World Federation of Direct Sales Association
Introduction
Direct selling is a dynamic, vibrant, rapidly expanding channel of distribution for the marketing of products and services directly to consumers. The purpose of this paper is to describe direct selling and the benefits that it brings to the marketplace.
Founded in 1978, the WFDSA is a non-governmental, voluntary organization representing the direct selling industry globally as a federation of national Direct Selling Associations (DSAs). There are presently over 53 national DSAs represented in its membership, and in 2001 it is estimated that worldwide retail sales by its members accounted for more than $78 billion US through the activities of more than 43 million independent salespersons.
The World Federation and its national DSAs have always understood the necessity for ethical conduct in the marketplace and as such the WFDSA has developed a World Codes of Conduct for Direct Selling which all national DSAs have approved and implemented in their national codes. All direct selling companies agree to be bound by these codes as a condition of membership in a national DSA.
Direct Selling
Direct selling provides important benefits to individuals who desire an opportunity to earn an income and build a business of their own; to consumers who enjoy an alternative to shopping centers, department stores or the like; and to the consumer products market. It offers an alternative to traditional employment for those who desire a flexible income earning opportunity to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full time employment. In many cases, direct selling opportunities develop into a fulfilling career for those who achieve success and choose to pursue their independent direct selling business on a full time basis.
The cost for an individual to start an independent direct selling business is typically very low. Usually, a modestly priced sales kit is all that is required for one to get started, and there is little or no required inventory or other cash commitments to begin. This stands in sharp contrast to franchise and other business investment opportunities which may require substantial expenditures and expose the investor to a significant risk of loss.
Consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. Moreover, direct selling provides a channel of distribution for companies with innovative or distinctive products not readily available in traditional retail stores, or who cannot afford to compete with the enormous advertising and promotion costs associated with gaining space on retail shelves. Direct selling enhances the retail distribution infrastructure of the economy, and serves consumers with a convenient source of quality products.
An important component of the Direct Selling industry is multilevel marketing. It is also referred to as network marketing, structure marketing or multilevel direct selling, and has proven over many years to be a highly successful and effective method of compensating direct sellers for the marketing and distribution of products and services directly to consumers.
Direct selling should not be confused with terms such as direct marketing or distance selling which may be described as an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location, with this activity stored on a database. Some commonly known types of direct marketing and distance selling techniques are telemarketing, direct mail, and direct response.
Although direct selling organizations occasionally use some direct marketing or distance selling techniques and technology to enhance their businesses, the primary difference between the two methods of marketing is the face to face, or personal presentation that is always an aspect of the direct selling relationship.
What is Direct Selling?
Direct selling provides important benefits to individuals who desire an opportunity to earn an income and build a business of their own; to consumers who enjoy an alternative to shopping centers, department stores or the like; and to the consumer products market. It offers an alternative to traditional employment for those who desire a flexible income earning opportunity to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full time employment. In many cases, direct selling opportunities develop into a fulfilling career for those who achieve success and choose to pursue their independent direct selling business on a full time basis.
The cost for an individual to start an independent direct selling business is typically very low. Usually, a modestly priced sales kit is all that is required for one to get started, and there is little or no required inventory or other cash commitments to begin. This stands in sharp contrast to franchise and other business investment opportunities which may require substantial expenditures and expose the investor to a significant risk of loss.
Consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. Moreover, direct selling provides a channel of distribution for companies with innovative or distinctive products not readily available in traditional retail stores, or who cannot afford to compete with the enormous advertising and promotion costs associated with gaining space on retail shelves. Direct selling enhances the retail distribution infrastructure of the economy, and serves consumers with a convenient source of quality products.
An important component of the Direct Selling industry is multilevel marketing. It is also referred to as network marketing, structure marketing or multilevel direct selling, and has proven over many years to be a highly successful and effective method of compensating direct sellers for the marketing and distribution of products and services directly toconsumers.
Direct selling should not be confused with terms such as direct marketing or distance selling which may be described as an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location, with this activity stored on a database. Some commonly known types of direct marketing and distance selling techniques are telemarketing, direct mail, and direct response.
Although direct selling organizations occasionally use some direct marketing or distance selling techniques and technology to enhance their businesses, the primary difference between the two methods of marketing is the face to face, or personal presentation that is always an aspect of the direct selling relationship.
Benefits of Direct Selling
Research shows some of the most popular reasons people choose direct selling are:
Direct selling is a good way to meet and socialize with people.
Direct selling offers flexible work schedules.
Direct selling is a good way to earn extra income.
Direct selling is a good way to own a business.
Earnings are in proportion to efforts.
Anyone can do it.
There are no required levels of education, experience, financial resources or physical condition.
People of all ages and from all backgrounds have succeeded in direct selling.
Direct sellers are independent contractors. You're your own boss, which means you can:
Work part-time or full-time - you choose when and how much you want to work.
Set your own goals and determine yourself how to reach them.
Earn in proportion to your own efforts. The level of success you can achieve is limited only by your willingness to work hard.
Own a business of your own with very little or no capital investment.
Receive training and support from an established company.
Direct Selling FAQ
"How can my company join the World Federation?"
The WFDSA is an association of more than 58 Direct Selling Associations (DSA) and one regional federation from around the world. The WFDSA is not comprised of individual companies, although board representatives typically do come from member companies. Companies may have access to WFDSA programs, activities and publications through membership in a DSA. If your DSA is not a member of the WFDSA and is interested in applying for membership, please refer to the following link:. CEOs of direct selling companies that operate in 2 or more markets may join the WFDSA CEO Council. For more information on CEO Council membership please refer to the following link:
"My company is a member of a DSA, how can I become more involved in WFDSA and/or international forums?"
The WFDSA is not comprised of individual companies, although board representatives typically do come from member companies. Your CEO can join the WFDSA CEO Council which is the primary governing body of WFDSA. The CEO Council sets the Federation's policies, approves the budget and directs the program of work
"I am interested in receiving World Federation News, how can I subscribe?"
World Federation News is published quarterly and is available only to WFDSA-member DSAs and their respective company members. Copies of current and past issues can be downloaded from the Members Only section of the WFDSA website World Federation News.
"Can I get a list of direct selling companies around the world?"
The WFDSA directory is available online in a searchable format. The WFDSA directory includes contact information of DSAs around the world, DSA-member companies, WFDSA committee members and Code Administrators.
"What products and services are marketed through direct selling?"
Virtually every consumer product or service can be purchased through direct selling. People who purchase through direct selling cite product quality, uniqueness and money-back guarantees as the top reasons for shopping through direct selling.
"What is the difference between direct selling and direct marketing?"
Direct selling is selling a product or service in either a person-to-person or party plan method. Direct marketing is catalogue sales.
"What is the difference between direct selling and multilevel marketing?"
Direct selling refers to a distribution method, whereas multilevel marketing refers more specifically to a type of compensation plan found in direct selling. A direct selling company that offers a multilevel compensation plan pays its representatives/distributors based not only on one's own product sales, but on the product sales of one's "downline" (the people a representative/distributor has brought into the business, and, in turn, the people they have brought into the business).
"What is the difference between single level and multilevel compensation plans?"
Single level compensation plan means a representative/distributor is compensated based solely on one's own product sales. In a multilevel compensation plan, representatives/distributors are compensated based not only on one's own product sales, but on the product sales of one's downline
Don't make a costly mistake!
Thousands of people have lost a substantial amount of money by participating in pyramid schemes. Many of the victims knew they were gambling (although they didn't know the odds were rigged against them). Many others, however, thought they were paying for help in starting a small business of their own. These people were fooled by pyramid schemes disguised to look like legitimate businesses.
The purpose of this article is to help you avoid falling victim to pyramid schemes, whether simple or disguised. Simple pyramid schemes are similar to chain letters, while disguised pyramids are like wolves in sheep's clothing, hiding their true nature in order to fool potential investors and evade law enforcers.
What is a Pyramid Scheme?
Pyramid schemes are illegal scams in which large numbers of people at the bottom of the pyramid pay money to a few people at the top. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later. For example, to join, you might have to pay anywhere from a small investment to thousands of dollars. In this example, $1,000 buys a position in one of the boxes on the bottom level. $500 of your money goes to the person in the box directly above you, and the other $500 goes to the person at the top of the pyramid, the promoter. If all the boxes on the chart fill up with participants, the promoter will collect $16,000, and you and the others on the bottom level will each be $1,000 poorer. When the promoter has been paid off, his box is removed and the second level becomes the top or payoff level. Only then do the two people on the second level begin to profit. To pay off these two, 32 empty boxes are added at the bottom, and the search for new participants continues.
Each time a level rises to the top, a new level must be added to the bottom, each one twice as large as the one before. If enough new participants join, you and the other 15 players in your level may make it to the top. However, in order for you to collect your payoffs, 512 people would have to be recruited, half of them losing $1,000 each.
Of course, the pyramid may collapse long before you reach the top. In order for everyone in a pyramid scheme to profit, there would have to be a never-ending supply of new participants.
In reality, however, the supply of participants is limited, and each new level of participants has less chance of recruiting others and a greater chance of losing money.
Things you should know about pyramid schemes
1. They are losers. Pyramiding is based on simple mathematics: many losers pay a few winners.
2. They are fraudulent. Participants in a pyramid scheme are, consciously or unconsciously, deceiving those they recruit. Few would pay to join if the diminishing odds were explained to them.
3. They are illegal. There is a real risk that a pyramid operation will be closed down by the officials and the participants subject to fines and possible arrest.
Why would anyone pay to join a pyramid scheme?
Pyramid promoters are masters of group psychology. At recruiting meetings they create a frenzied, enthusiastic atmosphere where group pressure and promises of easy money play upon people's greed and fear of missing a good deal. Thoughtful consideration and questioning are discouraged. It is difficult to resist this kind of appeal unless you recognize that the scheme is rigged against you.
Disguised pyramid - wolf in sheep's clothing
Some pyramid promoters try to make their schemes look like multilevel marketing methods. Multilevel marketing is a lawful and legitimate business method which uses a network of independent distributors to sell consumer products.
To look like a multilevel marketing company, a pyramid scheme takes on a line of products and claims to be in the business of selling them to consumers. However, little or no effort is made to actually market the products. Instead, money is made in typical pyramid fashion, from recruiting. New distributors are pushed to purchase large and costly amounts of inventory when they sign up.
For example, you might have to purchase $1,000 of nearly worthless products in order to become a "distributor." The person who recruited you receives $500 (a fifty percent commission) and $500 goes to the top (the company, in this case). Notice the similarity to the simple pyramid scheme described earlier.
Most disguised pyramids, however, are not this easy to unmask. Pyramid schemes often choose products which are cheap to produce but which have no established market value, such as new miracle products, exotic cures, etc. This makes it difficult to tell whether there is a real consumer market for the products. The best way to avoid a disguised pyramid fraud is to know what to look for in a legitimate income opportunity.
How to Protect Yourself
1. Take your time. Don't let anyone rush you. A good opportunity to build a business in a multilevel structure will not disappear overnight. People who say "get in on the ground floor" are implying that people joining later will be left out in the cold. BEWARE!
2. Ask questions:
About the company and its officers.
About the products - their cost, fair market value, source of supply, and potential market in your area.
About the start up fee (including required purchases).
About the company's guaranteed buy-back of required purchases.
About the average earnings of active distributors.
3. Get written copies of all available company literature.
4. Consult with others who have had experience with the company and its products. Check to see if the products are actually being sold to consumers.
5. Investigate and verify all information. Do not assume that official looking documents are either accurate or complete.
Source: WFDSA official site
Direct selling is a dynamic, vibrant, rapidly expanding channel of distribution for the marketing of products and services directly to consumers. The purpose of this paper is to describe direct selling and the benefits that it brings to the marketplace.
Founded in 1978, the WFDSA is a non-governmental, voluntary organization representing the direct selling industry globally as a federation of national Direct Selling Associations (DSAs). There are presently over 53 national DSAs represented in its membership, and in 2001 it is estimated that worldwide retail sales by its members accounted for more than $78 billion US through the activities of more than 43 million independent salespersons.
The World Federation and its national DSAs have always understood the necessity for ethical conduct in the marketplace and as such the WFDSA has developed a World Codes of Conduct for Direct Selling which all national DSAs have approved and implemented in their national codes. All direct selling companies agree to be bound by these codes as a condition of membership in a national DSA.
Direct Selling
Direct selling provides important benefits to individuals who desire an opportunity to earn an income and build a business of their own; to consumers who enjoy an alternative to shopping centers, department stores or the like; and to the consumer products market. It offers an alternative to traditional employment for those who desire a flexible income earning opportunity to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full time employment. In many cases, direct selling opportunities develop into a fulfilling career for those who achieve success and choose to pursue their independent direct selling business on a full time basis.
The cost for an individual to start an independent direct selling business is typically very low. Usually, a modestly priced sales kit is all that is required for one to get started, and there is little or no required inventory or other cash commitments to begin. This stands in sharp contrast to franchise and other business investment opportunities which may require substantial expenditures and expose the investor to a significant risk of loss.
Consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. Moreover, direct selling provides a channel of distribution for companies with innovative or distinctive products not readily available in traditional retail stores, or who cannot afford to compete with the enormous advertising and promotion costs associated with gaining space on retail shelves. Direct selling enhances the retail distribution infrastructure of the economy, and serves consumers with a convenient source of quality products.
An important component of the Direct Selling industry is multilevel marketing. It is also referred to as network marketing, structure marketing or multilevel direct selling, and has proven over many years to be a highly successful and effective method of compensating direct sellers for the marketing and distribution of products and services directly to consumers.
Direct selling should not be confused with terms such as direct marketing or distance selling which may be described as an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location, with this activity stored on a database. Some commonly known types of direct marketing and distance selling techniques are telemarketing, direct mail, and direct response.
Although direct selling organizations occasionally use some direct marketing or distance selling techniques and technology to enhance their businesses, the primary difference between the two methods of marketing is the face to face, or personal presentation that is always an aspect of the direct selling relationship.
What is Direct Selling?
Direct selling provides important benefits to individuals who desire an opportunity to earn an income and build a business of their own; to consumers who enjoy an alternative to shopping centers, department stores or the like; and to the consumer products market. It offers an alternative to traditional employment for those who desire a flexible income earning opportunity to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full time employment. In many cases, direct selling opportunities develop into a fulfilling career for those who achieve success and choose to pursue their independent direct selling business on a full time basis.
The cost for an individual to start an independent direct selling business is typically very low. Usually, a modestly priced sales kit is all that is required for one to get started, and there is little or no required inventory or other cash commitments to begin. This stands in sharp contrast to franchise and other business investment opportunities which may require substantial expenditures and expose the investor to a significant risk of loss.
Consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. Moreover, direct selling provides a channel of distribution for companies with innovative or distinctive products not readily available in traditional retail stores, or who cannot afford to compete with the enormous advertising and promotion costs associated with gaining space on retail shelves. Direct selling enhances the retail distribution infrastructure of the economy, and serves consumers with a convenient source of quality products.
An important component of the Direct Selling industry is multilevel marketing. It is also referred to as network marketing, structure marketing or multilevel direct selling, and has proven over many years to be a highly successful and effective method of compensating direct sellers for the marketing and distribution of products and services directly toconsumers.
Direct selling should not be confused with terms such as direct marketing or distance selling which may be described as an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location, with this activity stored on a database. Some commonly known types of direct marketing and distance selling techniques are telemarketing, direct mail, and direct response.
Although direct selling organizations occasionally use some direct marketing or distance selling techniques and technology to enhance their businesses, the primary difference between the two methods of marketing is the face to face, or personal presentation that is always an aspect of the direct selling relationship.
Benefits of Direct Selling
Research shows some of the most popular reasons people choose direct selling are:
Direct selling is a good way to meet and socialize with people.
Direct selling offers flexible work schedules.
Direct selling is a good way to earn extra income.
Direct selling is a good way to own a business.
Earnings are in proportion to efforts.
Anyone can do it.
There are no required levels of education, experience, financial resources or physical condition.
People of all ages and from all backgrounds have succeeded in direct selling.
Direct sellers are independent contractors. You're your own boss, which means you can:
Work part-time or full-time - you choose when and how much you want to work.
Set your own goals and determine yourself how to reach them.
Earn in proportion to your own efforts. The level of success you can achieve is limited only by your willingness to work hard.
Own a business of your own with very little or no capital investment.
Receive training and support from an established company.
Direct Selling FAQ
"How can my company join the World Federation?"
The WFDSA is an association of more than 58 Direct Selling Associations (DSA) and one regional federation from around the world. The WFDSA is not comprised of individual companies, although board representatives typically do come from member companies. Companies may have access to WFDSA programs, activities and publications through membership in a DSA. If your DSA is not a member of the WFDSA and is interested in applying for membership, please refer to the following link:. CEOs of direct selling companies that operate in 2 or more markets may join the WFDSA CEO Council. For more information on CEO Council membership please refer to the following link:
"My company is a member of a DSA, how can I become more involved in WFDSA and/or international forums?"
The WFDSA is not comprised of individual companies, although board representatives typically do come from member companies. Your CEO can join the WFDSA CEO Council which is the primary governing body of WFDSA. The CEO Council sets the Federation's policies, approves the budget and directs the program of work
"I am interested in receiving World Federation News, how can I subscribe?"
World Federation News is published quarterly and is available only to WFDSA-member DSAs and their respective company members. Copies of current and past issues can be downloaded from the Members Only section of the WFDSA website World Federation News.
"Can I get a list of direct selling companies around the world?"
The WFDSA directory is available online in a searchable format. The WFDSA directory includes contact information of DSAs around the world, DSA-member companies, WFDSA committee members and Code Administrators.
"What products and services are marketed through direct selling?"
Virtually every consumer product or service can be purchased through direct selling. People who purchase through direct selling cite product quality, uniqueness and money-back guarantees as the top reasons for shopping through direct selling.
"What is the difference between direct selling and direct marketing?"
Direct selling is selling a product or service in either a person-to-person or party plan method. Direct marketing is catalogue sales.
"What is the difference between direct selling and multilevel marketing?"
Direct selling refers to a distribution method, whereas multilevel marketing refers more specifically to a type of compensation plan found in direct selling. A direct selling company that offers a multilevel compensation plan pays its representatives/distributors based not only on one's own product sales, but on the product sales of one's "downline" (the people a representative/distributor has brought into the business, and, in turn, the people they have brought into the business).
"What is the difference between single level and multilevel compensation plans?"
Single level compensation plan means a representative/distributor is compensated based solely on one's own product sales. In a multilevel compensation plan, representatives/distributors are compensated based not only on one's own product sales, but on the product sales of one's downline
Don't make a costly mistake!
Thousands of people have lost a substantial amount of money by participating in pyramid schemes. Many of the victims knew they were gambling (although they didn't know the odds were rigged against them). Many others, however, thought they were paying for help in starting a small business of their own. These people were fooled by pyramid schemes disguised to look like legitimate businesses.
The purpose of this article is to help you avoid falling victim to pyramid schemes, whether simple or disguised. Simple pyramid schemes are similar to chain letters, while disguised pyramids are like wolves in sheep's clothing, hiding their true nature in order to fool potential investors and evade law enforcers.
What is a Pyramid Scheme?
Pyramid schemes are illegal scams in which large numbers of people at the bottom of the pyramid pay money to a few people at the top. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later. For example, to join, you might have to pay anywhere from a small investment to thousands of dollars. In this example, $1,000 buys a position in one of the boxes on the bottom level. $500 of your money goes to the person in the box directly above you, and the other $500 goes to the person at the top of the pyramid, the promoter. If all the boxes on the chart fill up with participants, the promoter will collect $16,000, and you and the others on the bottom level will each be $1,000 poorer. When the promoter has been paid off, his box is removed and the second level becomes the top or payoff level. Only then do the two people on the second level begin to profit. To pay off these two, 32 empty boxes are added at the bottom, and the search for new participants continues.
Each time a level rises to the top, a new level must be added to the bottom, each one twice as large as the one before. If enough new participants join, you and the other 15 players in your level may make it to the top. However, in order for you to collect your payoffs, 512 people would have to be recruited, half of them losing $1,000 each.
Of course, the pyramid may collapse long before you reach the top. In order for everyone in a pyramid scheme to profit, there would have to be a never-ending supply of new participants.
In reality, however, the supply of participants is limited, and each new level of participants has less chance of recruiting others and a greater chance of losing money.
Things you should know about pyramid schemes
1. They are losers. Pyramiding is based on simple mathematics: many losers pay a few winners.
2. They are fraudulent. Participants in a pyramid scheme are, consciously or unconsciously, deceiving those they recruit. Few would pay to join if the diminishing odds were explained to them.
3. They are illegal. There is a real risk that a pyramid operation will be closed down by the officials and the participants subject to fines and possible arrest.
Why would anyone pay to join a pyramid scheme?
Pyramid promoters are masters of group psychology. At recruiting meetings they create a frenzied, enthusiastic atmosphere where group pressure and promises of easy money play upon people's greed and fear of missing a good deal. Thoughtful consideration and questioning are discouraged. It is difficult to resist this kind of appeal unless you recognize that the scheme is rigged against you.
Disguised pyramid - wolf in sheep's clothing
Some pyramid promoters try to make their schemes look like multilevel marketing methods. Multilevel marketing is a lawful and legitimate business method which uses a network of independent distributors to sell consumer products.
To look like a multilevel marketing company, a pyramid scheme takes on a line of products and claims to be in the business of selling them to consumers. However, little or no effort is made to actually market the products. Instead, money is made in typical pyramid fashion, from recruiting. New distributors are pushed to purchase large and costly amounts of inventory when they sign up.
For example, you might have to purchase $1,000 of nearly worthless products in order to become a "distributor." The person who recruited you receives $500 (a fifty percent commission) and $500 goes to the top (the company, in this case). Notice the similarity to the simple pyramid scheme described earlier.
Most disguised pyramids, however, are not this easy to unmask. Pyramid schemes often choose products which are cheap to produce but which have no established market value, such as new miracle products, exotic cures, etc. This makes it difficult to tell whether there is a real consumer market for the products. The best way to avoid a disguised pyramid fraud is to know what to look for in a legitimate income opportunity.
How to Protect Yourself
1. Take your time. Don't let anyone rush you. A good opportunity to build a business in a multilevel structure will not disappear overnight. People who say "get in on the ground floor" are implying that people joining later will be left out in the cold. BEWARE!
2. Ask questions:
About the company and its officers.
About the products - their cost, fair market value, source of supply, and potential market in your area.
About the start up fee (including required purchases).
About the company's guaranteed buy-back of required purchases.
About the average earnings of active distributors.
3. Get written copies of all available company literature.
4. Consult with others who have had experience with the company and its products. Check to see if the products are actually being sold to consumers.
5. Investigate and verify all information. Do not assume that official looking documents are either accurate or complete.
Source: WFDSA official site
