NEW YORK (Reuters) - More U.S. workers, hoping to make ends meet in the recession, have turned to direct selling, but revenues are not keeping pace with growth in the sales force.
The ranks of people selling wares out of their homes, at parties and door-to-door grew by 100,000 last year to 15.1 million in the United States, but sales dropped some 4 percent, according to the most recent figures available.
“We’re seeing a lot of people turning to direct selling, either to replace an income or to supplement an income,” said Amy Robinson, spokeswoman for the Direct Selling Association, the industry’s trade association based in Washington.
However, she said: “We haven’t yet see a bump in sales which we generally see.”
In economic downturns of 1990-91 and in 2001, a jump in direct sellers was followed by a jump in direct sales, she said.
But this recession resembles the mid-1980s downturn that saw a dip in direct sales, the DSA said. Figures are not yet available for 2009, when the economy remained in a slump and the number of Americans losing their jobs continued to grow.
“We anticipate we’re going to see that jump in sales either to bear out this year or in the early part of next year,” she said.
Direct sales were $29.6 billion last year, the DSA said, down from $30.8 billion in 2007 and $32.18 billion in 2006.
That doesn’t mean direct sales aren’t worthwhile in tough times, said Dave Gardner, a San Francisco Bay area resident who has turned to direct selling, from vitamins to legal services, when his jobs have dried up or been downsized.
“It gets you out of the house, and it gives you training on how to talk to people as well as it keeps you from being depressed about the fact that you just got laid off,” he said.
“And it does give you hope,” he added. “Who knows? You might find you like it even better than staying in a cubicle and say the heck with ever going back to a job again.”
Dove Chocolate Discoveries, a division of Mars Inc, has seen its sales force double this year to about 2,000 people, said Betty Palm, president of the company whose representatives sell chocolate products not found in stores.
“If either you or perhaps a spouse, if they were laid off, had reduced hours or if their wages were scaled back, direct sales represented a new income source,” Palm said. “The economy has forced people to take a look at what other options exist.”
Calculating exact figures for direct sales, which entails selling a product or service person-to-person away from a fixed location, is difficult because most states do not require direct sellers to register, the DSA said. Also, many direct selling companies have short life spans, it said.
However, the DSA said it estimates sales by DSA members account for some 90 percent of all U.S. direct sales.
The most well-known and long-running are Avon Products Inc,, which sells beauty products, and Tupperware, which sells food containers. Avon is known for its “Avon calling” slogan, and Tupperware for the house parties that women would host to show off the wares.
Liz Kowalski, who sells Dove chocolates in the Chicago area, said she is inundated at the holidays with requests for tasting parties that feature such items as chocolate martinis.
She said she has seen a change in who wants to join up. “Before the recession, it was a lot of stay-at-home moms that wanted a little extra money, and that’s still an option now if their husbands have been downsized or laid off,” she said.
At Ohio State University, 22-year-old marketing major Kristiauna Mangum said she earns $300 to $2000 a month selling cosmetics by mark, a division of Avon, and helped recruit 150 other sales representatives on campus.
“With the economy the way it is, more people are inclined to listen to ‘how can I get into direct selling?’” she said.
In New York, psychologist Shelley Reciniello threw her first house party this year to sell the cowl-like scarves she makes on the side because firms on Wall Street, where she sold them in the past as corporate gift items, have scaled back.
She also has counseled her clients struggling with job loss to try their hand at new projects such as direct selling.
“In this economy there’s a lot of things you can do from home,” she said. “I say to people, ‘You can have a short-term goal of trying to make some money and pay the bills and sell some things and then get back on track when the economy is better.’
“Who knows? Some of these things might turn into businesses,” she said.
Editing by Michelle Nichols and Cynthia Osterman