Direct Home Sales: Will It Pay Off?

Pampered Chef

We’ve all been invited to home sales parties before: the Pampered Chef and Mary Kay parties were you feel obliged to make a purchase.  The Thirty-One event where you look at more bags than you think you could possibly find room for in your closet. A  friend’s Scentsy sale where you are reminded, again, that your favorite smell for your home is just plain clean.

While you figure out what purchase you need to politely make before you go home, you have to wonder: does anyone really make any money doing this?

The honest answer (and we’re all for being honest) is that you can make money.  Many people do-- but not much.

The trouble starts at the very beginning.  Companies like Traveling Vineyards, Gigi Hill Bags, and Young Living all promise a quick and long-term return on your original investment.  They offer what looks like a great income right off the bat.

But the buy-in costs for direct home sales fall in a wide range. If you are interested in selling candles, Scentsy offers admission to their club of sellers with a $99 starter kit. To be a Beachbody coach, the startup cost is $39.95 for the first month with an additional monthly fee of $15.95 – a cost they waive for active duty military and their spouses. At Mary Kay, the startup is $100 ($75 if they’re running a sale), but then, you need to buy your initial inventory.

No matter what product you end up selling, that first buy-in cost is only the beginning. Next, you’ll actually need product to sell. None of these organizations actually require you to buy initial inventory, but you will be pushed to do it., and for good business reasons. 

The initial inventory is what gives you the ability to show-and-tell to future buyers with real product. If you work for Mary Kay, for instance, it’s what gives you the ability to provide the same makeup demonstrations that we can all get for free just by walking into a Sephora or Ulta.. Essentially, your inventory is what separates Mary Kay from a mail-order catalogue.

That is where the costs really start adding up. At Mary Kay, you’re encouraged to find eight people to target for sales and sign them up for personal skincare classes in your first two weeks. The trick is, you need enough product to get through those classes. That’s where your initial investment comes in.

As Antonella, a successful Mary Kay saleswoman, told Virginia Sole-Smith, “How can you sell from an empty storefront?” Antonella then encouraged Virginia to sink $1800 into that investment – a golden number in Mary Kay terms. At $1800, you get automatically promoted to “Star Consultant” without even making a sale. With the title comes a number of benefits that make your job as a seller easier, but also that hefty price tag.  Moreover, you have to spend $200 on products with the company every three months just to stay “active” as a seller – which means you can count on forking over a good $800 to Mary Kay every year, on top of that inventory investment.

If you’re with Mary Kay, the answer for how to fund that original investment might be to take out a Chase Mary Kay Rewards Visa, or at least that’s what Antonella encouraged Virginia to do. As Virginia later recounted in Harper’s, Antonella told her, “I actually don’t suggest my consultants use personal funding to buy their inventory, even if they do have the money.”

So how do you get your business off the ground and pay that credit card bill down? With accruing interest, the need for fresh and sellable inventory, and any ongoing costs associated with your position as a seller with a direct sales company, you’ll need to do a realistic cost analysis to make sure that direct sales is actually a good way for you to bolster your family income.

Also, don’t forget to factor in your time: like any other business, you should expect to see recompense for you’re the hours you work.  Home sales is not meant to be a bill for makeup, candles, or fitness shakes several times a year.

Mary Kay herself was an Army wife looking for a way to augment her family income when she got into direct sales in 1938. First for Stanley Home Products, and then for World Gift Corportation, Mary Kay Ash was a model seller. She understood the principles of direct home sales and well before launching her own empire, it was clear she a genius at it. She began Mary Kay with $5,000 in 1963 and the corporate motto “Enriching women’s lives.”

Many of the military wives we spoke to say that direct sales like Mary Kay have enriched their lives. Jenni, an Air Force wife in Colorado, throws a Pampered Chef party once a month and brings in a little over two hundred dollars each time.

When she subtracts the cost she spends on food and wine for the event, her take-home can be closer to a hundred dollars, but it’s a hundred dollars earned doing something she enjoys.

“I love the parties. I love cooking demonstrations and having everyone over,” Jenni said. “I make good money, I think.  But when you start taking out the costs of the parties it does look different. Still, it adds up to over a thousand every year. That’s spending money.”

When it comes to using direct sales to earn some “spending money,” Jenni isn’t alone.  Melissa is a Navy wife in Norfolk who has been in direct sales for going on twenty years. She dabbles in a few different direct sales businesses, but relies mostly on Young Living – an essential oils company – for her income.

In a good year, Melissa makes a few thousand dollars.  Last year, she made $3,000. “It’s part time, easy to do with PCS moves, and as someone concerned with living a more natural life, it’s a good fit,” she says.

Melissa says she probably puts in about five hours of work every week on her direct sales jobs. That means she worked about 260 hours total last year, making her time worth about $11.50 an hour.

That’s not a huge return on investment.

For many, it’s not about the return on the investment, it’s about the community they find in the direct sales businesses. “All of the Beachbody coaches I know love their job,” Abbey says. She’s an Army wife who spent a year as a Beachbody coach. “It’s so inspirational. Everyone is just so enthusiastic and happy. They helped me reach my weight loss goals, and I get to help other people. The money is just a nice perk.”

For Abbey, working in direct sales with Beachbody gave her a home in a corporate culture she loved. “It’s not about the money, at least for me,” she says. “I hear about people who make thousands of dollars a month, but I don’t know. I did it because it made me happy, not because it made me rich.”

And that’s the real take-away from direct home sales. If you want to get involved, do it because it’s something you’ll enjoy, not because you’re looking for a fast way to make money at home. (Nothing is ever that easy.)

Crunch the numbers on the initial investment and see what you can afford. Stick within your budget and remember: you’re there for the community, the fun, and some spending cash, not for an annual income.

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