Party Model Delivers for Some Direct Sellers

"People like to associate with companies that have a broader mission," says Amy Robinson, senior vice president and chief marketing officers at the Direct Selling Association, which has 200 active members. "Almost all direct sellers started with a single entrepreneur at home, with a very specific reason for why they started. 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."

The gloomy employment situation has also meant that there are more people out there looking for alternate sources of income. The vast majority of sales consultants (about 90%) work part time, spending less than 10 hours a week on their business and making a median annual income of $2,400 a year. The goal is not to support the whole family (although some super-sellers do), but to pay for the kids' summer camp or a vacation.

For some struggling families, though, those few thousand dollars can mean the difference between making a car payment and having that car repossessed. Sales consultants whose spouses are out of work, or whose children have moved back home after college because they can't find jobs, may find that friends and neighbors are happy to buy their products because they want to help out. In a recent survey conducted by the Direct Selling Association, respondents said the highest motivator for buying products through direct sellers was to support a small, local business.

The direct-selling start-ups that have thrived over the past few years are those that sell affordable luxuries: treat-yourself items that can be bought on impulse but also have a practical function. Idaho-based Scentsy, which specializes in wickless candles, was founded in 2004. Since then, it experienced explosive growth, with revenue climbing to more than $500 million last year. That continued growth has been driven by the company's expansion into other scent-related products, such as bath gel and laundry fragrances.

Thirty-One Gifts was founded in 2003 by an Ohio mother who began sewing purses in her basement. The company now has more than 60,000 consultants, who sell a range of bags and home organization products in bright, stylish patterns. The company's name refers to a Bible passage that describes a hard-working, well-respected wife and mother, and the company's roots in the Christian community has helped it spread through church-based social networks.