Wendy Mikulka, sells 'chloe+isabel' jewelry from her Santa Rosa home.

Direct sales gains luster in dim economy

CATHY BUSSEWITZ
THE PRESS DEMOCRAT

When Melacha Quirke lost her job as an accountant during the height of the recession, she didn't know what she was going to do.

She had held that job for 15 years. Her husband lost his job around the same time, and they had two young children to support. They also had a monthly mortgage payment, but that ended also when they lost their home to foreclosure.

"It was basically one thing after another," Quirke said. "We were surviving on severance packages, and couldn't keep up with payments."

That's when Quirke remembered Passion Parties. She had attended a few gatherings where women bought bath, body and sensual products. She recalled that the attendees bought a lot. And another mom at her children's school had invited her to become a seller.

"It makes sense for me to be able to do it, because I can work at night when my husband is at home, and during the day I can be at home with my kids," Quirke said.

And so began a new career for Quirke, and millions of other independent retailers who began selling products to their friends at home parties and other venues as traditional employment opportunities eluded them.

Nationwide, an estimated 15.8 million people worked in direct sales in 2010, according to the Direct Selling Association, up from 15 million in 2007. Women dominate the industry, representing 82 percent of the direct sales force nationwide. Many were attracted by the flexible hours, earning potential and the idea that in this job, you can't get laid off.

But in an industry where compensation is based largely on commission, in order to make money, you have to sell. And revenues from direct sales didn't keep pace during the recession. While the sales force grew by 2.4 percent from 2006 to 2010, revenues fell by 1.2 percent, the association said. In 2010, an estimated $28.56 billion was spent on direct sales, a slight uptick since 2009, but not as much as the 2006 peak of $32.18 billion.

Despite the difficulties, just about any product can be bought and sold through direct marketing.

At a Santa Rosa meeting of direct selling women, far more than jewelry and cookware were available. The scent of sweet citrus wafted through the room as Lynn Kwitt, a certified reflexologist who had worked as a social worker for decades, passed around a sample of an "essential oil" that she recommends to relieve colds. Elaine Holtz talked about the difficulties of selling her products, pre-paid legal and identity theft prevention services.

The avenues to sell are just as varied. Many companies encourage party planning, where the saleswoman finds a hostess, and the hostess invites friends. The saleswoman makes a commission on every sale, and the hostess gets a discount or allowance to spend on the products as a reward for inviting her friends, also based on the amount of sales.

At passion parties, Quirke earns 40 percent of the sales price as commission. But hostess rewards come out of her pocket, so that dwindles her take to about 35 percent of sales, still more than most direct sales companies, she said.

On average, she sells about $500 of merchandise per party, earning about $200. She's hoping to earn about $2,000 this month, with seven parties planned so far. In the last two months of 2011, when she was busy moving out of her house, she only made about $100 a month.

"But now, I'm back on track. We're settled into a new place, and really starting to work," Quirke said. "It definitely has the potential to be a supportive income. There are women in the company that are making six-figure incomes."

Most people get into the business to supplement their income, while about a third got into direct sales to earn full-time income, according to a survey by the Direct Sellers Association. Nine out of 10 direct sellers spent less than 30 hours per week on their business.

In part, incomes depend on how early a saleswoman gets into a company, and how many people she recruits. In many companies, the "upline" sales representative gets a percentage of each sale their recruit lands. Quirke's "upline," also based in Santa Rosa, has reached director-level status, and manages a team of 80 people.

Wendy Mikulka, who sells jewelry for a company called chloe + isabel, used to manage 60 saleswomen as a director for the company BeautiControl. But her down-line salespeople weren't performing very well, or didn't stay with the company for very long, and she was unhappy.

"When you rise in company, if don't make quotas, it gets a little bit stressful," Mikulka said. "It got to the point where I wasn't happy anymore."

Eventually, she resigned her director position and returned to sales.

"I went back to what I enjoyed most: being able to do the pampering of women, instead of playing the numbers game."

Mikulka didn't get into direct sales to make big bucks. Her job for many years was raising four children, and direct sales was just a way for her to have fun, she said. Surprising her family with a new pool table with money she earned from her first paycheck felt great.

And she didn't rack up any debt buying products that she couldn't later sell, like some of her recruits did at BeautiControl, she said.

"I was one of the lucky ones," she said.

At the meeting, Joyce LaPierre, a consultant with Celebrating Home, led a discussion about effective party-throwing techniques.

"Think about keeping it short, because women don't have a lot of time these days," LaPierre said. "They come there to have a little fun, have a glass of wine with their friends."

That technique doesn't necessarily work for all direct sales, said Holtz, 71, who sells pre-paid legal services.

"It's so hard. How do you have fun talking about something that can be negative?" asked Holtz, who at one point sold caskets.

Attendees shared their tips for finding the gumption to pick up the phone to make a cold call. Billye Marie, an independent consultant for Jeunesse Global, which sells anti-aging products, got into the business six months ago to raise money to move from Fort Worth, Texas, to Santa Rosa to be closer to her grandson. She keeps her grandson's photo close to her phone to inspire her to make difficult calls, she said.

"If you go to a regular job, if you don't produce every single day that you're there, you're out of there," LaPierre said. "It's the same thing in direct sales."

LaPierre had retired from a job as a janitor, and wasn't looking for work when she went to a friend's party and was exposed to the idea of direct marketing.

"At the time I truly wasn't looking for income," LaPierre said. "I was looking for something that maybe could get me out of the house for one or two days a week to enjoy being with other women."

LaPierre is paid on commission, and earns about $200 per party, she said. To plan and hold two parties, she generally works eight to 10 hours and earns about $400. Her annual income has ranged from $12,000 to $20,000 for the part-time work.

"There's no other kinds of jobs that I can go out and get that kind of money per hour, at least legally," LaPierre said.

In addition to the supplemental income, product discounts and social opportunities, attendees at the meeting talked about the personal growth they had achieved. Quirke feels she is helping people to talk about taboo topics and buy products they might be too shy to buy in the stores.

"I educate women a lot," Quirke said. "Things are better now really, but ... too many women don't know about their own bodies."

LaPierre appreciated how much she learned on the job, without needing a college degree.

"As long as you are a people person and can open your mouth and believe in what you're doing, and you know you're helping somebody else, that's all that matters," LaPierre said.

Jill Scherer, representative for Silpada, a jewelry company, used to work as a property manager, but got tired of people calling and screaming about their sprinklers not working.

"It's nice, because people can find a direct sales company that fits their passions," she said. "There is money in direct sales, it's just how hard you want to work."

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