22 Sep 2022

Direct Selling – Its Types, Advantages and Disadvantages


Articles - FOB,

Direct selling is a circumstance where a seller sells their own products directly to consumers or buyers without using a third party or commonly referred to as an intermediary.

Although there are many types of sales that can be applied in marketing strategies, not all of them can be done easily as a whole. Sellers in this case need more detailed information about the method used. Once they figure out the way and understand it correctly then it is easier for them to apply it in a real-life situation.

Definition of Direct Selling

What is direct selling? It is one of the methods applied in offering services and goods. This method is used to market products directly to consumers. A situation that is common in non-retail environments.

This method is usually used in the home, virtual, or online stores in other places that are non-official stores. The application of this method provides more functions one of which is obtaining products from intermediaries in the distribution process. Therefore, the product will be sent directly by the company to the place where the consumer is or has previously ordered.

Direct selling means a sales activity that is not the main activity carried out by a company or individual in business. There are many different direct selling techniques and companies can choose which one is more appropriate for their businesses. Many direct selling techniques are used because they are considered very effective when applied.

Types of Direct Selling

direct selling

3 types of direct selling exist in the business world, each with its meaning and purpose. The distribution of direct sales is based on how the seller conveys the product to the consumer, the following is an explanation of each example of direct selling.

  • Host or Party-plan Sales

The use of party-plan sales direct sales is applied to group settings or when there are many potential customers. Sellers will create a titled social event which is the goal to promote the products they sell.

  • Single-level Direct Sales

This type of selling forces salespeople to visit one-on-one to the homes of potential buyers. This means that for those who have a very large percentage of wanting to buy, this type can also be done offline or online.

  • Multi-level Marketing (MLM)

It has become a more familiar term because this type of sales has in recent years spread to remote villages. The focus of MLM is on recruiting new members, not on the success of selling products.

Advantages of Direct Selling

  • Direct contact

Producers in this case the seller have a great opportunity to meet directly with potential buyers or consumers. This condition provides many advantages, besides meeting consumers directly, they also know what customers need to create business opportunities and provide services that suit their needs.

  • Reduce Maintenance Cost

This condition occurs in a non-retail environment, a seller does not have to set up a company such as a shop to sell products. It takes a lot of money to set up a shop, and direct sales can increase profit margins. Because having a shop means having to spend a lot of money on maintenance.

  • Profit Margin

First and foremost is the high-profit margin against the parent company and the seller, most entrepreneurs also adopt this method to make a lot of profit. While small entrepreneurs with limited funds, will usually save on mediator fees and increase profit margins.

  • Consumer Response and Satisfaction

This advantage is what entrepreneurs want the most because customer satisfaction with the products sold is a factor in the progress of the company or business. Moreover, a good response is received, so the information can be used to improve product quality and maintain customer loyalty.

Also read: Understanding Break-even Point – Its Basics, Elements, & How to Calculate

Disadvantages of Direct Selling

In addition to having many advantages, this way of doing business certainly has a negative impact that can be a drawback. There are several drawbacks to the direct selling system, such as being difficult to use by sales representatives and distributors, not providing support for business growth, representation must be with good marketing skills, and unclear sales focus.

Direct Seller Duties

  • Mastering Product Knowledge

It is the most important task for a direct salesperson, to master the products being sold because indeed all activities of the seller with consumers will be directly related to the products offered. Consumers will also usually ask for various kinds of product information, therefore knowledge of the product is very important.

  • Doing Direct Promotion

The direct promotion has become an obligation for direct sales, as well as product offerings to potential customers. Therefore, officers in this case are required to be smart in carrying themselves, especially when marketing products in small or large quantities.

  • Able to Present Products

This ability must be possessed by sales officers in the field, the aim is to attract the interests and desires of buyers from potential consumers. Products will not only be displayed to generate potential buyers, but it also takes the expertise of the salesman in offering the product to attract attention.

  • Approaching Consumers

Workers in implementing this must be with a direct approach to consumers as well as bring offers in the form of products. The approach taken is to make potential buyers interested in the products being sold, politely and kindly. The point is to make potential buyers feel comfortable and willing to buy the product.

  • Able to Read Big Opportunities

Companies that have a business in the field of direct sales must have salesmen who can see and read great opportunities, the foresight of a salesperson who goes directly to the field. Meet consumers and prepare for prospects. Besides,  it is necessary to obtain location opportunities to make direct sales.

Direct Selling Methods

It is the process of carrying out sales without using intermediaries or third parties in sales transactions. The products being sold are also products that cannot be found in regular stores or retail, which means that the only way to get these products is to find a product distributor.

The implementation must also look at the conditions and situations, because of the importance of calculating costs carefully if you want to make direct sales. This method also requires people with a proficient attitude in their field, so that communication and attitude are also included in the consideration.

Direct Selling Example

  • Sales Promotion

One type of sales strategy is to introduce products, especially new items to be released. It can also introduce old products to sell in hopes of increasing sales figures.

  • Personal Selling

A process where sellers and prospective buyers meet face to face to exchange information needed. The seller offers the product to be sold, while the consumer engages with the product they need, also referred to as an activity in maintaining the business.

  • Point of Purchase

It is a form of sales used by retail store entrepreneurs, the use of point of purchase is aimed at encouraging buyers to spend more. This concept refers to a pre-planned sales and crowd strategy.

  • Telemarketing

Being one of the sales strategies and considered effective for advertising in the media, it is done by marketing products and services using telephone media. The target is not specifically selling, it could be just to introduce products in the form of goods or services.

Direct Selling Benefits

Direct sales are used because it has many benefits in addition to the existing advantages, therefore every company, both in the retail sector and others, always uses this method to market their products. In addition to the benefits provided, direct sales also have many benefits for both entrepreneurs and consumers, including:

  • Low Operating Cost
  • Segmentation and targets are clear.
  • There is an increase in sales.
  • There is increased loyalty from consumers.
  • To analyze the results directly.

Thus a brief explanation of direct selling, ranging from understanding, the advantages and disadvantages to the benefits provided. Increasingly sophisticated business systems make business people have to absorb a lot of knowledge to compete with other businesses.

Sampoerna University provides a Business Faculty that implements an international curriculum. Students will be educated intensively, not only by studying theoretical knowledge in classes but also by hands-on practice, with direct selling as the main marketing strategy of a company.

Armed with the knowledge that is directly applied, Sampoerna University produces the best graduates in their fields. 94% of our graduates get full-time jobs 3 months after graduation.

For further information regarding registration, curriculum, visits, and information about Sampoerna University, please fill in the data below.

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