What is direct selling?

The phrases “direct selling” or “direct sales” are made up of two very familiar words. When paired together, however, some people might be confused about their meaning, especially in the ever-changing business world.

So, what is direct selling? It’s really very simple. Direct selling is a popular, longstanding business model where people sell products or services directly to consumers in a non-retail environment – person to person.

Nearly 115 million people across the world participated in the $172.9 billion direct selling industry in 2022, offering everything from fitness products and dietary supplements to beauty and home care items to clothing and accessories.

In North America, there were more than 7.8 million direct sellers in 2022 with product sales totaling over $43.9 billion, according to the Direct Selling Associations of the U.S. and Canada. Not all direct selling companies are part of the Direct Selling Association, but the organization estimates that at any given time there are about 1,200 direct selling companies operating in the U.S. and Canada.

People in the direct sales business make money by selling a company’s products to customers, but they work for themselves. They are often referred to as independent distributors, independent sales representatives, independent consultants, or as is the case with Amway, Independent Business Owners (IBOs).

Direct selling vs. traditional retail

Direct selling differs from traditional retail sales in various ways, the main one being the lack of brick and mortar stores or third party websites.

For customers, instead of having to travel to a store to search for the item or service they’re looking for, they work one-on-one with a direct seller who either has the product on hand or can have it shipped directly to a customer’s door. They get personal service from the direct seller, who is knowledgeable about the products and often can share their own personal experiences with them.

Or, instead of searching for a product on large online marketplaces with various manufacturers, they visit the online storefront of the direct seller they know and have a relationship with to order their products, which can be shipped directly to them.

For direct selling companies, instead of building physical stores, vying for shelf space at traditional retailers or competing for eyes and clicks on those same online marketplaces, they have independent business owners with personal retail web pages, working one-on-one with customers, providing demonstrations, offering insights from personal experiences and answering any questions customers may have.

Benefits of direct selling

The direct selling industry has benefits for consumers, for the sellers who are part of the businesses and for the communities where direct sellers and direct selling companies operate.

The direct sales industry benefits consumers by providing knowledgeable, face-to-face personal service and high quality products. And it benefits those who become independent distributors or business owners by providing a low-risk onramp to entrepreneurship.

Direct selling is a low-cost route to entrepreneurship

Some entrepreneurs have business plans that require hefty overhead costs, such as product research and development, manufacturing, warehousing and shipping, not to mention the physical locations that may be needed to market the product or service.

Most people who start their own business as a direct seller, however, don’t have to worry about those expenditures. They are handled by the direct selling company so the seller can focus on building a sustainable business.

Amway, for example, offers more than 350 high quality products supported by a team of nearly 800 innovation and science experts and a globally integrated supply chain that includes nearly 6,000 acres of certified organic farmland, manufacturing, warehousing, distribution and customer service.

It costs nothing to become an Amway IBO. Registration is complimentary in the first year and new IBOs receive an e-commerce storefront and immediate access to about 150 courses and training sessions designed to help them learn about the Amway business, selling strategies, leadership skills and product information – all at no cost.

Meanwhile, direct sellers enjoy the freedom of entrepreneurship while building their business. They have the flexibility to manage their business how they want, including setting their own hours.

Direct selling helps local economies

The direct sales industry also benefits the communities where its independent distributors and business owners operate and where the direct selling company is located.

As an example, the nearly 290,000 Amway IBOs in the United States generated nearly $350 million in U.S. tax revenue in the past six years. While the company has more than 14,000 employees around the world, more than 3,300 of them are in the U.S. And Amway recently invested $300 million in U.S. manufacturing sites where it produces 70% of its products sold in the U.S.

Amway is also passionate about giving back to communities through charitable donations and volunteer events. Over 20 years and more than 4.5 million volunteer hours, the company has supported over 14.5 million people, including providing mentors for the U.S. Dream Academy, raising $35 million for Easterseals™* and donating $200 million in COVID-19 aid and responses to disasters and malnutrition.

Consumer and seller protections: The Direct Selling Association

Responsible direct selling companies follow a strict code of ethics to protect consumers and the people who sell their products. The Direct Selling Association requires its members to follow its code of ethics and holds companies accountable.

The DSA’s code of ethics is comprehensive and covers behavior by direct sellers and direct selling companies. For example:

• Compensation for independent distributors or business owners must be based on product sales.
• Companies must offer an inventory buyback option to those who decide direct selling is not for them.
• There should be no large upfront fees for people just starting out in the direct selling industry
• Any claims by a company or a seller made about income or product performance must be clear and reasonable.

Amway, a longstanding member of the DSA, proudly employs some of the strongest consumer and business owner protections in the industry to ensure the integrity of the business is protected. All representations of the business, earning potential and any claims about products must be truthful, accurate, realistic and not misleading.

Amway believes it’s important for IBOs to conduct themselves in a manner that reflects only the highest standards of integrity, honesty and responsibility because their actions can have far-reaching effects, not only on their businesses, but on those of other IBOs, as well.

Want to learn more about Amway and direct selling? Visit the Start a Business page on Amway.ca.

*Easterseals® is a registered trademark of Easter Seals, Inc.