Direct selling is the marketing of consumer goods and services directly to consumers on a person-to-person basis, generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations.
Direct selling offers customers the opportunity to see, test and judge a product at their leisure in their own homes or among friends. All goods are delivered directly to the customer. It is especially useful for consumers in rural areas and small towns, making available goods and services not provided through outlets in the area.
Direct selling occurs in two primary ways:
- on a one-to-one basis (usually by prior arrangement a demonstration is given by a direct seller to a customer) or
- on a party-plan basis (selling through explanation and demonstration of products to a group of prospective customers by a direct seller usually in the home of a hostess who invites other persons for this purpose).
There are many ways of organizing a direct selling company. Some companies use a network or Multilevel marketing (MLM) structure, where goods and services are supplied to consumers for final consumption through sales made by a network of independent direct sellers. These direct sellers may receive remuneration based on their own sales of goods and services to consumers, and from the sales to consumers generated by their network of other independent direct sellers who have been recruited and trained in the business.
Direct selling is a form of non-store retailing.
Direct selling IS NOT selling by Internet, by telephone or mail order without the simultaneous physical presence of the direct seller and the consumer. These sales methods are forms of distance selling. Distance contracts are concluded through the exclusive use of one or more means of distance communications.
Direct selling IS NOT pyramid selling. A pyramid scheme is any plan or operation by which a participant pays or promises to pay for the opportunity to receive compensation, primarily derived from the person’s introduction of other persons into a plan or operation, rather than the sale of goods and services by the participant or other persons introduced into the plan or operation. There are mechanisms by which promoters of so-called ‘investment’ or ‘trading’ schemes enrich themselves in geometric progression through the payment made by recruits to such schemes. Related fraudulent schemes have been described in various international jurisdictions as ‘chain letters’, ‘snow ball schemes’, ‘chain selling’, ‘money games’, or ‘investment lotteries’.