Diverse Selling Techniques Boost Direct Marketers and Non-Store Sales

Several decades ago, non-store retailing consisted only of catalogs (such as those from Sears, Roebuck & Co.), mail-order ads in magazines or newspapers and door-to-door peddlers of such items as Watkin’s Vanilla Extract, Fuller Brushes and Kirby Vacuums. Slowly, non-store retailing evolved. By the 1970s, upscale catalogs such as the Horchow Collection had emerged in large numbers, catering to the growing base of affluent households where women were holding demanding, well-paying jobs and had less time or inclination for traditional shopping. At the same time, multi-level marketing was booming, and scores of new companies copied the methods of leaders like Avon, Amway and Mary Kay in selling cosmetics and other personal-care items through legions of independent representatives. Business-to-business catalogs of such items as office supplies also saw rapid growth. By the late 1980s, mail-order sales of personal computers and related accessories soared, as early leaders like Gateway and Dell Computer found success via aggressive advertising in computer magazines. Television shopping became sophisticated as the advent of new, niche cable TV channels created additional sales venues.

Today, non-store selling (sometimes called “direct selling”) is giving traditional retail selling a run for its money. It has steadily chipped away at the market share of stores. For the past several years, however, non-store selling has been migrating more and more to the internet, while selling through traditional direct marketing, such as through the mail or by telemarketing, is of less and less importance.

Direct selling involves both old-fashioned methods and state-of-the-art technologies. The direct marketing and direct response industry includes thousands of companies offering unique niche catalogs; television home shopping programs; millions of independent sales representatives selling everything from lingerie to cookware through personal calls and party-like events in the home; telemarketers; internet-based retail sites; and firms using additional, innovative non-store methods.

Non-store Retail Sectors:

= Online selling

= Catalogs, direct mail and mail-order advertising

= Television home shopping programs and infomercials, along with direct sales offers broadcast by radio

= Livestreaming (internet-based video shopping shows)

= Merchandise or services offered via interactive television programming

= Door-to-door and “party” selling

= Telemarketing

Note: Many sophisticated non-store retailers use combinations of these methods with ecommerce sites.

Extremely sophisticated database software now enables direct marketers to mail, e-mail or telephone their offerings to well-targeted groups. For example, matching such data as home value, occupation, credit rating and automobile type owned against a database of residents in a particular city may identify those most likely to purchase a particular item or line of merchandise. Likewise, very specific categories of consumers can be targeted in online ads on sites such as Facebook.

It is important to note that there are several purposes for direct marketing. For example, in the case of a catalog mailed to the home by a seller that does not operate any stores at all, the intent is to close the sale through direct contact with the consumer. This is more precisely defined as the “direct-response advertising” segment of direct marketing.

More broadly, direct marketing can have other purposes, including the generation of sales leads or the creation of a level of interest in the consumer that will generate store traffic. In instances where a retailer has both stores and catalog operations, direct marketing serves multiple functions. Restoration Hardware is a good example. Consequently, modern retailing, advertising and marketing methods have blurred the distinctions between mass media marketing and direct marketing. For example, is a banner ad on a web site a direct marketing effort or is it mass media advertising? If you simply look at the banner without clicking on it, and the meaning of the ad or the name of the retailer registers with you, then the ad may be a mass media branding success. On the other hand, if you click on the ad, and eventually make an online purchase rather than go to a retailer’s store, then the ad is a direct-response advertising success.

With regard to telephone orders, today’s so-called “call centers” are staffed with well-trained order takers and customer service representatives at both traditional and non-store retailing firms. Many of these call centers are outsourced to foreign countries where labor is cheaper than in the U.S. Consumer calls are routed to these centers, where operators use the latest in database and telecommunications technology to expertly answer questions, take orders and suggest high-profit-margin upgrades to those orders. Special software in the call centers keeps track of a customer’s questions, complaints, purchases and needs. In seconds, an operator can see a customer’s complete, long-term history of purchases and other activities with a simple keystroke on the computer. This not only provides faster and more thorough customer service, but it may also give the customer a false sense of a personal relationship.

Catalogs and Direct-Mail Offerings: Catalog retailing remains an immense business. Billions of print catalogs, direct-mail offerings via letters, brochures, flyers and postcards are mailed to U.S. households each year. Catalog shopping can offer great convenience and frequently offers better prices than shopping in stores. Catalogs also remain a popular venue for items we may not want our neighbors to see us buying in a store.

However, retailers are relying more and more on digital marketing, such as email and websites, while reducing catalog expenses and analyzing their mailing lists more carefully in an effort to drop addresses that are less likely to respond.

Television-Based Shopping, Cable Systems and Interactive TV: Television shopping shows were an instant hit. For example, QVC, Inc., a subsidiary of Liberty Interactive Corporation, is a televised shopping network based in West Chester, Pennsylvania that broadcasts internationally with locations in Germany, Japan, Italy and the United Kingdom. “QVC” stands for quality, value and convenience. In the U.S. market, it reaches the majority of U.S. homes with cable service. Globally, it reaches tens of millions of homes.

Interactive television services are growing rapidly, leading to new opportunities for direct selling via TV. With interactive cable TV services, subscribers can order movies on-demand and other unique services. They also have the ability to respond to direct sales offers via their cable systems. For example, viewers watching a pay-per-view music concert may be able to order souvenirs such as t-shirts via the cable system. Cable TV offers another unique advantage to direct sellers and other advertisers. Since the cable system knows the address of the cable subscriber, that address information can be matched against demographic databases to create a unique profile of the subscriber based on likely household income, value and size of the home and other data. Ads displayed by the cable system can then be custom tailored to match the viewer’s profile.

Livestream Shopping: Online interactive shopping is booming, especially in the era of the Coronavirus. Livestream shopping, also called interactive shopping, combines entertainment, social engagement and ecommerce. Viewers see celebrities or highly skilled commentators pitching merchandise, and viewers may chat as well as click to buy. Amazon’s Making the Cut programming, for example, features Heidi Klum and Tim Gunn (of Project Runway fame) and 10 ambitious fashion designers competing for $1 million to invest in their brands. Winning looks are available for purchase on Amazon.com and viewers can create Watch Parties to chat with each other. Livestream shopping is especially popular in China where celebrity Huang Wei (known as Viya) hosts live online shopping nightly. On Singles Day in 2020 (China’s largest shopping event each year), she sold more than $1.2 billion in online purchases.

Independent Representatives, Party-Based Selling and Other Personal Direct Selling Methods: While this type of non-store retailing has been with us for a long time, the growing struggle of middle-class families to become stable, two-income households has added greatly to the popularity of a sideline career as an “independent consultant” for companies like Mary Kay, Avon and Amway. However, the Coronavirus has forced the industry to evolve so that it relies more on digital marketing, such as emails from reps, and less on in-person sales.

The strategy of using individual reps as sales agents grew outside the United States. Avon, Amway and other direct sales firms have made sales in emerging nations, including China. In fact, Avon, long a major name in U.S. marketing, found its business dwindling in America. In 2019, it split into two units, selling most of its business to international beauty retailer Natura & Co., which also owns The Body Shop and Aesop. (The separate Avon North America business was acquired by Korea-based LG Household & Health Care.)

Representative selling has often been looked on with scorn, mostly because of the so-called “pyramid schemes” that often left recruits indebted to the company, trying to sell goods that no one wanted. Today’s practices are very different, especially in legitimate businesses that look for long-term returns and loyalty from both customers and recruits. Companies like Avon, which has been in business for more than 100 years, have taken great pains to develop a functional recruiting and selling structure, and have come up with multi-level pay packages that can yield marketers a satisfying return and encourage “group leaders” not only to sign up recruits, but also to teach these recruits how to sell. Payments to these group leaders are based on sales of those they have recruited, giving them a strong incentive to take responsibility for those under them in the hierarchy. Mary Kay’s business model inspired many other companies to launch new brands and sales networks offering a broad spectrum of products, across the U.S. and around the world.

Another direct selling option from the home is women’s apparel. Companies such as Carlisle and Cabi enable women who are independent representatives to show and sell clothes and accessories from their homes or company show rooms at trunk shows, usually held four times per year. It’s a model similar to Tupperware parties. At Carlisle, for example, “associates” are trained by district sales leaders to learn the ropes of fashion display, merchandising and marketing, as well as the nuts and bolts of processing orders and collecting payments. Each quarter, associates send out advance marketing materials and invitations (professionally produced by Carlisle) to friends and acquaintances. Appointments are made by customers to see and try on pieces from the current line. Orders are placed, and then the apparel is delivered to the customers within several weeks. Prices range from $60 for accessories up to $1,000 or more for suits and outerwear. Average annual income for associates have been about $40,000, with top sellers earning more than $100,000.

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