1.1 Close to consumers

Direct selling is the marketing of consumer goods and services directly to consumers generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations, usually through explanation or demonstration of the product by an independent direct seller.

1.2 Two plans

Direct selling companies operate mainly on two plans :

Person-to-person : Usually by prior arrangement or introduction, an explanation or demonstration is given by a salesperson to a customer and the customer's family.

Party-plan : A customer acts as a hostess and invites friends to a demonstration by a salesperson.

Additional plans include a combination of person-to-person with party-plan and others.

1.3 Seller's initiative

Direct selling is characterised by the initiation of contact, demonstration and sale through the direct seller.

1.4 From factory to customer :

Most direct selling companies manufacture their own products or control their manufacturing. Therefore, there is a short and direct route from the factory to the customer, allowing the former to find out and adapt very quickly to the needs and wishes of the latter.

1.5 Representation

At present, the Federation of European Direct Selling Associations (FEDSA) and its 25 national member associations do not represent direct selling of insurances, financial services (exception: Germany), real estate and cars, order collection for mail order companies, selling on coach or boat trips (exception : Italy and Spain) and selling of home improvements (exception : Germany).

1.6 Other selling methods

Other forms of non-store retailing, like mail order, television marketing, telephone selling (exception : Sweden) and selling at fairs and markets are not considered to be direct selling although used to complement the business of direct selling companies.

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2. THE CUSTOMER

2.1 A popular way to buy

Surveys show that more than 50% of all consumers are customers of at least one direct selling company.

2.2 Satisfied customers

Surveys show that more than 75% of direct selling customers continue to buy from the same company because they received good products and satisfactory service.

2.3 The typical direct selling customer

Surveys show that the average direct selling customer is a little younger and has a little more income than the average buying population. More customers than average live in small towns and rural areas.

2.4 See, test and judge

Many customers prefer direct selling because of the opportunity to see, test and judge a product at their leisure in their homes or among friends.

2.5 No shopping stress

Direct selling appeals to customers because it eliminates driving long distances, parking problems and costs, queuing at cash desks and carrying around heavy merchandise.

2.6 No limitation to shopping hours

Direct selling is not restricted to any limitation of hours. Direct sellers are ready to visit their customers at any time they wish.

2.7 Individual consultation

Direct sellers are well-trained specialists in their field and have enough time for consultation with and paying individual attention to each customer.

2.8 Delivery and after-sales service

All goods in direct selling are delivered directly to the customer's home. Direct selling companies provide a reliable after-sales service and guarantee the quality of their products.

2.9 Social communication

Nowadays, with many self-service stores and the development of telemarketing and similar sales techniques, the personal contact between purchaser and salesperson is diminishing.

Many customers prefer direct selling because they know the salesperson personally, trust him or her and therefore have more confidence and pleasure in purchasing.

2.10 Legal consumer protection

For most purchases concluded 'away from business premises', in Western European countries the customer has a legal right of cancellation within a cooling-off period of 7 days (in Poland 10 days), and thus has the opportunity to think the purchase over and to compare quality and price of the goods.

2.11 International Chamber of Commerce

In 1978, the International Chamber of Commerce in Paris published an "ICC International Code of Practice for Direct Sales" in close cooperation with the direct selling industry and its representatives.

2.12 Additional consumer protection

The direct selling industry promotes consumer protection in additional ways :

2.13 Little complaints

Surveys and statistics of direct selling companies as well as Direct Selling Associations show that complaints of direct selling customers or prospective customers are rare. Their number is less than 1% of the contacts or sales made.

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3. PRODUCTS

3.1 Variety of products

The direct selling industry offers a wide range of products and services for the consumer, including:

3.2 Complexity of products

Most products and services in Direct Selling are complex. Only careful and professional explanation, demonstration and advice ensure that the customer will be satisfied with the purchase.

3.3 Innovative

Direct selling companies have often been pioneers, creating new markets or extending small ones. Examples are vacuum cleaners, cosmetics, waterless cooking, encyclopedias, food containers and many others.

3.4 Exclusive

Most products and services in direct selling cannot be purchased through other distribution channels.

3.5 Quality

The direct selling industry aims at the highest possible level of quality. Direct selling companies know that their future depends on customers who are satisfied with direct selling products and services and so become permanent customers.

3.6 Market leaders

In many countries around the world, direct selling companies are market leaders with their products selling better than any competitor's. Examples are encyclopedias, floorcare products, stainless steel cookware, plastic food containers and many others.

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4. THE DIRECT SELLER

4.1 Employment

The direct selling industry employs many people in research, production, accounting, administration and marketing. Furthermore, the industry offers an almost unlimited number of jobs and working opportunities to salespersons. There are equal chances without discrimination of any kind : sex, religion, race, nationality, age etc. It thus provides an important factor in the fight against unemployment all over Europe.

4.2 Many part-timers

Although the direct selling industry offers excellent opportunities for full-time work, 90 % of direct sellers prefer to work part-time.

4.3 Many women

84% of all direct sellers are women. They are especially successful in demonstrating and selling cosmetics, household products and jewelry.

4.4 Management

Many part-timers change to a full-time management job, taking opportunity for a successful career in direct selling.

4.5 Training

Direct selling companies provide a substantial training for their new direct sellers who do not have to prove particular skills or schooling to start.They also permanently provide additional training for trained salespeople.

4.6 Fair treatment

Member companies of the direct selling industry provide fair treatment to their direct sellers and sales managers.

4.7 Independent enterprises

Direct sellers may be employees or, as in the vast majority of cases, act as free agents or distributors and therefore are independent and self-employed. They earn percentage-commissions or margins and pay their own expenses and taxes.

4.8 Consumer contacts

Direct sellers either follow up leads to potential customers provided by the company or create their own customer contacts.

4.9 Collection of payments

In many sales organisations, direct sellers are entitled to receive payments of the customer either after closing of a sales contract (down payments) or upon delivery.

4.10 Delivery by direct sellers

In some direct selling companies, direct sellers deliver the previously sold products to the customer.

4.11 Earnings

Earnings of direct sellers depend on the volume of their sales, not on their working hours.

Managers and distributors can earn additional commissions or bonuses for recruiting, training and administrating other direct sellers.

4.12 Multilevel Marketing

Multilevel Marketing (MLM) is a structure of a direct selling company where sellers are independent dealers who have the right to :

In addition to the dealers’ margin, they may earn overriding commissions based upon thier own sales and the sales of the independent dealers sponsored by them, according to the company’s marketing plan.

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5. THE COMPANIES

5.1 Size

Direct selling companies range from small (less than ECU 0.9 million annual turnover = US $ 1 million) to medium-sized (up to ECU 27 million = US $ 30 million) and to large firms with an annual turnover of more than ECU 272 million (= US $ 300 million).

5.2 International operations

A number of companies operate in many different countries around the world, reaching turnovers of the group in excess of ECU 0.9 billion (milliard) = US $ 1 billion.

5.3 Many years of success

A number of successful direct selling companies have been operating for a long time : 25,50,75 and even 100 years.

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6. ASSOCIATIONS

6.1 National associations

There are Direct Selling Associations (DSAs) in the following 25 European countries : Austria, Belgium, the Czech Republic, Croatia, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Russia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom. All have codes of conduct. Most of them publish periodical bulletins to give members and the public news, facts and figures of direct selling.

6.2 FEDSA

The Federation of European Direct Selling Associations (FEDSA) was founded in Brussels in 1968 and now has 25 national member associations. It has its headquarters in Brussels. It publishes amongst other publications, a quaterly bulleting "Direct Selling News" and holds a public forum every other year. On 1 June 1995, the Board of Delegates of FEDSA approved European Codes of Conduct for direct selling.

6.3 WFDSA

FEDSA and the 25 European DSAs are members of the World Federation of Direct Selling Associations (WFDSA). The headquarters are in Washington D.C.,USA. It publishes international news and holds a world congress every three years. It currently has 45 member associations.

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7. UNIVERSITIES AND LEGISLATION

7.1 Universities

All important universities recognise direct selling as a significant channel of marketing and distribution and cover direct selling in their marketing courses.

Well known professors believe that 'In-home-selling' and 'selling by personal contact' will be increasingly successful in the future.

7.2 Legislation

In most modern countries legislators have accepted direct selling as one distribution channel among others and grant freedom of trade and equal rights for all forms of trading including direct selling.

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8. PREJUDICE AND DISCRIMINATION

In a few European countries there are some prejudice and discrimination against direct selling among certain officials, politicians and consumers' representatives. They call direct selling 'doorstep selling' or 'selling from door to door'. They say that consumers have to be protected against surprise, the lack of possibilities to compare with competing products and psychological pressure in direct selling.

The direct selling industry is confident that the liberalized internal market of the EC, the cooling-off period for customers and activities of the industry and its associations will end all kinds of discrimination against direct sellers and direct selling companies in the near future.

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9. PAST AND FUTURE

9.1 History

Direct selling can well be considered the oldest distribution channel in history. It was the farmer and craftsman who walked around villages and towns offering and selling their products at customer's homes. Rural areas and small towns could get their basic goods only through travelling salesmen.

9.2 Future development

Today, direct selling is one of the most dynamic and fastest growing marketing channels in the world.

A number of new trends: