Unemployed and over-50s grab financial lifeline offered by direct selling
Companies such as Avon and Betterware are part of a growing industry that can give a much-needed boost to family incomes. Emma Lunn reports
Sunday 17 July 2011
Over-fifties are cashing in on opportunities offered by "direct selling" companies to boost their earnings or supplement their retirement income.
Direct selling is face-to-face selling outside a normal retail environment, either on a one-to-one basis or at specially held parties. Companies such as Betterware, Herbalife and Avon use direct sellers.
It is certainly big business. The industry is worth £2bn annually to the UK economy with more than 400,000 people selling products this way. Direct sellers can often earn more money by recruiting other people to sell products too, and then earning commission on the sales their recruits make.
In most cases getting started requires only a very modest initial investment – usually about £100. Sellers are self-employed and so will need to sort out their own tax and National Insurance payments. Another advantage is that hours are flexible and can generally fit around other jobs or family commitments, which is why traditionally, direct selling has appealed to young working mothers. But increased redundancies and the difficulties older people have finding work means recruits are joining at all times of life.
The Direct Selling Association (DSA), the trade body that represents the UK's major direct selling companies, has seen a 29 per cent increase in recruits aged over 50 in the past year. The DSA estimates there are currently 120,000 direct sellers over the age of 50 in the UK, compared with 93,000 in 2009/10.
Recent statistics have shown that unemployment is falling, but over-fifties are struggling to get back into work, with 44 per cent of unemployed at that age having been out of work for more than a year.
Paul Southworth, the director general of the DSA, says: "In terms of quality of life, from what our member companies tell us, many in the plus-50 age bracket enjoy the social side of direct selling, which allows them to continue to work and network with a variety of people.
"It is an attractive option, allowing them to manage their own business with minimal outlay as well as generate an income. "
So, how does someone – of any age – get started in direct selling? First, find a business with a product range which appeals to you and which you think is fairly priced. Check whether the company concerned is a member of the DSA as its members have certain rules they must stick to that benefit sellers as well as consumers.
If someone else suggests you become a direct seller for a company they're already working for, ask them about what's involved, the hours they put in and the income they generate. Also check how much money their other recruits are making. Either way, be cautious and take exaggerated earnings claims with a pinch of salt. With some businesses, high earnings are possible, but they require time, hard work and dedication.
According to the DSA, the majority of direct sellers spend little more than a few hours per week and earn under £1,000 a year. However, about 30,000 people direct sell full-time with many earning £50,000 or more, although incomes of more than £100,000 are not unheard of.
Herbalife sells weight management and nutrition supplements and has about 8,000 distributors across the UK. The company's vice-president, Neil Spears, says distributors can work as little or as much as they want with most earning between £20 and £2,000 a week.
"Of course, how much they work does strongly tend to reflect how much they earn, which can be anything from nothing to millions of pounds a year," he says, "It's a big range, but then with 8,000 distributors around the UK from all walks of life, the range has to be this big.
"Individuals become distributors for many reasons, some just wanting to earn a few extra pounds a week and others looking for a full-time income which also adds to the range of earnings our distributors achieve."
Cosmetics firm Avon is one the best-known brand names that uses direct sellers and has five million representatives worldwide. As a rough guide sellers can earn £1 for every £4 sold, so if you sold £200 worth of stock you'd get £50. It costs £15 to become a representative. Once you've been a successful representative you can become a sales leader, manage a team and earn commission on your team's sales.
Betterware distributors earn a minimum of 20 per cent of their sales plus bonuses. There are opportunities to become a "co-ordinator" or "territory sales agent" and earn more, although these roles require you to have access to a car and a computer.
Sellers with jewellery company Silpada need to make an initial investment of £149 and they then earn 30 per cent commission on sales as well as getting a 50 per cent discount on jewellery they buy for themselves.
People new to direct selling should beware of invitations to take a short cut to a higher appointment by investing large amounts in stock. Most direct selling businesses will require you to make an initial investment of only about £100.
Always make sure you receive a proper written contract and that you understand it. Check details about when and how much you'll be paid as well as payments for recruiting other sellers and whether you'll earn commission on their sales.
A final word of warning: make sure you don't get direct selling confused with pyramid selling or network marketing. These kind of online business opportunities tend to be offered to Britons by companies based overseas. In most cases there is not an actual physical product sold – just a lot of money changing hands until the scheme eventually collapses.
"Pyramid selling is illegal in the UK and many other countries and is a type of fraud which is disguised to look like direct selling," warns Mr Southworth. "Pyramid selling is where recruits pay an admission fee to join and then earn commissions on persuading others to join rather than supplying any real investment or sale of products or services to the public."
Allain McLeish, 61, Direct seller for Pampered Chef
Mrs McLeish, from Aberdeenshire, has worked for the kitchen and cookery company for 11 years and is now in charge of a sales team with a turnover of £3.5m a year.
She first got involved in direct selling 13 years ago after she had children. Back then she was nervous about re-entering the workplace. Previously a secretary in the oil industry, her first direct selling job was with Tupperware. After a year and a half, she moved to a similar role at Dorling Kindersley books.
"I earned commission on what my sales people sold as well as what I sold," she says. "I was earning about £1,000 to £2,000 per month which kept us going when my husband then lost his job."
After Dorling Kindersley was sold off. a friend recommended Pampered Chef which sells kitchen equipment such as pots and pans and cooking dishes.
Mrs McLeish says: "Pampered Chef consultants find a host to host a party. The host buys food for about £10 which the Pampered Chef consultant cooks using Pampered Chef equipment. While the food's in the oven people can buy the kitchen goods. The host gets about £100 worth of freebies and the consultant commission on the sales."
Over the past 11 years Mrs McLeish has recruited about 100 people to Pampered Chef and they in turn have recruited about 500 people, giving her a sales force which has a turnover of about £3.5m a year.
She says direct selling has worked wonders for her self-confidence as well as her bank balance. "I've gone from shaking with nerves at my first cooking show to demonstrating cooking equipment in front of 200 people," she says, "Direct selling has enabled us to put our children though university and pay for my daughter's wedding.
"I also became the breadwinner when my husband was made redundant."
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