Recession Drives Women to Direct Sales

For Jen Kundrod of Alexandria, the ongoing recession in the United States led to a new career opportunity.

Kundrod, who formerly worked as an internal project manager for an e-learning company, began to suspect in February she might lose her job. That’s when she began selling Mary Kay cosmetics as a precaution to guard against lost income.

“Mary Kay started as a plan B for me,” Kundrod said. “And I did lose my job in June. And so, it quickly became a plan A. I really just haven’t looked back, and it’s been great, and I’ve been able to support myself with it.”

Kundrod says her income per hour with Mary Kay is comparable to what she made at her last job.

Added Financial Security in the Recession

Kundrod isn't alone. In the United States and worldwide, the recession has contributed to higher participation in direct sales and direct sales revenues. Grace Keohohou, president of the Direct Selling Women's Alliance, which serves more than 56 million direct sellers worldwide affiliated with more than 400 companies, said she’s definitely noticed an increased interest in direct sales over the past few years.

One woman she spoke with was accustomed to her husband being the family breadwinner, while she provided supplemental income through direct sales. Then, her husband lost his job.

“Women are coming into Mary Kay because they’ve been working, but they don’t feel security"

“Her supplemental income became what put dinner on their table and a roof over their head,” Keohohou said. “These stories I am hearing time and time again: ‘I’m so grateful I have a direct sell business … because right now I’ve been doing everything to find a job and I don’t have the experience, or they’re just not hiring.’”

The lower barrier to entry is key. Mary Kay, one of the world’s largest direct sellers of skin care products and cosmetics, is actively promoting itself as an income-generating option for out-of-work or underemployed Americans.

From 2004 to 2011, Mary Kay’s wholesale sales went from over $1.8 billion to over $2.5 billion, and the number of independent sellers went from over 1.5 million worldwide to more than 2 million, according to data provided by the company.

In the first half of 2011, the company saw a 9.5% increase in independent sellers in the United States, compared to the same period in 2010.

Direct Sales Up Across Industries

Companies that have only recently moved into direct sales, often with a focus women doing the selling, also report seeing fast growth in the number of sellers. Ken Knibbs, co-owner of Texas-based Eclipse Candle, said his company started its “glow team” of direct sellers in January with only six sellers. That number has already reached 150.

“A lot of them state the reason they’re joining us is to bring in some added income to the family—their husband was laid off, or prices are going up,” Knibbs said.

Compelling Creations, an Atlanta-based jewelry seller, started out as a brick-and-mortar company in 1998, selling wholesale to gift shops, but the company abandoned that model and went solely into direct sales in 2010, said CEO Jill Felts. The company began with no direct sellers and now has about 100.

“There is an incredible increase, but also from our angle we see there is an increase in bricks-and-mortar businesses [closing their doors and] going into direct selling,” she said.

The trend isn’t universal: Avon sales, while increasing globally, have fallen in the United States, from $2.1 billion in 2008 to $1.7 billion in 2010. Spokeswoman Leigh Goldman says the company's growth increasingly comes from emerging markets worldwide.

The Draw for Women

Anna Sempeles of the Burke area, a senior sales director who has sold Mary Kay products for 14 years, agrees the company is drawing in more women due to the recession.

Their circumstances are much like Kundrod's. “Women are coming into Mary Kay because they’ve been working, but they don’t feel security,” Sempeles said. “They’re seeing a lot of turnover, if they’re employed.” Many are young mothers looking for additional income but flexibility, she said. Tracey Koch, a Mary Kay sales director of almost 20 years, cited similar trends among applicants.

For Kundrod, making an income off direct sales has an additional benefit—security.

“Now I really don’t have that fear of losing my job, because I control what I do,” she said. “It’s been a blessing. It’s been really one of the greatest opportunities of my life.” (patch.com)