“Direct Selling” in a Recession: Pink Truth Has a Voice!

The CBS affiliate in Philadelphia ran a story yesterday about women doing direct selling in a recession to “supplement” their income. Of course, Rhonda Shasteen of Mary Kay got to have her say…. telling the world that women will spend money on lipstick even when their finances are tight.

The story was largely focused on the “opportunity” that companies like Mary Kay and Arbonne offer women. (Mary Kay said recruiting is up 10% this year, but of course didn’t release any sales figures or offer up information on how well all those recruits are doing!)

But Pink Truth has a voice! I am so thankful to the producer for working hard to get something in the story about the other side of Mary Kay. We got a great mention, and I got to tell the world that recruiting and frontloading are keys to multi-level marketing schemes.

Here’s part of the transcript if you’re unable to view the video:

Companies such as Mary Kay are using the recession to recruit, saying women can earn money selling in their own homes.

When they sell, they get a commission. If they recruit new salespeople onto their team, they’ll often earn a slice of those commissions, too.

Direct selling companies say, even in a recession, direct selling has customers.

“A woman may not be able to go out and spend $100 on a new dress or a new leather handbag, but she can certainly afford — and will spend — $13 or $14 on a lipstick that will help brighten her day,” said Rhonda Shasteen of Mary Kay Cosmetics.

To some people, direct selling isn’t all it’s cracked up to be. Tracy Coenen used to sell Mary Kay. Now she runs Pink Truth, a Web site critical of Mary Kay.

“The name of the game is recruiting people and getting them to purchase inventory packages upfront that they most likely will not be able to sell, if history is any indicator of that,” Coenen said.

The median income for direct selling is about $2400 a year, according to the Direct Selling Association. It says, don’t risk your finances to join direct selling, and if you have to buy inventory, don’t buy more than you can sell to customers.