Americans know and recognize conventional retailing. Every time someone makes a trip to the shopping mall for a new shirt or book, she witnesses retail selling in action. Direct selling, on the other hand, occurs on a much smaller scale. The direct seller focuses on a more personal shopping experience that revolves around one particular brand of goods. Although both techniques can turn a tidy profit, direct selling can also require much more footwork on the part of a seller.
Definition of Direct Selling
According to the website "Direct Selling 411," direct selling is "selling a product or service in either a person-to-person or party plan method." It differs from direct marketing because it takes place in person, rather than through another means such as the Internet or a catalog. Direct selling companies may offer a multilevel compensation plan, but this isn't true of every direct sales brand. In short, direct selling moves the selling floor to the consumer, rather than making the consumer come to a particular location to buy.
Definition of Retailing
Retail, on the other hand, takes place in a particular location. According to its definition, which the Collins Reverso online dictionary gives as "the sale of goods individually or in small quantities to consumers," direct selling also counts as retail. For most people, however, retail buying consists of going to a store with multiple products on display and making a purchase. The store is there all the time, and sales are not dependent on throwing a party or making a special sales call.
Payment and Compensation
Unlike retailing, direct sellers are usually independent contract workers and aren't formally employed by the direct selling company. People make money through the supplier company, which pays a percentage of the sale price for each item sold. If the company also has a multilevel compensation component, then others in the seller's upline, or superiors, also profit with each sale. No benefits apply, even if the seller works full-time hours. In retailing, most workers are formal employees and can collect benefits. They're paid a check that includes either salaried, hourly or commission monies or a combination of several pay methods.
While retailing is pretty straightforward, certain types of direct selling can be downright dangerous to the pocket. Non-retail direct selling, which focuses on selling business opportunities and investments, can sometimes turn out to be nothing more than a fraud. According to Robert L. FitzPatrick of the website "Pyramid Scheme Alert," "The non-retail model results in loss rates of more than 99% for all that sign up as 'independent distributors' or sales agents." Therefore, it pays to research all direct sales opportunities thoroughly before paying any membership, materials or vendor fees.
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