The direct-selling industry has an image problem. At best, this business model — the marketing and selling of products directly to consumers, away from a retail location — conjures up door-to-door salespeople dependent on middle-aged women nagging friends for the names of their friends. At worst, its association with the term "multilevel marketing" has become synonymous with pyramid schemes, fair or not. For doubters, it's worth noting that Berkshire Hathaway placed its own stamp of approval on the direct-sales industry; the multinational holding company has owned Pampered Chef since 2003.
Today a new version of this industry is booming, appealing to a younger generation of entrepreneurs who can tap into social media rather than knock on front doors. According to the Direct Selling Association, more than 18 million Americans make a living or supplement their income with direct sales, adding $34 billion to the economy in 2014.
"It's a model that allows young people with less capital and maybe with even less experience to get into an entrepreneurial experience," said Joseph Mariano, president of the DSA, who said 2015 growth numbers should show an uptick of about 3 percent to 5 percent. "Our model is flexible enough for young people to engage in these sales actions however they like."
Mariano notes that roughly 75 percent of sellers within the industry are women, down from about 90 percent a few decades ago, but more men and married couples are joining the ranks and finding a better work/life balance than the corporate world provided.
Here are the stories of seven stars in the direct-selling industry, many pulling in six-figure incomes and on their way to $1 million in annual sales.
— By Maggie Overfelt, special to CNBC.com
Posted 23 May 2016
For Denver couple Lindsay and Michael Moreno, a career in direct selling has fostered upward of $1 million in annual income.
Lindsay, 35, started with Young Living, which sells essential oils, three years ago to supplement her time as a stay-at-home mother. A friend introduced her to Young Living oils when she was searching for a natural way to keep her three kids healthy before a long trip. "I fell in love with the stuff, and it was easy to talk about," she said.
She bought a Young Living starter kit — which comes with various oils, diffusers and back-end support and ranges in price from $45 to $260 — and started sharing on Facebook how she was using the oils, passing out her membership number. Soon "I had an accidental paycheck, and I wondered, If I can make $700 without trying, how many people could I talk to if I really did try?"
The first month, she made $3,000 in sales. She soon created her own Young Living user brand (the Lemon Droppers) and a Facebook group, where she posted educational videos of how to use Young Living products and how to leverage social media to run a Young Living team. When she hit 100,000 members, she asked Michael to quit his job to help her with the back end of her business (e.g. taxes). "He told me we needed money for six months of our expenses in a savings account and that I needed to bring in $20,000 a month [in sales] for three months."
Lindsay hit that three months later.
Laveda Whitfield wasn't looking for another job or income stream when she started hosting parties to sell Traci Lynn jewelry 10 years ago. Rather, the D.C.-area software analyst fell for the jewelry when a friend was wearing it during lunch, then became further intrigued by the brand when she tagged along to a presentation where the firm's CEO spoke.
Whitfield sold out of every piece of jewelry in her $650 starter kit at her first party, a Memorial Day family gathering. (Traci Lynn's investment price range starts at $99.) "I made my investment back in one show," said Whitfield, 44.
For 18 months Whitfield hosted about two shows a month in the evenings after work, concentrating on selling as many items as she could (she also attributes a good portion of her sales to wearing the jewelry whenever she goes out.) Her income from jewelry sales had just started to match her day-job salary when she underwent surgery that required eight weeks of bed rest. During that time, Whitfield's husband, an IT consultant who does contract work with the government, reviewed Traci Lynn's compensation plan for distributors and convinced her to quit her day job and make the leap.
"Since I wasn't able to go out and physically sell the jewelry, I started having conference calls twice a week with potential team members," she said. "As soon as I was able to get busy and mobile again, we'd coach each other, show up at parties, and my team started to grow — I was having so much fun. I had a replacement of income, and I didn't have to [commute]."
Whitfield, who flies all over the country teaching the sellers in her 5,000-strong group how to close recruits, how to leverage social media to reach more buyers and how to stay positive, pulls in well over six figures in annual income. A few years back, when her husband found himself out of work for nearly two years, Whitfield was able to sustain her family's lifestyle with the income from her sales.
After doctors diagnosed Kim Young's third son with Tourette syndrome — her first two also had the disorder — she figured that quitting her direct-sales gig with a crafting company to take a 9-to-5 corporate job would offer the stability that her family needed to deal with the challenges of their situation. (Her husband's corporate job supplied the family's benefits.)
It turned out to be a bad fit: She found herself continually having to leave the office to answer calls from the school nurse to come help with her son's tics. "His neck would get locked because his tics were so bad that I would have to go massage that out for him," she said. "I really had to be available 24/7 for my kids."
She eventually joined Tastefully Simple, a Minnesota firm founded in 1995 that sells quick-prep meals. "Everyone eats; it's a product that people will keep coming back for," said Young, 51, who is based in Sinking Springs, Pennsylvania.
It also offered her the flexibility to work around the homeschooling of two of her kids, as well as the extra income the family needed to buy a larger house so each boy — whose tics would sometimes keep the others awake at night — could have his own room.
Young, leveraging skills from her first corporate job selling phone systems for a telecom company decades ago, worked 30 to 40 hours a week around her boys' study time. Within two years she made it to a six-figure income with Tastefully Simple; Young said her current income from the business exceeds $100,000 a year. After paying off some medical debt, the family was able to purchase a new home.
Today Young, who has been selling Tastefully Simple for nearly 16 years, still works 30 hours a week coaching her 1,000-person team, although two out of three of her sons are out of the house. "There is nothing else I could have done that would have allowed me to stay home with them," she said.
Carrie Bohlig started selling Amway products just before college graduation nearly 10 years ago as a backup plan to go with her liberal studies degree. The investment required to start: $62.
"I saw most of my friends who were a few years ahead of me struggling financially," said Bohlig, 32, who was introduced to Amway by a college friend. "Amway sold me on a pretty long-term business model, and [the brand] had a track record of success, which spoke volumes to me."
The first thing that Bohlig took away from Amway was the business-skills training the firm provided online and via workshops. "I felt that I had to empower myself and develop those professional and leadership skills while I was learning how to sell the products," said Bohlig, who is based in Madison, Wisconsin. "Over time I learned how to educate and train others in what I was doing."
In 2007, Bohlig started teaching and kept Amway as an evening and weekend job. But when the Amway income started to exceed her teaching salary, she transitioned to teaching part-time in 2010 and then, nine months later, quit to pursue Amway full-time.
Bohlig's Amway income fluctuates today based on what's going on with her life — she's a stay-at-home mother. But she and her husband, who also is an Amway consultant despite holding a full-time job in the commercial banking sector, have reached the six-figure income point with Amway. In 2010, when Craig's job was eliminated, Amway sales and commissions sustained the family until he landed a new job a year later. Bohlig declined to be more specific about her income level but did say the couple has been able to save almost all of Craig's corporate salary over the past several years, which they plan to use to purchase a new home.
In late 2008, after Hurricane Ike hit the Texas coast, Tysh Mefferd's 10-year-old wedding paper business drastically slowed as the region's economy sputtered. To help pay for a home-improvement loan and some expenses for her sons, Mefferd, based in Galveston, Texas, started searching for ways to supplement her income.
She eventually came across Stella & Dot, the Silicon Valley venture-funded $300 million firm that enlists thousands of consultants — dubbed stylists — to sell its jewelry and accessories at in-home trunk shows or on personalized websites. The investment to join as a stylist is $199.
"Initially, I thought I'd sign up, sell some jewelry until my business picked up and then be on my merry way," said Mefferd, 46, who was aiming for $3,000 in sales a month. She met that goal in a few weeks, earning a few hundred dollars with each two-hour trunk show she hosted. Then she attended a conference where the firm's founder spoke.
"She talked about her vision, about how there is no glass ceiling with Stella & Dot — you go and do as much or as little as you want — and I really felt that this was the opportunity of a lifetime that was being handed to me," Mefferd said.
In the summer of 2009, she closed her wedding calligraphy business to focus on Stella & Dot full-time, attending trunk shows and training others while juggling her kids' football games and doctors' appointments.
Today, Mefferd is one of the firm's top stylists, pulling in almost $1 million in annual income; she coaches the roughly 9,000 stylists that make up her team.
"What I love about it is that ... anyone can do it — it's not built for rocket scientists," Mefferd said, who is aiming to double her annual sales over the next three or four years. "It's built for women and a few great men who are interested in adding a little or a lot of extra income around their busy lives."
Jennifer Glacken, a former assistant product manager in the telecom industry, made an indirect jump into direct sales in 1992, about six months after her first baby was born.
"He had all sorts of respiration problems, and we were spending more time at the hospital than at home," said Glacken, 49, who spent lots of time disinfecting her house with Lysol and Windex, until a friend suggested using a Shaklee-brand organic cleaning solution.
"I was skeptical — no one in my circle had ever heard of the company before," Glacken said. (Shaklee was founded in 1956.) "I had no intention of using it and took it initially to get rid of her."
After the cleaner sat around in her garage for a while, Glacken, based in Perryburg, Ohio, finally tried it. It worked well enough and was cost-effective. Compared to a 32-ounce bottle of Windex that sells for $3 to $4, one 16-ounce bottle of Shaklee basic cleaner sells for $12 and can be diluted into more than 40 gallons of cleaner. And a few days after using Shaklee, her son no longer needed the medication or nebulizer treatments he had come to depend on; Glacken soon found out that he was allergic to phenol, the main ingredient in many name-brand cleaning products.
Glacken bought a $20 membership to Shaklee and for six years bought its cleaning products, soaps and nutritional supplements. Then, in 1999, her husband lost his job at Sears Automotive. "We were homeschooling our two kids, and I didn't want to go out in the marketplace and get a job," she said. Instead, they decided to build a Shaklee business to support their family.
Although Glacken's husband found a job at Tuffy the next year, she continued with Shaklee, selling the products and coaching others. With her husband, who spent years teaching people how to run automotive businesses through Sears, she developed Glacken University, a seven-week webinar training program for new Shaklee recruits.
In 2007, Glacken became a top Shaklee seller, pulling in a minimum of $100,000 in sales a month. Today Glacken's monthly sales across her team fluctuate between $250,000 to $450,000.
For Rachel Huse, whose days were typically spent homeschooling her kids, sewing children's clothing for her Etsy shop and co-leading a volunteer organization that took nearly 30 hours a week of her time, the foray three years ago into direct selling centered around one goal: "I definitely saw it as an opportunity to get a house cleaner," she said.
Huse, 38, whose husband is deployed in the military overseas, was looking for a low-overhead business opportunity that she could kick-start as fast as possible. When a friend introduced her to Jamberry, a five-year-old start-up that sells vinyl nail wraps directly to women around the world, she was skeptical. "I didn't used to be that into nails, and I wasn't interested in the product until she sent me some to try," said Huse, who is based in Lacey, Washington.
The nail wraps, which were recently featured on models at New York's Fashion Week, wore well, and Huse was impressed by the transparency and opportunity presented by Jamberry's compensation plan. After an initial investment of $99 for a Jamberry kit, sellers market the wraps online and at in-house parties.
"I had my launch party at my house and made $1,200 in sales — that's for a $15 product," Huse said. "It took me about two weeks to clue into that I wanted to do it."
Huse trains others through YouTube videos and FaceTime on how to build their own Jamberry team. She also spends time hosting parties and traveling around the country to meet potential leaders.
Huse pulled in $85,000 her first year; today she's one of Jamberry's biggest sellers and has almost reached $1 million in annual income.
She recently took her three kids and father to Germany for two months to meet up with her husband and tour Europe — a trip that was paid for by her Jamberry sales. "I never intended to stick around; this was supposed to be a short-term thing," Huse said, who will soon fly overseas with a few of her team members to launch the brand in the U.K. "I'll be around as long as they'll keep me."