Direct selling is a business model that offers entrepreneurial opportunities to individuals as independent contractors to market and/or sell products or services directly to consumers typically away from a fixed retail location. Sales are typically made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales.
Direct selling is often, but not always, based on a multi-level marketing (MLM) strategy that compensates the sales force, not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. Consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees.
What is the Direct Sellers Association of Canada?
Since 1954 the Direct Sellers Association of Canada has established and upheld rigorous standards, ethics and good business practices as the recognized voice of our industry. We are a family of competitors using our combined strength to ensure fairness in regulations and gain credibility and respect within government.
As an industry that connects close to 800,000 Canadians to entrepreneurial opportunity and enrichment, we provide assurance of member company integrity and a foundation of trust for independent sales contractors (ISCs) and consumers.
What products and services are marketed through direct selling?
Direct Sellers offer a whole array of products. Virtually every consumer product or service can be purchased through direct selling. People who purchase through direct selling cite product quality, uniqueness and money-back guarantees as the top reasons for shopping through direct selling.
Describe the direct selling business model.
Direct selling uses a distribution and compensation method where products are sold by a sales force of independent contractors who market the products through personal explanation and demonstration. Individual direct selling entrepreneurs earn compensation based on their own sales and, often, the sales of others. Compensation is based on sales of products/services.
There are close to 800,000 Canadians engaged in direct selling in some capacity, whether as full-time entrepreneurs, part-time representatives earning extra money, or distributors who primarily consume the products themselves. Direct selling is a driver of local economies and is a widely accepted business model.
In the Canada, it is estimated that 42% of adults have purchased from a direct seller. Many people get into direct selling because they already use and believe in the products they will be representing. Their goal is to share the products with family and friends to build their network. In some instances an individual signs up as a distributor with the sole intent of buying the products for their own use at a discount.
What is the big picture for the direct selling industry globally and nationally?
Direct selling is a diverse and driving force in the global economy. Worldwide there are more than 99 million independent sales contractors who sell over $182 billion of goods and services annually. In the Canadian market alone, direct sales represent a $2 billion a year industry, providing close to 800,000 Canadians with the opportunity to achieve personal and financial goals.
This great success is founded on a solid business model that has been tested and proven over time. The direct selling method of product and service distribution has grown with integrity over the last 150 years, based on the tenets of transparency and consumer protection.
What is the difference between a pyramid scheme and a legitimate MLM direct selling company?
Many people confuse legitimate multi-level/network marketing sales plans with pyramid schemes. It’s important to know that pyramid schemes are illegal.
What recourse does a consumer have if they have a complaint against a member company?
The DSA has a formal complaint process and we have retained the services of an independent Code Administer to mediate the issue if it gets to that stage. Our members have agreed to honour the decision made by the Code Administrator.
How does the DSA protect consumers and potential entrepreneurs?
The DSA is committed to ensuring that consumers and potential entrepreneurs are dealt with fairly and honestly in their dealings with DSA member companies. All member firms must adhere to strict Codes of Ethics and Business Practices as a condition of membership.
How can a person start their own home-based business in direct selling?
We recommend visiting www.dsa.ca to find out which direct selling companies are members. That’s assurance that you’re dealing with a company committed to upholding strict standards through the DSA Code of Ethics. The direct selling industry offers a vast array of different products and services to potential entrepreneurs.
The cost to start a direct selling business is usually less than a few hundred dollars and most companies offer training. A career in direct selling is open to anyone; there are no restrictions based on age, gender, race, income or education. All you have to have is a desire to run your own business and then you can explore the many opportunities available from the DSA member companies.
How can you tell the difference?
Pyramid schemes will typically charge high “entrance fees,” possibly buried in the cost of a starter kit or as investment in startup inventory, or for training or other services. Pyramid schemes concentrate on the importance of “recruiting” others to achieve high profits. Often, little or no focus is placed on the product or service they may claim to represent; or on the subsequent sale of these products and services to customers.
Legitimate direct selling companies offer easy and inexpensive opportunities to start selling their products or services. Legitimate direct selling companies have buyback policies in place that allow their independent salespeople to return products in saleable condition on reasonable commercial terms
Conversely, legitimate direct selling companies contribute to a vibrant marketplace by selling competitive, high quality products and services and providing a sustainable source of income for those who choose to sell those products.
Individual direct selling entrepreneurs earn compensation based on their own sales and, often, the sales of others they mentor. Compensation is based on sales of products/services. In fact close to 800,000 Canadians are involved in direct selling and approximately 600,000 of that number are from DSA members.
What is the difference between direct selling and direct marketing?
Direct selling is selling a product or service in either a person-to-person or party plan method. Direct marketing is catalog and telephone sales.
What is the difference between direct selling and multilevel marketing?
Direct selling encompasses a variety of distribution methods; multilevel marketing is one type of distribution and compensation method. In a multilevel distribution model products are distributed from one level of distribution to another and compensation is based not only on one’s own product sales, but on party plan method. Direct marketing is catalog and telephone sales.
How does compensation in a multilevel distribution company work?
In a multilevel distribution model products are distributed from one level of distributor to another and compensation is based not only on one's own product sales, but on the product sales of one's downline.
How many direct selling companies are there?
It is difficult to estimate the number of direct selling companies operating at any given time. The DSA estimates that forty-two percent (42%) of the Canadian population counts on the Direct Selling Industry to deliver them a wide range of products and services.
Who can become a DSA member?
DSA is a corporate membership organization. There is a complete review by Legal Counsel of the prospective Direct Selling member company’s marketing materials and business plan to ensure compliance with DSA Codes of Ethics and Business Practices and provincial and federal legislation. The application then comes to the DSA Board for consideration of membership.
Valued Contributor - Subscriber is available to companies who are:
i. Currently operating internationally and studying the Canadian market for entry at a future date; ii. Currently operating Canadian-based companies considering diversifying into direct selling at a future date; iii. not-yet-operating Canadian companies planning to begin direct selling operations within 12 months following their application for subscriber membership.
Subscriber level is not available to companies that already sell directly or that are suppliers to direct selling companies. Subscribers are non voting members of the Association.
Valued Contributor – Supplier
Available to companies not eligible as a Member, but a firm in good standing engaged in supplying a product or service to the Direct Selling Industry, or as approved by the Board. Suppliers are non voting members of the Association.
I am a sales representative with a DSA member company. What benefits does DSA provide for me?
As a representative with a DSA member company, you receive the benefit of your company's pledge to abide by the DSA Code of Ethics. You are encouraged to share your affiliation with a DSA member company with all of your customers as DSA membership is a symbol of the highest possible business ethics. You can expect your company to:
• Provide you with legal and accurate information on the company's pay structure, products and sales methods. • Refrain from any unlawful or unethical recruiting practice and exorbitant entrance or training fees. • Base all actual and potential sales and earnings claims on documented facts. • Abstain from encouraging you to purchase more inventory than you can sell in a reasonable amount of time. • Every member shall permit its Salesperson to return Products in Saleable condition on reasonable commercial terms (based on Member Company’s product return and/or inventory restocking policies and the established Sales record of the Salesperson). • Explain the repurchase option in writing.
Additionally you may be eligible to participate in the DSA’s MemberPerks Programme.
What are my responsibilities as a representative/distributor of a DSA member company?
As a representative/distributor of a DSA member company, you are responsible for upholding the same high standards of business ethics your company has pledged to uphold, which are embodied in the DSA Code of Ethics. As a sales person, you should always:
• Tell your potential customers who you are, why you're approaching them and what products you are selling. • Explain how to return a product or cancel an order. • Respect the privacy of your customers by calling at a time that is convenient for them. • Promptly end a demonstration or presentation at the request of your customer. • Provide accurate and truthful information regarding the price, quality, quantity, performance, and availability of your product or service. • Offer a written receipt in language your customers can understand. • Provide your name and contact information, as well as the contact information of the company you represent. • Offer a complete description of any warranty or guarantee.
A representative with another company is trying to recruit me. Does the Codes of Ethics and Business Practices address this?
Yes our Codes of Ethics and Business Practices address this topic. As per our Codes of Ethics and Business Practices; every member shall refrain from business recruiting practices directed at the Salespersons or other Members, whether directly or through third parties that do not comply with the provisions of applicable federal and provincial laws, including the Civil Code of Quebec and the applicable common law that may, among other things, deal with wrongful or malicious interference with contractual relationships in effect between companies and their independent contractors.