CHAPTER 2

Direct Selling—From Camels to Cyberspace

W. Alan Luce and Victoria L. Crittenden

On just about any day or night 6,000 years ago, before the development of writing and before the zero was invented that would lead to the development of modern math, you would find men trudging along, leading and sometimes riding their camels. Traveling along what became known as the “Silk Road,” they moved trade goods from China and India in the east to the burgeoning civilizations in Egypt and in Mesopotamia empires such as Babylon and Assyria. These early entrepreneurs had figured out that they could buy goods in the local markets, where items such as silk and spices were plentiful and relatively cheap, and take these goods west to Mesopotamia where the same items were rare and highly sought after. There, they could trade the items for a profit.

As time passed, the role of the peddler evolved into a way for hard-to-obtain goods (e.g., blades, tools, fabrics, spices, and salt) to be distributed in small villages, country estates, and fortresses of the aristocracy. Large quantities of these goods came into ports such as London or Amsterdam and were taken to the weekly public markets to be sold to the local population. The public markets worked fine for city dwellers, but these items were also needed by rural folks spread about the countryside in villages and shires well away from the ports. Once again, the entrepreneurial peddlers (or “chapmen” according to Brodie 1999) saw an opportunity and filled an important product distribution role. Loading up in the ports and city centers where the goods were relatively cheap, the peddlers took their carts of goods into the countryside to bring these hard-to-obtain items to anxious buyers. When a peddler came into a village, he was welcomed. In addition to goods, the peddler brought news of the outside world. In return for a place to sleep and free meals, the peddler would entertain the town with his stories and news. In many cases, the first time an isolated village learned that the old king had died and a new king was on the throne was hearing it from one of these traveling peddlers.

Over time, the peddlers came to follow one of two commercial strategies. The first was to take basic, necessity goods to the rural villages and shires, often including other services such as blade sharpening and blacksmithing to repair broken tools. The other strategy was to bring high-end luxury goods (e.g., silk, Italian lace, glass items, mirrors, and combs) to wealthy farmers, local aristocracy, and large landholders. This reliance on peddlers to distribute needed necessities and luxury goods out into the countryside continued for more than four millennia.

When European nations started to colonize places like North America, they set the stage for the next big evolution in selling. The French, Dutch, and English settlers brought their customs and cultures with them and, as they expanded inland from the coastal settlements, the peddlers were needed to bring goods and services to the many new inland communities, ranches, and farms. Often known as “Yankee Peddlers,” these direct sellers picked up goods at ports and they would then point their carts toward following the trails established by the early settlers to their villages and homesteads. The Yankee Peddlers were fulfilling essentially the same role that their earlier iterations had performed for hundreds of years in the old world.

As depicted in Figure 2.1, these 18th-century Yankee Peddlers set the stage for the direct-to-consumer channel of distribution that we now know as direct selling (Emmert 2014). Schreyögg, Sydow, and Holtmann (2011) refer to the importance of past events when discussing the path dependence or historical conditioning of organizational actions. This path dependence helps explain how institutional persistence and, oftentimes, puzzling stability have invigorated the direct selling marketplace. This book is a compilation of reflective points about direct selling, and the purpose of this chapter, in the tradition of reflection (Yancey 1998), is to cast backward to understand the evolution of direct selling.

Figure 2.1 The direct selling journey

The Evolution of Direct Selling

Today, a wide variety of consumer goods and services are offered through direct selling. Major product categories include clothing and accessories, cosmetics and personal care, home care, household goods and durables, wellness, books/toys/stationery, foodstuff and beverages, home improvement, utilities, and financial services (World Federation of Direct Selling Associations 2020). Direct selling is a unique retail channel since direct selling companies rely upon a salesforce of independent distributors who earn commissions on sales of a direct selling company’s products. The independent distributors are backed by established direct selling companies that provide a “business-in-a-box” comprising quality products, marketing tools, business training, and technological resources (Crittenden and Bliton 2019). All the while, the independent distributors maintain the flexibility of setting their own hours and engaging as much or as little as they desire.

Emmert (2014) refers to the “paradigm-shifting events and thresholds” that helped shape 21st-century direct selling. These events and thresholds are given as follows: (1) the first recognized direct selling company established in 1855 that had young men going door-to-door to sell products, (2) the welcoming of women as distributors, (3) the formation of the Direct Selling Association (DSA), (4) a revolutionary approach for compensation, and (5) the evolution of the sales method. These paradigm-shifting events and thresholds are captured here in a chronological story of direct selling.

Mid-to-Late 1800s

Rev. James Robinson Graves was the forerunner to the direct selling business model that we know today. In 1855, Rev. Graves began sending young men door to door to sell Bibles and educational materials as a means to earn money for going to college (Asenshia 2016). This door-todoor business model formed the basis for the first direct selling company; now known as Southwestern Advantage (originally just “Southwestern”), the company is the oldest direct seller in America. According to the Direct Selling News (2019):

Soon to follow Southwestern was the California Perfume Company. David H. McConnell was a traveling book salesman who gave free perfume samples to his customers. As the story goes, he realized that his customers had more interest in the perfume samples than books (Avon 2016). Thus, he began mixing fragrances himself and, having worked with a very successful woman bookseller named Mrs. Persis Foster Eames Albee, Mr. McConnell asked Mrs. Albee to sell his perfumes. Not only was Mrs. Albee the first sales representative for the California Perfume Company, she is also known as the first “Avon Lady” since the California Perfume Company was renamed Avon in 1939 (Asenshia 2016; Avon 2016). Mr. McConnell made a bold statement for the times when he recruited women as sales representatives, and he set the stage for utilizing the direct selling business model as a means of economic freedom for women.

Early 1900s

In 1906, Sarah Breedlove officially changed her name to Madam C.J. Walker and soon thereafter began selling “Madam Walker’s Wonderful Hair Grower.” Her customers soon became her “evangelical agents,” receiving a commission to sell the products for her (Gates 2013). Madam C.J. Walker was one of the earliest successful African American woman entrepreneurs. While the Walker Manufacturing Company was not necessarily a direct selling company since the focus was more on hair colleges and setting up businesses using the Walker System, Madam C.J. Walker, like Mr. McConnell, showed the power of using a woman’s social network to generate business.

Frank Stanley Beveridge was a successful Fuller Brush Company salesperson. His success was attributed to the fact that he demonstrated his products at home parties. That is, a group of people would gather at someone’s home, Mr. Beveridge would demonstrate to the group as a whole and then the group would buy en masse. In 1931, Mr. Beveridge opened his own company, Stanley Home Products, using this group home demonstration approach (Asenshia 2016).

Brownie Wise was a Stanley salesperson, but she left the company to go to work for Tupperware. It is at Tupperware where Brownie Wise is credited with creating the party plan model for direct selling (Emmert 2014). The party plan method was just that—a socializing party where Tupperware was sold, with incentives offered to both the selling agent and the party host. The party plan soon became a new norm for the direct selling marketplace (Asenshia 2016). Joining Brownie Wise in the party plan sales model were two other women sales leaders previously with Stanley Home Products: Mary Crowley and Mary Kay Ash. Mary Crowley was founder and CEO of Home Interiors and Gifts, Inc., and Mary Kay Ash founded Mary Kay Cosmetics.

Thus, three women (Brownie Wise, Mary Crowley, and Mary Kay Ash) are responsible for the success of three major direct selling companies in the United States (Tupperware, Home Interiors and Gifts, and Mary Kay Inc.), as well as the evolution and success of the party plan model of direct selling. These three women had a desire to see women succeed and recognized that there was more than financial success. In the words of Ash (1984, 98), “At Mary Kay, we teach people how to spread their wings and fly on their own.”¹

The turn of the century brought with it not only more direct selling companies and the party plan model, but it was also the time for early efforts to align direct selling companies into a cohesive group of companies focusing on the needs of direct sellers. In 1910, the California Perfume Company joined with nine other companies from New York, Massachusetts, and Michigan to form the Agents Credit Association (Emmert 2014). The initial purpose of the association was to help with credit and collection issues (Asenshia 2016).

Mid-to-Late 1900s

The second half of the 20th century was a time when direct selling companies were experiencing a sharp focus on structural issues related to the business model. The Agents Credit Association took on a bigger purpose in terms of creating codes of ethics, advocacy, and consumer protection (Asenshia 2016). The association evolved into the DSA, which is now the national trade association for companies that market products and services directly to consumers through an independent, entrepreneurial salesforce. The DSA’s mission is “to protect, serve and promote the effectiveness of member companies and the independent business people they represent. To ensure member companies’ products and the direct selling opportunity is conducted with the highest level of business ethics” (Direct Selling Association 2021c).

In 1970 the DSA enacted a Code of Ethics—a robust series of policies that every DSA member agrees to follow (Direct Selling Association 2021a). The Code holds member companies accountable to policies that seek to protect both the independent salesperson and the direct selling consumer. With stringent guidelines for earnings representations, product claims, sales and marketing tactics, and policies for order cancellations and returns, the DSA Code of Ethics helps to ensure the integrity of the channel.²

Now, in addition to the DSA in the United States, there is also the WFDSA, a nongovernmental, voluntary organization founded in 1978 that represents direct selling globally with over 60 national DSAs and one regional organization, representing direct selling in 170 countries (World Federation of Direct Selling Associations 2020). The regional organization is the Federation of European Direct Selling Associations (SELDIA). The SELDIA, representing all forms of direct selling in Europe, has 23 direct selling member associations in the European Union and 16 corporate member companies (Direct Selling Association 2021b).³

In 1973, the Direct Selling Education Foundation (DSEF) was founded by visionaries in the DSA as a Washington, DC-based 501c3 organization, funded by contributions from DSA member companies, suppliers, and individuals. The purpose of the DSEF is to empower educators to provide students with an accurate understanding of direct selling. To accomplish this purpose, the DSEF partners with educators, largely through the DSEF Fellows program that was later created in 2016. This program is a group of over 200 university and community college professors with specialties that fall mainly within the areas of management, marketing, entrepreneurship, ethics, and consumer studies, as well as other related fields (Direct Selling Education Foundation 2020).

In addition to the formation of formal groups of direct selling companies and individuals, a revolutionary approach to compensation was being developed by the mid-1900s. As described previously, the independent contractors in direct selling were compensated using a performance-based model where earnings were tied to personal sales (Emmert 2014). However, direct selling companies had long recognized the power of a salesperson’s social network for recruiting others to sell product. Thus, the revolution in the compensation structure was that of awarding commissions to salespeople based on individual sales effort as well as commissions on the sales efforts of independent contractors whom a salesperson trained. This change in the compensation structure, implemented first at Nutrilite (which was later acquired by Amway), sparked a decades-long boom for direct selling (Emmert 2014).⁴

As evidenced, the latter half of the 20th century was a busy time for the direct selling marketplace with numerous start-ups, rapid growth among the more established companies, changes to the business model with the party plan approach, modifications to the compensation structure in terms of a salesperson’s downline, and formalized governing bodies. However, according to Emmert (2014), “perhaps no event in the history of direct selling has caused more of a paradigm shift than the emergence of technology.” The advent of the computer changed everything—from order processing to compensation management to inventory control to customer transaction history to electronic payments—making operational excellence paramount in direct selling companies. From this desire for operational excellence arose a number of niche suppliers that could provide behind-the-scenes technological support. However, technology soon grew beyond meeting the demands of internal operational excellence.

The Technological Unfolding in the 2000s

Direct sellers are in the people business. As portrayed in the historical overview of direct selling, the independent distributor who brings high touch to the sales process has long been key in direct selling. These independent distributors possess extensive knowledge of the product, and their personal interactions with customers (many of whom are friends and family) in the luxury of the customer’s home have resulted in a marketplace valued in billions of dollars. However, the start of the 21st century brought with it a technology explosion that enabled new ways of reaching the customer. The digitalization era had begun for direct selling, but as noted by Sheri McCoy at Avon Products, Inc. (Emmert 2014), “While the biggest game changer is technology and how we use it, the backbone of our business hasn’t changed. Our representatives continue to build relationships and have a passion for our products, and our business is still high-touch, even though it is now high tech too.”

Recognizing that the personal connection with customers was key to success, direct sellers began to align high-tech marketing practices with the traditional high-touch nature of direct selling. For example, Origami Owl had its own media center that offered a single template for independent sales consultants to create, in mere minutes, a personalized brochure that could be printed or shared via a social media link. Rodan + Fields built a robust SoLoMo organization that both empowered the independent sales force and delighted the Rodan + Fields customer. Direct selling giants Avon and Mary Kay created virtual mirrors for customers to try on products in the comfort of their homes at any time day or night—no salesperson presence needed. In the words of Crittenden, Crittenden and Crittenden (2019, 265), “High touch met, and fit with, high tech.”

By 2010, direct selling companies had adopted digital tools with companies and independent distributors utilizing social media platforms to engage with customers. Companies were engaging with independent distributors in various ways on owned platforms, and independent distributors were engaging with their customers on social platforms (e.g., Facebook). With that, however, also came the need for new methods of regulation since social media posts with, for example, even subtle suggestions that direct selling could make financial and/or health worries go away could place companies in violation per the Federal Trade Commission (Martin 2019). In 2019, Brett Duncan, cofounder and managing partner of Strategic Choice Partners (a consulting firm that offers strategic support and services to direct selling companies), wrote a brief opinion piece titled “2019: The Year Direct Selling as We Know It Changed Forever.” Duncan (2019) identified three market forces: (1) new regulations, (2) the consumer marketplace, and (3) the entrepreneur marketplace.

In terms of new regulations, the DSA created the Direct Selling Self-Regulatory Council (DSSRC) in 2019. The DSSRC is a third-party self-regulatory program administered by BBB National Programs, Inc. (formerly Council of Better Business Bureaus).⁵ As far as the consumer marketplace, Duncan (2019) suggested that the consumer marketplace was changing in areas such as the shopping experience, access (particularly relative to online giants such as Amazon), interaction, and competitive lifespan. The third market force, entrepreneur marketplace, highlighted the fact that direct selling was no longer the only gig in town. With the gig economy growing, as noted in Chapter 1 with more discussion in Chapter 6, direct selling firms were facing competition, not just in terms of consumer selections, but also for the independent distributors that have long been the mainstay of direct selling.

While 2019 might have been a year of change for direct selling, 2020 was a year of challenges (Luce 2020). The negative effects of COVID-19 and the pandemic are long lasting. Death, illness, and job/income loss have had catastrophic effects on millions of people worldwide. Isolation, social distancing, and mask wearing will likely have a cultural impact that changes human behavior as we have known it. The challenges of 2020, however, have led to the three Cs of direct selling in 2021 (Luce 2020): Chance, Change, and Challenges.

The chance element (when a vaccine will be available for all, the percentage of the population that will take the vaccine, and the degree of normalcy relative to pre-COVID times) will have a significant impact on sales and inventory forecasts. Interestingly, the change element has worked in favor of direct selling. As noted previously, direct selling companies had already adopted technological platforms that enabled the virtual selling events required by the pandemic, and onboarding of independent distributors adapted quickly to the online environment. Job losses resulted in people seeking out work that would help pay the bills. Direct selling has the competitive advantage that it does not require distributors to leave home, since sales engagement can occur virtually and order processing electronically. This offered the added benefit of not having to leave home (unlike Uber drivers, grocery store employees, delivery people, etc.), which meant no childcare was needed and there was no risk of exposure to the virus.

Unfortunately, challenges are ahead for direct selling in 2021 and beyond. While the independent distributor has been the mainstay of direct selling, these distributors, who are the ones out in the field engaging with customers, have navigated to online sales events, social media, and digital acquisition tools. Many distributors may have never physically held a particular company’s product in their hands or even met face-toface with a group leader. The independent sales force has now become the online independent sales force. As seen in Chapter 7, company executives feel challenged in building a sense of community and organizational culture in a technological platform world. Additionally, current senior-level sales executives in direct selling companies may be uncertain on how to lead in this new technology-driven environment. As noted in a blog by Rallyware (2020), a company that offers software to direct selling companies, “[digital transformation exacerbated by the pandemic] is a genie that will not go back into the bottle any time soon.”

Looking Forward by Casting Backward

This chapter has provided a look at the direct selling journey—a journey from camels on the Silk Road to virtual sales parties in cyberspace. As noted in Chapter 1, direct selling is both a go-to-market strategy and, according to Fleming (2021), one of the first forms of gig work. History shows that it has long been both, with many companies and individuals achieving considerable success in both forms. Just as there have been challenges through the decades, similar challenges lie ahead as will be seen in the remainder of this book. Direct selling companies have evolved over time, becoming what they are today because of transformations that were made over time. They will continue to do so in preparation to take advantage of the opportunities that lie ahead.

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¹ The nonfinancial benefits of direct selling are discussed further in Chapter 6.

² More about ethics appears in Chapter 4.

³ More about direct selling globally appears in Chapter 5.

⁴ More on the downline approach to compensation is in Chapter 3.

⁵ More about the DSSRC is available in Chapter 4.