the economy. Whether you’re interested in buying or selling, spotting an honest company is simple with a little research.
