Jewelry! Cookware! Children’s clothing! Everyone has something to hawk, it seems. You may have even been asked to host a party where your tennis buddy or next-door neighbor can sell her wares. And here’s why: Direct sales, the person-to-person marketing popularized by Avon ladies and Tupperware parties, is now a nearly $29 billion–a-year market, according to the Direct Selling Association, an industry trade group.
And shopping parties—in which friends get together to browse and buy merchandise from firms such as kitchen-tools purveyor the Pampered Chef and accessories company Stella & Dot—are part of the driving force behind that huge number. If you’ve thought of hosting one of these get-togethers, you probably have a few questions. Here are the answers.
How Do These Parties Work?
A friend who is selling her goods asks you to host a party. If you agree, you invite your pals to hang out and check out her merchandise. If anyone buys, your friend turns a profit. At the party, she might also try to coax your guests to become hosts themselves—or even sellers. If any of them ultimately join your friend’s “team of sellers,” she will also earn a commission on their sales.
Is This Direct-Sales Thing a Pyramid Scheme?
Typically, no. In most direct-sales situations, sellers make money mostly by selling goods, not by enlisting other workers. By contrast, in many pyramid scams, the vast majority of the sellers’ profits come from recruiting other folks to hawk merchandise, not from moving products themselves, says Robert L. FitzPatrick, the founder of PyramidSchemeAlert.org, a nonprofit consumer-education site.
Will I Make Any Money If I Host the Event?
Alas, probably not. It’s your friend (the seller) who will get the commission—anywhere from 15 to 50 percent—on the sales. But the more everyone buys, the more you could earn in free and/or discounted merchandise. Companies vary when it comes to compensating hosts. Say you throw a party for the Pampered Chef products. If the event earns $300, you would earn $40 to put toward a cookware order, plus a half-price item, 20 percent off additional purchases, and free shipping. If you want to make real money, though, you’ll have to become a seller.
Will It Cost Me a Lot to Be a Party Host?
It depends on how you define “a lot.” You’ll be encouraged to invite between 30 and 40 guests (plan on about half of them showing up) and to provide simple hors d’oeuvres and drinks, such as wine, which can cost you a couple of hundred dollars. So, realistically, even given the discounts and the incentives from the merchandise company, you’ll be out some cash.