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When I began reading Lori Penner’s piece “Why We love Our Tupperware” that appeared in a Canadian publication today, I could feel the Letter to the Editor forming in my head. “The patronizing stereotypes reinforced in this piece do not do justice to the millions of women and their satisfied customers who enjoy direct selling,” I would say.

To my surprise and delight, though, Lori’s description of her mother’s home parties as shallow and uncomfortable took an unexpected turn when she said: “Being at one of these parties recently made me keenly aware of just how much fun you can have when you throw a bunch of enthusiastic women together. Yet, there was a casualness about this get together I didn’t remember from the parties my mother and aunts used to throw.”

Like Lori, many women certainly have childhood memories of clanking tea cups and polite conversation in their own living room. I remember the tiny lipstick samples a fragrant perfume vials my mother’s friend would leave for me each time she visited. These memories certainly form the basis for the particular feelings evoked in each of us, now as adults, when we imagine those same parties and demonstrations in the first person instead of as the small child sneaking hors d’oeuvres from the table.

If your last experience with direct selling didn’t have you in the starring role, perhaps it’s time to update your memory bank with an experience in your own living room – or that of the next friend who sends an invite your way.

Lori sums up her first-person experience this way: “To say we didn’t feel a pressure to purchase would be lying. We all felt a certain urgency – after all, we wanted to make our hostess happy,” she states.

But in the end, Lori happily purchased several items – “the two consultants had done their job so well – none of us wanted to go home without these amazing products,” she continued.

I’m glad Lori was able to write her own ending – how about you? 

During its quarterly meeting in mid-December the DSA Board of Directors approved an amendment to its policies and procedures document that clarifies the actions that will be taken in the case of marketing plan changes by a company as a result of a state or federal action.

Under current procedures, all active direct selling company members are automatically reviewed at least once every five years. This procedure is in place to continually verify that marketing plans approved as part of the initial membership application process have not subsequently been changed in a way that puts it outside of compliance with the Code.

Under the new policy, any company that makes changes to its marketing plan as a result of a state or federal action, and that would fall under the scope of the Code, must notify DSA and will automatically be set for review of the new plan. Actions against a company frequently result in a voluntary change to a marketing plan that satisfies both the law enforcement entity and the company. However, in order to assert that the new plan is in compliance with the DSA Code, a new review must take place.

In the case of any criminal finding or admission, the company’s DSA membership can be terminated by a majority vote of the Board of Directors.

While the DSA Code Administrator has the authority to recommend various actions be taken regarding a company’s membership status as a result of his work, these additions to the Board policies ensure that swift and appropriate action can be taken in cases where it is clear that a plan needs to be reviewed or a company is found to be violating the law.

Many may also be surprised to learn that a significant number of companies that apply for membership do not ultimately make it through the review process. In addition to going out of business, companies often realizes they cannot comply with all of the provisions of the Code. Many companies will voluntarily change their policies when presented with a list of areas of concern by DSA staff,  but others choose instead to withdraw from consideration.

As part of its actions at the recent meeting, the Board also directed DSA staff to evaluate and enhance the membership application review process with additional checks and investigations to ensure all companies admitted into membership are practicing the highest level of business ethics. Additionally, the list of companies pending review will be listed on the DSA Web site and comments from the public will be welcome.

The past year has been a busy one as many new provisions were added to the Code in September, and additional reviews of various Code provisions and possible enhancements are ongoing. These Code enhancements are critical steps in proactively working to make sure DSA member companies represent the best of the best.

Click to view the video

For six years now DSA has helped coordinate the donation of millions of dollars in products and cash to the TODAY Show Holiday Gift Drive. This year 25 DSA member companies donated a total of more than $15.7 million, with a cummulative six-year total exceeding $52 million!

I’ve been fortunate enough to have gone to New York each of the past six years to present the donation live on the TODAY Show. Each year has been a great experience personally and professionally, but most of all, it’s just really rewarding to know that you’ve made a difference.

So how did it start? The Monday after Thanksgiving in 2004 I was cheerily chewing my Cheerios one morning when I saw someone being interviewed on the show about their donation to the Toy Drive. Something clicked in my head as a remembered a conversation I’d had just the week before with one of our members looking for a company that could come to their warehouse to remove and destroy dozens of pallets of merchandise from the previous season’s catalog. “What a shame and a waste of perfectly good merchandise!” I had thought. Bingo! If one company had all that perfectly usable inventory they wished would vanish – so must other companies. That very morning I put out a call to our companies with a goal of collecting $1 million in products. Before the week was over, I had collected more than $2 million in donations.

And every year since then, more and more companies have participated in the drive, donating everything from a single product to more than 300,000 of a single item – all distributed to more than 200 organizations around the country that will see to it that the products get into the hands of people in need of a bit of cheer during the holidays.

The win-win-win this program creates is obvious, but I have to say, it’s also really exciting to get to be part of the fun on the TODAY Show. Sitting on “the couch” inside the studio this year was great (I’ve been interviewed out on the plaza the previous five years) and the chance to interact with the hosts of the show and the production staff makes it clear why they always look like they’re having such a great time – because they are!

Throughout the next month at least nine other direct selling companies will be on-air to present their donations. Each and every one of them should be proud of the difference they’re making just by doing a little housekeeping in their warehouses!

Happy Thanksgiving!

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Hello 411 readers! It was a busy summer and early fall as I continue to get many inquiries about direct selling in this poor economy from both media outlets and the general public. It’s also been very busy at the Direct Selling Association as we prepare for our 100th anniversary in 2010.

However, some of the most exciting work has been done by the Ethics and Self-Regulation Committee which has spent more than a year carefully reviewing every clause of DSA’s Code of Ethics. For those who aren’t aware, the Code outlines the ethical guidelines DSA member companies must  follow, and guides DSA’s independent Code Administrator in handling any violations of the Code.

The Code is a living document that maintains its strength because it can adapt to a changing marketplace. After review, the Ethics and Self-Regulation Committee recommended substantial changes and additions to the Code. These changes were adopted by the DSA Board of Directors in September and I am pleased to be able to share these with readers of this blog!

Here’s a brief summary of what’s new:

• Statements Regarding Other Companies: Member companies are specifically prohibited from making misleading comparisons of another company’s direct selling opportunity, products or services. All comparisons must be based on objectively substantiated facts. 
• Promotional Materials: Promotional literature, advertisements and mailings may not contain product descriptions or other information that is false, deceptive or misleading. All literature must also contain the address and telephone number of the direct selling company and may include contact information for the independent salesperson. 
• Training and Materials: Independent salespeople may not market supplemental materials that are inconsistent with the member company’s policies and procedures. Further, the materials must be reasonably priced and cannot be a required purchase. The materials must also have a return policy consistent with that of the company itself. 
• Sales Receipts and Cooling Off: In the case of sales made in a non-face-to-face manner, such as via mail, phone or the Internet, a written order or receipt must be provided either in a printable or downloadable form via the Internet or with the initial order. Consumers must also be offered a clearly written description of the cooling-off period permitting cancellation of an order within three days for a full refund of the purchase price. 
• Inventory Loading: Companies must reasonably ensure that sellers who receive compensation for downline sales are consuming, using or reselling the products they purchase. In other words, salespeople should not be purchasing product for the sole purpose of qualifying for their downline commissions. 
• Fees: Any fees charged by a company to become a salesperson must be directly related to the value of materials, products or services provided in return. This provision does not prohibit a company from making a profit on their sales kit or other fees, but it would prohibit, for example, a $300 sales kit that includes nothing more than a set of pamphlets worth $20. 
• Extraterritorial Effect: U.S. DSA member companies operating in a country where they are not a member of the local DSA, or where a DSA does not exist, must comply with the World Code to the extent it is not inconsistent with U.S. law.

These changes address some very important and hotly debated direct selling issues and I’m confident the new provisions will add clarity and strength in these areas. Of course, the Code is only effective when consumers are aware of its existence and take advantage of it if they encounter a problem. The Code doesn’t have the power of law, but DSA member companies are responsible for making sure their corporate policies and the actions of each individual seller are in compliance – otherwise they risk losing their DSA membership or other remedial action. DSA’s job is to set standards and be the first line of protection if there’s a problem.

I encourage everyone to liberally share these changes, and the Code itself, with any one involved in direct selling – whether as a customer of the product or as a seller. You can also find an updated ”plain language” version of the Code online for both consumers and sellers.

As always, anyone is welcome to file a Code complaint if they’ve encountered a problem. 

And don’t think DSA is done yet! There will likely be additional tweaks and changes coming over the next 6-12 months so stay tuned.

I’m writing today from the national convention of one of DSA’s member companies. I came to speak to the group about the benefits this company’s DSA membership provides to its consultants. Each time I have the chance to meet and mingle with some of the 15 million U.S. direct sellers I am reminded what a wonderful collective story there is to tell. Each of the women I’ve had the chance to talk with during the past two days has a slightly different story about how or why she became a direct seller, but I have yet to find one that doesn’t have something to do with personal empowerment, supporting a family or just looking for something new to do.

I sat with a group of four women at lunch yesterday. Their experience with the company ranged from two years to just a few months. I asked each how she got involved and was impressed with the candor of their responses. None of them set out saying “I want to be a direct seller,” but each had found her way here. One had reluctantly attended a party, ended up buying several products and a few months later decided to give selling a shot because she thought some extra money each month would take the pressure off the family finances – that was two years ago.

All the consultants I’ve met are very genuine, real, intelligent and motivated women. There’s no hype, there’s no pretense – but there is a lot of camaraderie. During the introduction of the fall product line each was busy writing notes and facts that they will use when they demonstrate the products. The addition of additional colors was a particular high point. “I can’t tell you how many people have been asking me for that in red!” I heard one woman say.

I’m headed home on a red-eye flight tonight. Most of the women here will make their way home tomorrow, armed with a new selection of products, new friends and new strategies for achieving their goals. I leave here with a certain satisfaction that the collective story of direct selling, for all of its diversity, is still just as I portray it every day – a flexible opportunity that can be personalized to one’s own situation. In a world with so much bad news, I think that’s pretty cool.

There’s an important legislative issue being considered in California right now that will affect millions of independent contractors (Realtors, taxi drivers, many in the construction trades, etc.) – including direct sellers.

In a desperate attempt to balance California’s budget, lawmakers there are considering a proposal that would mandate withholding on all payments to independent contractors.

In a state that has an 11.5% unemployment rate, lawmakers are looking at any and every mechanism to make the numbers work – even if they only work on paper. It is estimated that the withholding plan will generate $1.9 billion in revenue, but in reality very little of that money will be new revenue and the majority of it will be returned to taxpayers at the end of the year. By 2011, the Franchise Tax Board estimates the state will lose money on the program. In the end, all the state will be left with is the bill for administering the program.

For direct sellers, this withholding program doesn’t take into account expenses, the cost of items bought for resale or any other costs of doing business. Taxes are withheld on the entire amount paid to the direct seller. Until the state refunds the money, a direct seller’s cash flow is limited and they have essentially given an interest-free loan to the government.

At a time when the State of California should be looking for ways to encourage spending and business growth, they are instead considering proposals that look good only on paper and will end up negatively impacting millions of Californians.

This provision is included in the budget proposal approved by the conference committee and could be considered by the Assembly and Senate any time during the week of June 22. View the following video for all the details and contact your California legislators and the Governor right away to ask them to remove independent contractor withholding from the budget proposal or to exempt direct sellers from any such proposal.

This proposal is bad for direct sellers, bad for business and bad for California!

Contact Your Elected Officials in California:

I saw an interesting segment on the TODAY Show this morning – an interview with Wal-Mart’s new CEO, Mike Duke. Among other things he talked about various product categories that are doing particularly well during this economic period that has few bright spots. It caught my attention because many of these same products (or products that consumers are choosing as alternatives) make up a large percentage of products sold through direct selling – thus underscoring the reason why direct selling has historically performed well during recessionary periods.

For example, Mr. Duke said health and wellness products are a particular bright spot, he theorizes because people feel they need to take better care of themsleves as they can’t afford to be sick or miss work. Wellness products account for nearly a quarter of sales in direct selling. Let’s face it – people aren’t willing to give up their favorite vitamin, even if they are cutting back in other areas. Based on Mr. Duke’s experience, there are also many others who might be adding wellness products to their regular routine.

There may be a similar mindset when it comes to other products – “The Lipstick Factor” has become a popular buzz word, but it really applies to more than cosmetics. It applies to any product that a consumer views as a “little luxury” that makes him or her feel better but doesn’t put a huge dent in the pocketbook. In the case of direct selling, this could be cosmetics (which I’ll tell you would not be the first thing most women would cut from their shopping list!), costume jewelry, home decor or a variety of other items.

Mr. Duke also noted with some surprise that electronics were doing very well. He attributes this to the fact that so many families are opting to stay at home instead of going out so they tend to spend money on the latest video game as home entertainment instead of eating out or taking a vacation. The increase in the home products category underscores this observation and applies to direct selling in categories such as home decor, and food products and associated kitchen accessories. (Really, who wants the boring meatloaf grandma used to fix when you can have gourmet meatloaf made with a simple mix, accompanied by hand-smashed potatoes, covered with freshly grated cheese and twice-baked in an attractive stoneware dish? – still cheaper than eating out and you can feel good about the meal while spending quality time with your family.)

The one area cited in a Wal-Mart press release that does seem to be significantly different in direct selling is the jewelry category. The release states jewelry sales have been soft, but anecdotal reports from several direct selling companies in this category have indicated strong sales. This is likely do to consumers who are not stopping their spending altogether, but are instead making different choices. For example, a consumer might forego buying a new suit, but instead decide to accessorize the one she already has with a $25 necklace. That little luxury is enough to satify the consumer in all of us but keeps total spending in check.

Wal-Mart may be the biggest traditional retailer in the country (with about 1.4 million associates), but direct selling’s 15 million salespeople make up an important part of today’s economy and will play an important part in recovery. As people tend to stay closer to home, their buying habits shift and direct selling offers relevant and appealing products and services, a comfortable shopping environment with knowledgable salespeople, and even a brief escape from all the negative economic news. It’s only a matter of time before Americans are spending full-tilt again, but until then direct selling offers appealing buying options and a way to earn supplemental income at exactly the time when people need reasons to be hopeful.

April 15 will be here before you know it. For direct sellers, it’s especially important to understand the tax requirements that come along with being an independent contractor. The Direct Selling Association has worked closely with the IRS for many years to provide resources to help direct sellers and those who prepare taxes for direct sellers to understand these requirements. Anyone who is filing or preparing a return for a direct seller should get the facts before your start your return! You can view these resources, including a helpful video, at www.dsa.org/taxcenter/.

I love attending direct selling parties or demonstrations – not only for the fun and the shopping experience (I can be a bit of a shop-a-holic), but also because I think it’s important to continually update my practical knowledge of direct selling. In most cases, I wait until later in the event to let to let on that I’m somewhat more than a casual observer. It’s important for me to see exactly how people are approaching their business.

But this past weekend I had an interesting opportunity to be part of a conversation that was a bit different from a product demonstration. I was at the mall with my daughter and we stopped in the food court for lunch. We were seated in a cluster of tables and next to us six women were having a friendly conversation. During a break in the discussion I was having with my daughter about her upcoming birthday party, the conversation at the next table caught my ear. After casually eavesdropping for a few moments it was confirmed – the women were direct sellers having a team meeting. It didn’t take long to determine that the company they were with is a DSA member, so I listened intently. What would the sales leader say to motivate her team, particularly in this tough economy? Would she say anything that would make me want to leap up and flash my business card as though I were an undercover cop? Would the ladies report brisk sales or tough times?

The leader asked the women how they were feeling about their business. One woman began by reporting strong sales the week before. Another woman reported that even though sales were pretty good she said she knew the economy was having an impact on people – they were considering more carefully how their money was going to be spent. After going around the table the leader chimed in again. Her direction to her team was the following –

“Almost all of you joined this company after having used the products yourselves. You know they are great products, but just as with anything, some people will love them and some people won’t. It’s our job as consultants to show people the products and help them decide if they are the right products for them. If you find yourself trying to convince someone to make a purchase, that’s not the right kind of sale. Just give them the facts and let them decide.”

By this time my daughter was asking me to remind her who had RSVP’d for her party so my attention went back to her, but I was grinning on the inside. Despite the urge I had to turn around and congratulate this seller on her wise advice (and wanting to continue listening), I finished my lunch and headed back to shopping. The meeting continued and no one in the group had any idea that I had been listening to the conversation or that their words had fallen on the ears of someone who had a much different perspective than most.

It’s not that the conversation at that adjacent table was unique – it happens thousands of times each day in this country and around the world. But the perspective was unique – and what I heard reaffirmed for me why direct selling works. Tough economy or not, direct selling has a real impact on the lives of millions of people around the globe every day. It works because it’s a business about people. I don’t know the stories of each of those women, but I know they wouldn’t stand out in a crowd – they are just doing what they need to do to put food on the table, have a little fun, buy products they love, etc. etc.

So, thanks to those women for providing me with an opportunity to be a fly on the wall. I wish them good luck in their business and hope they continue to find success.