Are “Home Parties” a Financial Solution?

COMMENTARY | We’ve all gotten an invitation to a fill-in-the-blank party: organic foods; naughty toys; linens; nearly anything. This one was for jewelry, hosted by my friend Michelle, who extended her hospitality to Ashley Braun, the jewelry “stylist” who met Michelle at one of those urban indoor places for kids.

Ashley – young, bright and doused in an exuberant glow – laid out her jewelry samples in display boxes on Michelle’s long dining room table. Stand-up necklace holders and the line’s bright packaging framed them from behind.

The company with which Ashley works is one of hundreds of multi-level marketing operations, with names as familiar as Avon and Mary Kay, to unexpected major companies, like Lindt Chocolate, to newer companies, like Stella & Dot, Ashley’s company, and Wildtree, a business that sells herbs and oils that we’ll get to in a moment.

According to ABC News, multi-level marketing is a $28 billion dollar industry. The structure has two aspects: direct sales, like Ashley selling her jewelry to us; and the multi-level system, which requires the sales force to recruit sellers below them, who then pay a commission to the recruiter on each item the new sales person sells. For Ashley’s company, that person is called a “sponsor.” As USA Today pointed out, some of these multi-level companies are heavy on the multi-level, sometimes to the near-exclusion of selling the product.

Ashley’s, however, has plenty of product. It also had an initial outlay. When she signed up, the company offered $450 in free jewelry to build up her collection of samples. She purchased the display boxes, and her sponsor lent her about half of the jewelry there. She started in September, but wasn’t sure yet if she’d broken even. She thought she was close. “But,” she told me, her face earnestly sincere, “I’m really in it for the jewelry.”

The company recommends 4-6 “Trunk Shows” per month. Whether one can pull together that number of shows probably depends on the person, which brings us back to Wildtree. Michelle and I have a friend who works with them, and is apparently making a living doing so, even winning trips.

But I don’t believe her to be the norm, and statistics bear out this theory. According to a separate USA Today article, the average person in multi-level direct sales makes just $2,400 per year. It takes a special kind of person, the outgoing kind who can make friends with whomever comes her way, to do as well as our mutual friend, and for her, the model and product are good fits.

“I have a friend who sells Mary Kay,” said a fellow guest. She described how her friend greets her with product recommendations, and the resulting humorous retort in her head. “I’m still trying to use up the eight tubes you sold me last time, because I wanted you to get the pink Cadillac.”

The party winding down, I approached Ashley as she added up her sales. “So how did you do?”

“Well, I need at least four orders for Michelle to get the hostess rewards,” she said, “and I have two.”

“What happens?”

“Usually people order online after the party and make up the total.” My unofficial survey had, in fact, revealed that many of the women were planning to purchase online, rather than on the spot. One woman was under strict orders from her husband to buy herself something, which she swore she would do later, from the website.

A friend, who finds it difficult to get out with her newborn, socialized while knocking two gifts off of her list. Another indulged herself a little. Most of us had a glass of wine, spirited chatting, and a nice evening, so for us, it was a success. For Ashley, only time will tell.

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