Types of Direct Selling

Direct selling refers to selling products directly to the consumer in a non-retail environment. Instead, sales occur at home, work, online, or other non-store locations.

This system often eliminates several of the middlemen involved in product distribution, such as the regional distribution center and wholesaler. Instead, products go from manufacturer to the direct sales company, to the distributor or rep, and then to the consumer. 

The products sold through direct sales are usually not found in typical retail locations, which means finding a distributor or rep is the only method to buy the products or services. 

Direct selling is usually associated with party-plan and network marketing companies. Although these companies use direct sales, they aren't the only ones. Many businesses that sell business-2-business (B2B) use direct selling to target and sell to their end customer. For example, many companies that sell advertising or office supplies will send their reps directly into the stores that can use their services.

Don't confuse direct selling with direct marketing. Direct selling is when individual salespeople reach out to consumers directly, whereas direct marketing is when a company markets directly to the consumer.

Types of Direct Selling

There are a variety of ways business owners can sell directly to consumers through direct selling. 

Single-level Direct Sales: This type of sales is done one-on-one, such as through door-to-door or in-person presentations. Sales can be done online or through catalogs, as well. Generally, income is earned on sales commissions, with possible bonuses.

Host or Party-Plan Sales: This type of sales is done in a group setting, usually involving the distributor or rep doing a presentation in their home or another person's home. In some cases, a company might sell to individuals in a business. For example, a real estate software sales rep might do a group sales presentation to a group of Realtors (R). Income can come from commissions from sales, and sometimes through the recruitment of other reps (see multi-level marketing below).

Multi-level Marketing (MLM): Sales in multi-level marketing are made in a variety of ways, including single or party presentations, but also through online stores and catalogs. Income earned through MLM is commission on sales, and the sales made by other business partners the distributor recruits into the company. 

Sometimes direct sales is called MLM or network marketing, however, these terms are not interchangeable. While MLM and network marketing are a form of direct sales, not all direct sales systems involve MLM. For example, in single-level marketing the sales representative is only paid commission on the sales he or she personally makes. In this case, there is no recruitment of other sales team members or commissions earned from their sales.