Recession Drives Women to Direct Sales Companies
Local woman finds new career with Mary Kay cosmetics following job loss.
For Jen Kundrod of Alexandria, the ongoing recession in the United States led to a new career opportunity.
Kundrod, who formerly worked as an internal project manager for an e-learning company, began to suspect in February she might lose her job. That’s when she began selling Mary Kay cosmetics as a precaution to guard against lost income.
“Mary Kay started as a plan B for me,” Kundrod said. “And I did lose my job in June. And so, it quickly became a plan A. And so I really just haven’t looked back, and it’s been great, and I’ve been able to support myself with it.”
Kundrod says her income per hour with Mary Kay is comparable to what she made at her last job. She’s also found satisfaction in helping women look and feel their best.
Added Financial Security in the Recession
In the United States and worldwide, the recession has contributed to higher participation in direct sales and direct sales revenues. Grace Keohohou, president of the Direct Selling Women's Alliance, which serves more than 56 million direct sellers worldwide affiliated with more than 400 companies, said she’s definitely noticed an increased interest in direct sales over the past few years.
“I think, more so than ever,” she said.
Woman and families have used income from direct sales to meet various needs, Keohohou said. One woman she spoke with was accustomed to her husband being the family breadwinner, while she provided supplemental income through direct sales. Then, her husband lost his job.
“Now I really don’t have that fear of losing my job, because I control what I do,” Kundrod said.
“Her supplemental income became what put dinner on their table and a roof over their head,” Keohohou said. “ … These stories I am hearing time and time again: ‘I’m so grateful I have a direct sell business … because right now I’ve been doing everything to find a job and I don’t have the experience, or they’re just not hiring.’ ”
Keohohou said her organization estimates there are 55 million people employed in direct sales worldwide, with 19 million in the United States alone.
Mary Kay, one of the world’s largest direct sellers of skin care products and cosmetics, is actively promoting itself as an income-generating option for out-of-work or underemployed Americans and takes a proud stance in helping women generate or supplement their income during tough economic times.
For Kundrod, the Mary Kay consultant, making an income off direct sales has an additional benefit—security.
“Now I really don’t have that fear of losing my job, because I control what I do,” she said. “… It’s been a blessing. It’s been really one of the greatest opportunities of my life.”
In 2004, Mary Kay’s wholesale sales exceeded $1.8 billion and the number of independent sellers topped 1.5 million worldwide, according to data provided by the company. By 2011, annual worldwide wholesale sales had grown to more than $2.5 billion, and the company contracted with more than 2 million independent sellers.
In the first half of 2011, the company saw a 9.5 percent increase in independent sellers in the United States compared to the same period in 2010.
Direct Sales Up Across Industries
Companies that have only recently moved into direct sales also report seeing fast growth in the number of sellers. Ken Knibbs, co-owner of Texas-based Eclipse Candle, said his company started its “glow team” of direct sellers in January with only six sellers. That number has already reached 150, he said, and many sellers point to the recession as a reason for signing up.
“A lot of them state the reason they’re joining us is to bring in some add income to the family—their husband was laid off, or prices are going up,” Knibbs said.
Compelling Creations, an Atlanta-based jewelry seller, started out as a brick-and-mortar company in 1998, selling wholesale to gift shops, but the company abandoned that model and went solely into direct sales in 2010, said CEO Jill Felts. The company began with no direct sellers and now has about 100.
Not only has Felts seen many women cite the poor economy as a reason to go into direct selling, but she’s also seen other brick-and-mortar businesses close their physical doors.
“There is an incredible increase, but also from our angle we see there is an increase in bricks-and-mortar businesses going into direct selling,” she said.
At California-based Herbalife, which sells nutritional supplements, third-quarter net sales for 2011 worldwide increased 30 percent compared to the previous year period, the highest volume point growth rate of the past five years. In the United States over the same period, that number was 16 percent, said Amy Greene, vice president of investor relations, while the number of U.S.-based independent sellers increased 14 percent.
Globally, the number of Herbalife sellers has increased from 2 million in 2009 to 2.5 million today, Greene said.
“New distributors in the quarter were up five percent, and I think the soft economy obviously generates a need for either supplemental income or replacement income, if you have lost your job, and the entrepreneurial nature of direct selling really lends itself to that environment,” she said.
The trend isn’t universal, however. Sales and the number of independent sellers in the United States have dropped at Avon Products, the world’s top direct sales company with 6.5 million distributors and $10.9 billion annual revenues worldwide.
Avon spokeswoman Leigh Goldman said since 2007, Avon averaged a 2 percent to 3 percent growth rate in the number of independent sellers in North America—with the vast majority in the United States—but in 2010 that number fell by 3 percent.
Avon sales, while increasing globally, also have fallen in the United States recently, from $2.1 billion in 2008 to $1.7 billion in 2010. Goldman said most of Avon’s growth stems from emerging markets, while the United States is considered a mature market.
“They’ve already seen their explosion in growth,” she said.
Flexibility Among Benefits
Tracey Koch of Kingstowne, a Mary Kay senior sales director who has been with the company 19 years, said she loves the flexibility of the job and knowing she can increase her income by putting more time into her business. Women come to Mary Kay for different reasons, some to supplement income and others who sell Mary Kay as a full-time job, she said.
Anna Sempeles of the Burke area, another senior sales director who has sold Mary Kay products for 14 years, said she believes the company is drawing in more women due to the recession. Many are young mothers looking for additional income but flexibility, she said, and others are closer to retirement age but realize they don’t have enough savings.
“Women are coming into Mary Kay because they’ve been working, but they don’t feel security,” Sempeles said. “They’re seeing a lot of turnover, if they’re employed.”
Northern Virginia’s unemployment rates, although lower than in much of the nation, remain high for the area and appear to be growing worse. According to U.S. Bureau of Labor Statistics, unemployment in Fairfax County was 6.9 percent in September 2011, compared to 5.1 percent the same time last year. Unemployment in the City of Alexandria rose from 4.5 percent in September 2010 to 4.8 percent a year later.
Nationally, the unemployment rate in October was 9 percent.
You can find more articles from this ongoing series, “Dispatches: The Changing American Dream” from across the country at The Huffington Post.