How the direct selling business model empowers budding entrepreneurs
Beyond the obvious benefits of being able to work from home and not being shackled to a typical 9-to-5 corporate job, the direct selling business model is becoming an increasingly appealing way for people across the globe to earn a salary.
In fact, a recent Herbalife Nutrition survey revealed that an impressive 71% of consumers in the Asia Pacific aspire to own a business, with the majority believing that working on their own business would be more fulfilling than working for someone else.
“More and more young people were supplementing their income. Direct selling has proven successful in combating unemployment as more than one in every three young people of working age in South Africa did not have a job this year. In recent years, around 1,3 million people derived an annual income from the direct selling industry,” says Direct Selling Association of South Africa (DSA) Chairman, Rajesh Parshotam.
It seems that the rest of South Africa agrees with her. The direct selling industry (DSI) became more of a household name in 2017 already, when the 2016 results of the annual DSA report showed that sales were up by 1,6 per cent and a number of representatives up by 2,6 per cent – numbers which have showed few signs of slowing down.
And in a shaky economy with rising living costs and cutbacks on jobs, the direct selling industry is one of a handful that’s providing entrepreneurial opportunities for all South Africans, regardless of their financial or educational standing.
“In a tough environment, the DSI industry has decreased slightly – but a five percent decrease is no train smash. Most other markets would decline in double digits in the same period. And not every company [in the sector] declined by five percent. There are certain companies that actually grew,” says DSA Secretariat, Imtiaz Ebrahim.
But, how exactly does such a lucrative business model operate? And how does direct selling contribute to individual wealth creation as well as the local economy as a whole?
Read on to find out.
What is direct selling, and how does it work?
The direct selling business model provides entrepreneurs with tools, resources and support to generate income and create their success. Direct selling acts as a professional distribution channel of products and services to customers and income is earned through personal and team sales (i.e. from the sales of others in the direct seller’s own downline sales team).
Direct sellers are responsible for multi-level marketing and selling goods and services as well as building personal relationships with their customers. Products are typically sold through one-on-one selling, group project demonstrations or a combination of both.
Direct sales leaders are responsible for managing the sales of their downline team and training their team members as well as occasional referrals and purchasing goods for personal use.
To ensure ethical business practices and consumer service, all legitimate direct selling companies in South Africa are registered with and governed by the DSA.
What are the benefits of direct selling?
First and foremost, this modern business model provides entrepreneurial opportunities to anyone, with hardly any risk involved because the individual companies have typically already proved the efficacy and reliability of their products or services, and with adequate training, individuals joining direct selling companies can reap the rewards of working for a well-known and long-established brand.
From a training perspective, direct selling also provides skills development for those wanting to brush up on or build new business, marketing, sales and interpersonal skills. Direct selling educates individuals on the ins and outs of entrepreneurship, how to effectively market and sell goods, how to interact with and build relationships with customers, and how to manage teams.
The flexible working hours and the ability to work from home are two more reasons why women find direct selling beneficial. Stay-at-home mothers can earn a full salary or supplement their existing income while being actively involved in their children’s lives. Moms are usually part of close-knit communities of other moms, and with shared interests and needs, they tend to thrive as saleswomen. This, in turn, fosters female empowerment and financial independence.
Another appealing factor of direct selling? Money can be earned immediately – there’s no waiting period between the sale and the next payment cycle.
As far as economic benefits go, this proves direct selling is an important contributor to the economy and also an important skills development and employment provider at a time when jobs are scarce and disposable income is declining. It’s also perfectly suited to youngster – the majority of the South African population – trying to find their feet in a working environment with few formal jobs on offer.
"Trends this year [in 2019] reveal more young people coming into the industry and a rise in online sales methods thanks to the prominence of social media. The future truly does belong to the youth, and it is a privilege to have them show us through these stats that this industry is well framed for them,” concludes Parshotam.