In the age of online shopping, Facebook and Pinterest, you'd think that in-home group product demos (such as the famous Tupperware party) would have gone the way of the telegram.
Think again. Not only are direct-sales companies thriving with the in-home demo model, but startups are starting to join the party. For example, Idaho-based Scentsy, founded in 2004, has selling soirees for its wickless candles. Last year its revenue was more than $500 million. Skincare line Rodan + Fields has grown rapidly since 2008, with a direct sales model that results in an average customer bill of $200 or more.
In Michigan, two friends, Connie Michael and AnnMarie Di-Legge, began offering spray-tan parties using their all-natural and organic tan-in-a-bottle. The company, Pure Sunless Tan, requires 10 clients per party, and the cost of a tan will run you $28 to $35 for their services. Another selling point: Their spray tan is the preferred product of "Dancing With the Stars" contestants.
"It's a great way to have some fun, meet women and have a job but not a career," Michael says. She adds that the partnership is particularly effective because while one of them is busy spraying, the other can watch the kids and entertain the guests.
According to an article by Elizabeth Blackwell of TheStreet.com, direct selling has clear cost benefits.
"You don't need to lease retail space or pay employee salaries. And independent sales consultants, who work on commission, market your products through word of mouth, saving on advertising costs."
Treating Yourself for a Good Cause
But with money tight and times uncertain, does anyone really want to attend a party devoted to handing over some hard-earned dollars? Well, it turns out that customers are more numerous (and spend bigger) than you might think. Although buyers are still value-minded, all consumers likes to treat themselves now and again, especially if they think their purchase means something.
"Americans are going to spend a bit more because I think they are a little tired of the economy, unemployment and how tough things are," Arkadi Kuhlmann, ING Direct USA chairman and president, told ABC News. "So I think they're going to spoil themselves a bit more."
Plus, shoppers tend to buy when they are attracted to an entrepreneurial story.
"People like to associate with companies that have a broader mission," Amy Robinson, senior vice president and chief marketing officer at the Direct Selling Association, told TheStreet.com. "One of the first things you learn in Direct Selling 101 is that people are attracted to that story. You have to give them something to relate to."
She cited a recent survey by the association in which respondents said the highest motivator for buying products through direct sellers was to support a small, local business. And beyond that, who doesn't like a party?
"People tend to go out less now, but they still want to see their friends," she said. "They are looking for an escape."
What experience do you have with the product-party model? Would you recommend it–or try it?
Photo credit: Prelinger Archives (Creative Commons)