Direct sellers rev up retail

Barbara Jack of Puyallup got her first direct-sales job at Tupperware 35 years ago.

She stayed with the company long enough to see the Tupperware "burp" give way to the Tupperware "whisper." By the time she left, she had run an office and training center for them in Tacoma for a decade.

"I've always enjoyed the fact that in direct sales, I could be working while the wash is washing and while the stew is stewing," said Jack. In her last job, she oversaw an independent sales force of 11,000.

Jack's new charge: to help build the sales force for Simply Fun, a Bellevue-based startup that sells original card and board games through private home parties.

She isn't the only one getting a new start in an otherwise established industry. With retail shelf space all but locked up by big manufacturers, more entrepreneurs have turned to direct sales to introduce products to consumers.

While the industry doesn't track new companies, "we've had more startups in the last five years than we've seen in the last 15 or 20," said Alan Luce, a 30-year industry veteran and consultant.

These are not nail-polish-type sales, either. The industry has outpaced retail sales growth by an average of 1 percent a year for the past decade.

And while direct sales represent just 1 percent of total retail sales, U.S. direct sales reached $30 billion in 2003, the last year for which statistics were available.

Established traditional retailers have taken notice: The Body Shop, Jockey and Southern Living magazine all have added direct-sales arms.

"You can keep products alive longer in this channel," Luce said. "Traditional retailers always want what's new. They don't want to sell last year's products."

Selling emotion

Rob Barnes was vice president of sales for an aerospace firm when he decided he needed more balance in life. He purchased Sensaria Natural Body Care, which sold spa products at health-food stores.

He moved the company from California to Shelton, Mason County, and launched a direct-sales program in May 2001.

Sensaria President Melissa Soete said the company teaches its customers that if they establish an every-day nurturing ritual, "they will have more health, wholeness and balance in their lives."

"We show them how to do it," she said.

The approach seems to work. At home parties, the independent consultants give women a five-step facial or foot treatment. Customers go home with an average of $75 worth of spa products.

The company, which had 1,500 customers the year it switched to direct sales, now attracts more than 20,000 new customers a month. Its some 3,000 representatives sell in a day what it used to sell in a year.

Negative stereotypes

Despite success stories, the industry is still working to overcome negative perceptions that stretch back decades about the uninvited, foot-in-the-door, high-pressure salesman.

In the mid-1970s, the Direct Selling Association (DSA) hired a prominent pollster to conduct the industry's first attitudinal study. The negative perception was so pervasive that the pollster concluded it could spend millions per year for two decades and not make a dent in the problem.

Ironically, the same study showed a major disconnect between consumers' perceptions about direct sellers and their personal experiences with them.

Legitimate direct-selling companies came together in other ways: They created a consumer-oriented code of ethics. They set up an independent code administrator to handle consumer complaints.

The DSA worked with the Federal Trade Commission and Association of Attorneys General to help pass anti-pyramid and "cooling-off" laws that gave consumers the right to cancel purchases up to three days later, no questions asked.

While the industry matured, it received a boost from an unlikely source: Warren Buffett's Berkshire Hathaway purchased direct-sales company Pampered Chef in 2002 for a reported $900 million.

"They buy winners," explained Soete, president of Sensaria.

Jim Northrop, chairman of Tawton, Mass.-based Princess House, which sells cooking, dining and entertainment products, said the industry flew under the radar for so long because direct-selling companies don't require large loans or venture-capital dollars to get started.

Alexandria, Minn.-based Tastefully Simple was founded in 1995 after Jill Blashack offered taste-testing of her gifts baskets at a local holiday crafts tour. Pampered Chef founder Doris Christopher started the kitchenware giant in her home.

"We replace the bricks and mortar with people," Northrop said. "They go out and create the marketplace for us."

Recruiting sales team

It's a Friday at the Northwest Women's Show, and Simply Fun is there to build its sales force, one demo at a time.

The company's emotional pitch: Have your family commit 30 minutes every week to play a game and improve communication.

"Just turn off the noise," said Gail DeGiulio, a former high-tech executive turned Simply Fun chief executive. "Turn off the TV."

For consultants, the incentives are attractive. They earn a base of 25 percent of sales. If they add three or more additional recruits, they earn 4 percent of those sales.

The additional money doesn't come out of the consultant's check. This is money the company spends in lieu of physical retail space.

Missy Kirtley sold Tupperware for 10 years. She earned a salary of $120,000 a year but lost her sales force after moving from California to Washington to marry.

Now she's joined Simply Fun. "It's a ground-floor opportunity," she said. "There's a lot of money on the table and I want to be part of that."

Jack is here, too. She waits at the demonstration table for potential customers, scanning the crowd.

Jack said she's seen different personality types succeed over the years. Most assume a seller must be the "life of the party" or know how to "wheel and deal."

The question she asks: How do you feel about people?

"If someone basically doesn't like people, that comes through," she said. "You don't fool anybody."

After Jack left Tupperware, she returned to direct selling when her mother was diagnosed with Alzheimer's. She craved the same flexibility she needed when her children were young.

She sold books for U.K.-based Dorling Kindersley, building a sales force of 11,000. She earned a six-figure income. Her husband took early retirement because she was making good money. The company ended direct sales after a change in ownership in May 2000.

Her secret to selling? Jack said she attended a training conference once that listed five qualities of top sellers: sincerity, helpfulness, enthusiasm, attentiveness and friendliness.

"It's exactly the qualities you'd look for in a friend," she said. "It's not somebody that puts their foot in your door. A good sale is a sale that is made and they're happy they bought."

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com