On a recent Sunday afternoon, friends and neighbors gathered in the home of Kathy Archambault in Cumming, Georgia, for a crafts-making party. Guests pressed flowers in greeting cards with a special flower press, then zapped them in a microwave. But it was not all fun and games. Her visitors bought US$425 in crafts kits, and Archambault made 25 percent in sales commissions.
Before they left, Archam-bault, 45, made another pitch, asking them to become what she is -- an independent consultant for Big Yellow Box, the business behind the crafts kits and a venture of Binney & Smith Inc, the maker of Crayola products. There were no takers, but three women agreed to give parties. In return for free products, they would introduce Archambault to friends and neighbors -- all potential buyers and recruits.
"This gives me an outlet for my creativity, and I love the idea of being so entrepreneurial," said Archambault, who is also a marketing instructor at Lanier Technical College in Oakwood, Georgia. Since she started selling crafts in June, she has built a team of 135 recruits, whose sales also earn her commissions.
If you have not been invited to a shopping party yet, there is a good chance you will be. And you may be asked to sell as well as to buy. The sellers, mostly women motivated by sales incentives and flexible work schedules, have been turning these parties into big business.
Last year, home parties accounted for US$8.4 billion in sales nationwide, up from US$7.1 billion in 2000, according to the Direct Selling Association, a trade group that represents 173 companies. But prospective consultants who expect a payoff along the lines of a Mary Kay pink Cadillac shouldn't quit their day jobs just yet; only 8 percent of all sales consultants earn more than US$50,000, the association says. Before signing on, even those who are shooting only for pocket change should understand a company's compensation and recruitment plan, the likely expenses and the potential market.
Despite the convenience of Internet retailing, marketers have learned that they can sell just about anything at parties, like wine, pet supplies, home accessories and golf clubs. They say parties give harried consumers a chance to meet with friends, get away from children, learn how products can be used and, yes, shop.
"It's all about relationships," said Jill Blashack, president of Tastefully Simple Inc, a seller of gourmet foods in Alexandria, Minnesota, that started in 1995.
"People want to buy from people they like and know," she said.
Blashack expects the company to have revenue of close to US$125 million this year on products sold by 21,000 consultants. Unlike food shoppers on the Internet, her customers can taste the products first, she said.
Buffet joins in
Established companies and investors are also joining the business. Two years ago, Berkshire Hathaway, headed by Warren Buffett, acquired the Pampered Chef Ltd, a direct seller of kitchen tools in Addison, Illinois. In 2001, Southern Progress, a subsidiary of Time Inc, started Southern Living at Home, whose 40,000 consultants demonstrate many uses for trays, vases and other home accessories. The company, based in Birmingham, Alabama, had revenue of US$140 million last year.
In June, Binney & Smith, in Easton, Pennsylvania, started Big Yellow Box, which sells crafts kits. Like most party-based companies, it has a multilevel marketing strategy. Sales reps are paid a commission on their own sales, plus smaller cuts of sales made by recruits.