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Is the Direct Sales Industry a Scam?

By Holly Reisem Hanna

Recently I’ve noticed a lot of traffic coming to my site from the search query, “Stella & Dot Scam”. Having hosted a Stella & Dot party myself and knowing numerous direct sales Consultants for Stella & Dot, I couldn’t figure out why this query was popping up so much. So I decided to dig a little deeper to see if there was actually something to it.

First of all, for those of you who are not familiar with Stella & Dot, it is a direct sales company that sells the most adorable jewelry from mompreneur, Jessica Herrin.  In the direct sales industry, Independent Consultants market and sell products directly to consumers away from a retail store location; often times this is done through in-home parties, presentations, online stores and/or through catalogs (Avon, Mary Kay and Tupperware are all well known direct sales companies). For a small fee, the company supplies the Consultant with a starter kit that gives them everything they need to get started with their business; usually including samples, training, a website and marketing tools. The Consultant then makes a commission off all of the products that they sell – pretty straight forward.

I started my quest by performing a Google search on, “Stella & Dot Scam” and low and behold 211,000 different results popped up (I only looked at the first 5 pages of results). Starting with the most relevant result, I conducted my research and here is what I found.

  • One question from a woman on a forum asking if anyone had any good or bad information on Stella & Dot – no negative replies were noted.
  • Various multi-level marketing articles (MLM) that included Stella & Dot as an example of a direct sales company.
  • Numerous interviews with Jessica Herrin, CEO of Stella & Dot.
  • The same complaint on numerous review sites, about a rhinestone missing from a ring that was purchased through a Stella & Dot Consultant.
  • Assorted reviews on the Stella & Dot opportunity – none of the reviews that I looked at were negative.

Nothing out of the ordinary, so I continued my search on the Better Business Bureau website where I found one A- rating for an Independent Stella & Dot Consultant located in Clear Water, Florida. My last effort to dig up some dirt on Stella & Dot was to perform a Twitter search, and this too proved to be fruitless.

So is the direct sales industry a scam?

Absolutely not! Not only do I know a ton of women who are supporting their families by working in the direct sales industry, but according to Direct Selling Association (DSA), the direct sales industry generated over $30 billion in U.S. sales in 2007.

Of course just like any other industry, there are some bad apples in the bunch, so if you’re considering a work at home opportunity in the direct sales industry, you just need to take your time and do your due diligence. Starting by following the steps that I took above, then see if the company has any contact information listed; an email address, phone number and physical address. Try to contact them and get some additional information on their company and the opportunity.

Look for testimonials from other Consultants, in fact talk to other Consultants about their experiences with the company. You’ll also want to test out the product for quality and durability, along with learning the commission structure, associated fees and contracts that are required for the business opportunity. Check to see if the company is affiliated with the DSA which promotes ethical business practices in the direct sales market.

We all know that when you’re looking for work at home opportunities, you are bombarded with information, websites, and products that all claim to be the next best thing. It’s hard to know what to believe and who to trust, but by investing a little time and effort you can protect yourself from scams and perhaps even find the career path that you’ve been searching for.

Posted in Direct Sales

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28 Responses to “Is the Direct Sales Industry a Scam?”

  1. 1
    Mary @ The Writer's Block says:

    Holly,

    I, too, know consultants for all types of companies who are doing gang-busters and making a great stream of income for their families.

    I think the issue is this: persons’ expectations when they enroll as a consultant. I have tried it with a few companies. Guess what? I just can’t make it work. It must be something in my genes, my contact list, or whatever. But–it’s obviously not in my skill set/strength set. And neither is being an open heart surgeon.

    When people sign up to be a consultant and want to do what their upline is doing or want to be the next Exec. Director and then don’t succeed (for whatever reason), their disappointment may turn to sour grapes. It’s not a scam. It just wasn’t a good fit for you.

    Personally, I’m trying to learn from those “mistakes” to find niches where I do fit well, while also still encouraging others to give direct sales a try. ;)

    • 1.1
      Holly Hanna says:

      Hi Mary, Thanks for sharing your experiences with the direct sales industry. I agree, you need to have the right personality for direct sales and you need to have realistic expectations. I also think you need to a fierce passion for the products that you are selling, but if you have all of those traits I think direct sales can be an excellent opportunity.

  2. 2
    Tracy Bennett says:

    Holly,
    Thanks so much for writing this!! I think every direct sales company has its negatives and positives. I also think that everyone should realize that what Mary said is true. It is “not for everyone”. I have even talked a few girls out of signing up on my team because I could tell it just wasn’t for them.
    I also think that everyone is silly to think that just because there are people making lots of money at it, doesn’t mean it happens overnight. It IS a business and it only “works when you do”, just like any other. Great post. I know you love stella & dot too! :)

    • 2.1
      Holly Hanna says:

      As they say, Rome wasn’t built overnight and neither will your direct sales business take off over night – just like you said, it takes a lot of hard work and passion. Thanks for stopping by Tracy!

  3. 3
    Dawn says:

    HI Holly, thanks for a wonderful article. I didn’t want to be in “direct sales” until I found the right company a couple years agao that I can work from home with – Shaklee. I love the idea of not having to stock product, deliver, hold parties, but rather help people undertand their health and that of thier families. I love what I do I agree with Tracy, all direct sales are not for everyone. Thanks again for this great article.

  4. 4
    Shana Segat says:

    Thank you for the great blog about direct selling. A lot of people think they are scams because they think all they have to do is buy the start up kit and BAM they’re rich. It’s just like any business. You get what you put into it. I not only sell Avon, but I’m an Administrative Assistant to our DM. I have seen personally ladies that are making fantastic money selling Avon, but those ladies are out there, selling, making new customers, providing great customer service. It can be done, but you have to do the work.

    Shana Segat
    Avon Beauty Advisor
    http://www.youravon.com/ssegat
    Free shipping with code SPRING2011 at checkout!!

    • 4.1
      Holly Hanna says:

      Hi Shana, I also think a lot of people confuse direct selling opportunities (Multi-Level Marketing) with pyramid schemes and they are two totally different things. Thanks for the comment!

  5. 5
    Silver Belle says:

    I was once a stylist with S&D and my experience was awful. Anyone that has a team is required to maintain a sales quota and if they fail at that then their whole team is dismantled and given to other “active stylists”. I found this out when I received an email from someone saying that I’ve been moved to their team. I was so disgusted by how it was handled (no call from corp telling me of this change) that I left the company and signed with another jewelry line where the support is more embracing.

    • 5.1
      Elise says:

      This is in the policies and procedures Stella & Dot provides from Day 1 of your sign up. There are NO sales quotas until you start growing a team. And these quotas are in place so that the leaders of the team actually have to keep selling and can’t just rely on their team to do all of the work. If the leaders don’t do anything, after 3 or 4 months, their teams are given to the next leader above them. Leaders are expected to LEAD their teams, so if they’re doing NOTHING, they SHOULD not have a team.

    • 5.2
      Nancy says:

      I was considering becoming a stylist with Stella and dot until I read your review. Which co did you go to that you are now happy with? Thx

      • Hi Nancy,

        I’m not a direct sales consultant, but an online publisher. I’m not sure why you wouldn’t go with Stella & Dot, if you love their products… I couldn’t find any negative information on them and they are experiencing tremendous growth. Good luck with your journey!

  6. 6
    Regina Blake says:

    I was also a Stella and Dot stylist for a while and wasn’t able to keep my quota. My area lead would email me constantly asking about my home party schedule and pressuring me. I had a full-time job and traveled for work!

    Last year my company downsized and I went to half-time. I thought about Avon or Silpada. Instead I found Mia Luxe.

    Mia Luxe is a boutique jewelry company much like Stella and Dot but we don’t have home parties. We use the jewelry to raise money for schools. Anyone who has a child in school knows about fundraising!

    The company set me up with a database of schools to get me going and tons of their Lookbooks. It did not cost me anything to sign up.

    I am in Texas and I have over 1000 schools as leads. I was able to have either an event or a Lookbook fundraiser with almost every school I contacted. I made a ton of money over the last year.

    If anyone is interested, you should check it out. http://www.mialuxe.com
    They are fun and super supportive at the home office. This is a perfect opportunity for a WAHM and there is no startup costs!

    • 6.1
      Amy says:

      Hi Regina, I just saw your posting and am wondering if you are still with Mia Luxe. I went on the website you provided, and it looks like there are sales opportunities in certain states. Do you know if they are exanding to other states?
      Thanks,Amy

    • 6.2
      Holly Hanna says:

      Hi Regina – That is so great that you have found an opportunity that you love and that allows to make good money!

      Amy – You may also want to look at Fund-Hub they also offer sales opportunities in the school fund-raising channel, but they sell home decor and gift items – cute stuff. Their website is http://fund-hub.com/

    • 6.3
      robin says:

      I just found your post about working for Mia Luxe – I am curious if you are still working with them and how did you get started? Also how do I find out if there are opportunities in my area?
      Thanks for any infomation you could give me

  7. 7
    Kaila Narum says:

    Hi Holly!

    I agree you need to find the right company to work for and it can be a blast (and successful)! In fact, direct selling is no longer just for women! Have you heard of the new company called Man Cave? They are a direct sales company for men that have parties (they call MEATings) to get guys together and sell meat, grilling accessories and bar ware. Pretty cool concept for the guys!

  8. 8
    Sara says:

    Hi ya

    Has anyone heard of Arbonne? What do you think of it?

    • 8.1

      Hi Sara, I have a friend that sells Arbonne and she LOVES it. There are a couple of keys to finding the right direct sales company. One you need to be passionate about the products and two, you need to make sure that you’re dealing with a reputable company. All the best to you!

  9. 9
    Tanjia Rahman says:

    Thank you for such a informative article. I agree direct sales are not a scam! I have been working with a new company called At Home. They are great! They offer excellent commission and no starters fee. For more info. Visit my site! http://desidecor.athome.com/home.html

  10. 10

    I agree that direct sales is not a scam, but it’s very important to do your research, as not all companies are created equal. I am partnered with SHOP-COM, Powered by Market America. They have been around for over 20 years, and I can tell you residual income is wonderful, and time freedom is even better! I LOVE what I do, and that is important. This company is part of the direct sales industry, but the compensation plan is not limited to levels or percentages like a multi-level marketing company is. SHOP-COM is a comparison shopping site, similar to Amazon but larger, and has similarities to QVC (real people to talk to) It is a lot like owning a franchise on the internet (without franchise fees or upfront investments). What I do is refer people to SHOP-COM, and show them how to save money through online shopping at over 6,000 well-known partner stores along with some exclusive stores. When someone I refer finds a good deal and makes a purchase, they save money and I make money. So, I think you can see why I love what I do…I get paid to help people save money shopping. Feel free to visit my site: http://www.shop.com/kathys Click on the LEARN MORE link and you will see it’s free to shop and save with us. No membership dues. No business to join. :-) However, if you are looking at options to create more income, I’d be happy to show you our business model. Click on my name at the top of the site to contact me. But otherwise, I’m happy to help you save money shopping!

  11. 11
    Emily Smith says:

    I sell Kitsy Lane and love love love it. I love the products and their packaging is so classic and gorgeous. They always have great deals on the majority of their jewelry and accessories, which is a big help in closing sales with my customers.

    I work from home in my down time from chasing my toddler around. It is so quick and you wont lose your account if you don’t have any activity for a few weeks like other product lines. Its fun because you get to be your own boutique owner from home and add the pieces you like instead of having a range of products that you are not in love with.

    If you want to check it out, use my sign-up link to join: http://bit.ly/16QSbls

  12. 12
    Sara says:

    Hey Holly, I think your article is very interesting. I am looking for a direct sales company that I may want to sign up with to become a consultant. I am trying to find a company that does not have much for representation in my area and offers the best benefits but still is interesting to me. I am wondering if you know of a website that actually compares direct sales companys side-by-side? Thanks for the info Holly!

  13. 13
    Nikki says:

    The network marketing world is so tricky to navigate, it’s no wonder everybody thinks they are all a scam. It’s sad, though, because there are some wonderful companies that really offer great opportunity to those who join. You’ve just got to do your research ahead of time (don’t just join willy-nilly) and pick the company that gives the best opportunity for YOU to earn money.

    This is why I started a blog on the topic- hope you enjoy it!
    http://www.choosingahome-basedcareer.com/

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