Many staying home to work direct-sales jobs

McClatchy Newspapers (MCT) - The modern-day version of the Avon lady is holding her own in this recession.

In fact, more people turn to pushing everything from jewelry to home decor at home parties and other functions _ and see healthy sales _ during recession years.

Many say this year is no exception, as people look for ways to make up income lost through pay cuts, furloughs and layoffs. Sales are increasing or holding steady as buyers indulge in relatively inexpensive purchases.

The practice called direct sales has gone far beyond the days of the Avon cosmetics to include scrapbooking supplies, chocolate, purses, "bedroom accessories" and fuel additives.

Most sellers pay up to several hundred dollars up front for a kit before they start selling. And many are both sellers and managers, recruiting others to work under them and taking a share of their sales _ sometimes in the thousands of dollars per month.

The Washington, D.C.-based Direct Selling Association studied the number of direct sellers beginning in 1987. In the three recession years during that time period, the growth rate of new sellers was 8.4 percent, above the typical 6.9 percent growth rate in non-recession years.

The year 2007 didn't fit that trend, with the product sales and the number of sellers slightly down, but many local sellers say that as the recession deepened, they saw more people sign up and sales remain healthy.

Alma Colado of Selma, Calif., has sold Cookie Lee jewelry for four years in addition to her full-time job as an accountant. In typical years, she'd sign up one new seller a month. This year, she's signed up five and is getting between four and six calls a week from people interested in becoming sellers.

The phone calls were once inspired by people wanting a little extra spending money. But these days, many of the calls Colado gets are need-based.

"I get people lately that are full-time employees like me and they're looking for something on the side to have a little more security," Colado said. "They're getting prepared."

She's also seeing more stay-at-home moms wanting to contribute to the household's income because their husbands have taken pay cuts or are working fewer hours.

More than 80 percent of direct sale consultants are women, according to the association.

Making a connection

Pure Romance consultant Cheryl Johnson of Fresno has also signed up more sellers than average this year. Johnson sells the company's "bedroom accessories" such as lotions and other more racy products at discreet home parties.

Last year, she recruited 12 people to sell. This year, she's signed up seven.

Find the Perfect New Rosary at 15% off!

Pure Romance and others are taking advantage of the interest, offering deals for new sellers. Johnson's company offered free starter kits to 1,000 laid-off women nationwide.

Others are offering specials. Kristin Mendoza of Fresno, Calif., became an Uppercase Living consultant, buying her starter kit at $99 instead of the typical $150.

Mendoza got into direct sales after being furloughed two days a month along with thousands of other state workers.

The cut in hours translated to a 10 percent pay cut for Mendoza, a supervisor at State Fund, California's self-funded workers' compensation insurance carrier.

With extra time and less income, she sells vinyl stick-on letters for Uppercase Living. The letters are typically stuck on walls, featuring phrases like "Welcome to our home" or "It's not easy being a princess."

SALES UP, TOO

It's not just the numbers of sellers that are increasing. Sales of the products are rising as well.

During the recession years since the late 1980s, direct sales rose an average of 4.5 percent, said Direct Selling Association executive Amy Robinson. Regular retail sales fell 3.3 percent during those same years, she said.

"People don't stop spending during a recession, they're just more careful about how they spend," she said. "They're looking for a little ... reminder that things are not that bad."

Tanell Herbert, who recruited Uppercase Living demonstrator Mendoza, said her sales are up 140 percent in the first quarter of this year compared to the same time last year.

People are "nesting," spending more time at home and paying more attention to their surroundings, a trend the National Retail Federation noticed over the most recent holiday shopping season and after the 9/11 terrorist attacks.

"Because they're not going out on vacation anymore and they're not doing dinners (out), they want their homes to be comfortable because they're in them more," Herbert said.

Johnson of Pure Romance said her sales steadily increased through 2008, and are up slightly this year.

She also attributes the healthy sales to people staying at home.

At Cookie Lee, nationwide jewelry sales are "slightly down" _ they wouldn't say how much _ but not as drastic as the decreases that retail stores are facing, said Alice Kim, director of marketing for Tustin-based Cookie Lee.

The items are low-priced, with everything under $50. Kim said sales aren't dropping more because of the jewelry's versatility: many of the necklaces are designed to double as belts or bracelets.

Likewise, sales are flat this year for jewelry seller Silpada after a record year in 2008. But with signups of new sellers up 8 percent in the first few weeks of March, Silpada CEO Jerry Kelly said he expects them to push sales up soon.

Announcing NEW Catholic Online News - Visit Today!

NOT FOR EVERYONE

There are some red flags to look out for when considering the industry, said Tim Stearns, director of the Lyles Center for Innovation and Entrepreneurship at California State University, Fresno.

Not all companies are reputable, he said.

Google the company name along with "reputation" before signing up, he said.

"There's a lot of people that will take advantage of the situation," he said. "They know a lot of people are anxious right now and receptive to the sales pitches."

He also recommended reading the contract closely. Make sure the seller's cut of the sales is enough to justify the time spent on it.

The Direct Selling Association requires member companies to repurchase any products the seller bought in the last 12 months at 90 percent of the purchase price if the seller leaves the business.

Stearns also recommended checking on limits on the number of sellers who can sign up in your area. If every other person in your neighborhood is selling the same jewelry, you'll have a tough time competing.

Also, make sure the up-front fee isn't too large, he said.

___

© 2009, The Fresno Bee (Fresno, Calif.).