Has one of your friends or relatives started bombarding you with social media messages about a must-have lipstick or kitchen utensil? Chances are they have joined the 400,000-strong army of Britons direct selling for companies such as Avon, Younique and Stella & Dot.
Home-based direct sales businesses now contribute more than £2bn to the economy every year, according to the Direct Selling Association (DSA).
The huge majority — 95% — of UK-based direct sellers work part-time to supplement their household incomes.
Lynda Mills, director-general of the DSA, said: “Direct selling is a flexible option for more than 400,000 people in the UK, allowing them to earn money on their own terms.”
However, direct selling, also known as multi-level marketing (MLM), can be a road to riches for those who treat it as a full-time job. Figures from the American website Business For Home indicate that there are at least 200 direct sellers worldwide making more than $1m (£750,000) a year.
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These include US-based Amway sellers Dexter and Birdie Yager, who the website claims make a jaw-dropping $15.6m a year, and Rolf Kipp, a German Living Forever representative whose estimated monthly earnings are $175,000 — making an income of $2.1m a year. Both Amway and Forever Living sell beauty and lifestyle products.
Not everyone who tries direct selling turns a profit, though. Here we compare the start-up costs and earnings potential of some of the most popular schemes, and investigate the risks involved.
Getting started
Make-up, jewellery, dietary supplements . . . if you want to get into direct selling, the first thing to decide is what you want to sell. Many people try before they buy, becoming a customer before signing up.
Julia Williams, a Forever Living representative from Chester, started selling Forever Living products such as essential oils only after trying them herself. “I knew I had to like using the products and believe in them in order to sell them,” said Williams, 44.
To become an “ambassador”, she paid close to the maximum £200 that MLM companies can legally demand of sellers in the first seven days.
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“I paid £199 for a Business Owner Box including 18 of the best-selling products for the UK market,” Williams said. “But the support and training I have received since has been very good.”
At the other end of the scale, Avon — the doyenne of direct selling in Britain — claims that its members face no upfront costs, with the joining fee of £16 only charged after you place your first order. You will still need to pay for your order, though, before you can start selling.
Earnings potential
There are two main ways to make money through direct selling: by earning sales commission, and by recruiting members on whose sales you’ll earn a percentage.
Take Younique, a make-up company that has made a big splash in the UK over the past two years. Its new members join as White Entry Presenters, earning commission at a rate of 20% on sales that must hit at least $125 a month.
Once their overall sales hit $1,000, they become Yellow Entry Presenters, and their commission rises to 25%. To move up a level and become a Pink Exemplary Presenter they must attain monthly sales of $250, and have introduced one entry-level presenter on whose sales they receive extra commission at 3%.
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If they want to become a top-level Black Exclusive Presenter, they must maintain monthly sales of $500 and have introduced at least four people also selling $500 worth of products a month. The reward for reaching this level is 30% commission on their own sales, plus up to 6% on the sales of their recruits.
Are these pyramid sales?
MLM companies have been around a long time. The giant Amway, for instance, with more than 3m representatives worldwide, was launched in 1959. However, critics claim the MLM business model is little more than glorified pyramid selling, and many firms have been investigated as possible pyramid schemes.
Last year, Herbalife, another big American MLM company specialising in weight loss products, was ordered to pay $200m after the US Federal Trade Commission issued a complaint about it.
The companies vehemently deny such claims. Andrea Slater, general manager at Avon UK, said: “Avon is not a pyramid scheme. Representatives’ earnings are based on product sales.”
But whatever MLM scheme you join, it is important to recognise that, while some representatives make huge profits, most do not. Some people lose their initial investment or, worse, buy more products than they need and end up thousands of pounds out of pocket.
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Work — and earn — as much as you like
Vicki Church, 42, started selling Younique products in 2015. “I bought a mascara through a friend and set up my business a few months later,” said Church, who lives in Chiddingfold, Surrey, with her husband Pete, 42, and their children Adam, 10, Ben, 7, and Emilia, 4. “I paid £69 for a starter pack.”
Church set up her Younique website and organised a launch party. “I sold £650 worth of products, making 20% commission. I also set up a Facebook group and began posting beauty tutorials.”
Church, who makes between £200 and £400 a month, spends only a few hours a week on her business as she also runs a mobile eyelash lifting service. “You can make a lot more if you put the hours in,” she said. “One friend is now making about £3,000 a month.”
Experts’ general top tips include:
• Check the start-up costs — don’t invest more than £200
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• Make sure you can return unsold products
• Choose products you believe in
• Be first — don’t sell the same products as lots of your friends
• Make sure you understand the bonus and commission structure
• Choose an organisation that provides training