Direct selling parties make a comeback
By Melanie Chambers • Bankrate.com

Genevieve Madden, 36, of London, Ont., hosted her first Pampered Chef party a few months ago. Twelve women "ohhed" and "ahhed" over apple wedgers, cheese cutters and the latest in kitchen accessories and cookware.

"It was a big gab- and eating-fest with lots of shopping. It was a lot of fun getting together with other women and meeting new people," says Madden.

Direct selling has been around since the 1950s, when Tupperware parties were all the rage. Today, the industry is still big, racking up an estimated $1.3 billion a year in retail sales according to 2002 statistics from the Direct Sellers Association of Canada. Not a bad haul for plastic containers.

But today, it isn't just moms selling Tupperware. Although sellers are still mostly women, anyone can make some extra cash by selling everything from scrapbooking materials to candles to lingerie.

But can you get rich from selling garlic presses and negligés out of your living room? And how much work is involved in setting up one of these parties? If you've ever dreamed of earning yourself a Mary Kay pink Cadillac or just some extra cash, read on to learn the tips of the trade.

How it works
There's a host (who does not work for the company), a consultant (who works for the direct selling company) and of course the guests who buy the products.

The host, who varies from night to night, invites guests to her home, where the consultant presents a sampling of merchandise. For the host's effort, she receives a discount on the products. Depending on which company you work with, some distribute customers' purchases by mail while others have them available at the party.

Each company differs, but the idea is the same: More sales equate to a bigger commission for the consultant and more points for the host with which to buy products.

How much work is involved
"The majority of the people get into this hoping to make a big, fast buck and then find out it's work," says Hanna Ibson, a branch manager in London for Fantasia, a Quebec-based company that specializes in lingerie.

Ibson left her nine-to-five job in the printing business more than 10 years ago to try to make a living by direct selling. Today, she works at it 60 hours a week. When she isn't on the road, driving three hours to some shows, she's ordering products and talking on the phone to potential hosts.

But all that work comes with rewards. Not only does she make a good living, but as the top seller in Ontario, she's received free trips to exotic destinations like the Dominican Republic, Cuba and Mexico. This year, she's off to Panama. On top of the trips, she also receives extra pay bonuses.

Colleen Steenbergen, a mother of three who works as a consultant in London, says her parties do entail work but don't overtake her primary work of looking after her children. "I'm aiming at having four parties a month. For the amount of work put in, the reward received is very fair," she says.

Each company has different requirements to stay in business. Fantasia, for example, requires consultants to hold eight to12 parties per month, each of which runs about three hours. The Pampered Chef, on the other hand, requires consultants to make at least $300 in sales every two months.

"Some people book six or more shows a week and sell $3,000 (every time) and then others are a little slower to start," says Janice Gerol, vice-president and general manager of The Pampered Chef's Canadian operations in Markham, Ont. "It all depends on someone's style and how efficient they are."

The start-up costs
Most companies require you to buy a start-up kit, which includes some inventory and training manuals. The Pampered Chef kit costs $150, but drops to $100 if you accumulate enough points by hosting parties.

Fantasia requires a $240 insurance and bonding fee ($100 of which is refunded if you leave). The fee covers the stock in the consultants' possession, which is worth about $8,000. Fantasia also requires consultants to have a decent credit rating, a vehicle and a guarantor.

Some companies require you to buy the start-up kits more than once, so you get new inventory and news updates from the company. Those costs can add up, though, so be sure to ask about how many you have to buy before you sign up.

Ibson has sold everything from lingerie to ladies' wear and has doled out her share of cash for kits before working for Fantasia. "I ended up going broke on buying the kits twice a year," she says.

How much money you can expect to make
Consultants make their money from commissions, which vary widely from company to company. At The Pampered Chef, beginner consultants receive 20 percent of their sales.

At two shows a week, with average sales of about $600, you'd make about $240. Bonuses are available if you surpass certain sales targets. But keep in mind that most companies require you to pay shipping charges for inventory if you make less a certain amount.

Like any other job, there are promotions based on sales. To move up, consultants recruit other consultants and then receive a portion of their sales.

With Fantasia, Ibson takes home 28 percent of her sales as branch manager with five consultants under her wing. Regular consultants take home a 25-percent commission.

It's hard to nail down an exact salary when you factor in possible bonuses, which are paid monthly. But here's one scenario -- with five consultants selling $1,000 a week, a branch manager receives $200 (four percent of the recruits' sales).

A branch manager must host at least two shows a week. Let's say she sells $1,200, of which she would make $536 for herself. Add to that allotted bonuses, and it's conceivable a branch manager could make $700 a week.

Don't forget about tax
As a full-time consultant running a business, Ibson can claim tax write-offs for such expenses as gas.

But tax benefits differ if you are part-time and not making much money. "It's determined on a case-by-case scenario," says Keith Brooks, a communications manager with the Canadian Revenue Agency.

"It's critical that people ask themselves if they are a business." To answer this question, Brooks suggests calling your local CRA office or visiting its website. If you are a full-time consultant, your tax position differs greatly than if you only have parties occasionally.

Is this the job for you?
Let's face it this job isn't for everyone. For one, you have to love the products and be a cheerleader for the company. You also have to be very sociable.

Consultants must constantly be on the lookout for people to host parties. Invariably, your family and friends are your guinea pigs. "There's a little bit of a stigma and people think when you start one of these that your friends and family run and hide," says Gerol.

But Gerol says word of mouth quickly takes over. "You start by asking friends, but they go quickly into a circle of people they never met."

It all comes down to research. Before you sign up with a direct selling company, do your homework. Know the start up costs, the insurance policies and what is required of you.

Melanie Chambers is a writer in London, Ont.