The re-emergence of direct selling is yet another growing trend that will ensure the future success of the network marketing industry. On this page we will discuss the concept of going direct, why it is becoming more popular and how you can capitalise on this growing trend to secure your financial future.
Direct selling is not a new concept of delivering products and services to the marketplace. It has been around for thousands of years. Traditionally, farmers would travel miles to deliver their daily produce to local markets, selling their goods directly to the consumer. However, through the evolution of the business world we have moved away from this method of delivering goods straight to the consumer, we now choose to involve third parties, either through policy or convenience, better known as the middleman. This has significantly impacted the end price of our products and services.
So lets look at some examples:
How much does it cost to buy the latest pair of Nike shoes?
Now ask yourself how much does it cost Nike to manufacture that same pair of shoes?
Today it is estimated that a pair of Nike joggers would cost about $5 to manufacture and yet you pay well over $100 for them. Do you know why? To start with, think of all the distribution channels that a pair of Nike shoes needs to go through to get the shoes from the manufacturing floor to the retail outlet before they can be sold. There are international, national and regional distributors, transport costs and of course the profit margin of the retail outlet selling the shoes. Add to this the cost of advertising and marketing the brand name and its easy to see why we are paying over a $100 for a pair of Nike shoes.
If we were to single out the marketing budget of Nike, how much do you think they spend sponsoring the likes of Tiger Woods, Maria Sharapova, LeBron James, Derek Jeter, Ronaldo and the Brazilian soccer team? The company won’t say exactly what it pays for names like these, but obviously it isn’t cheap. Tiger Woods, for example, is the world’s highest paid athlete, earning approximately $87 million a year. Why does a company like Nike pay so much for Woods? Simple, he has what it takes to be marketable. He is articulate, attractive, an excellent role model, clean-cut and scandal free. Essentially the perfect walking, talking billboard! Now add to this the cost of Nike TV commercials and roadside billboards, who do you think is paying for it all? Thats right, the end customer.
We are not just talking about Nike, the same could be said about Coca Cola. How much do you think it takes to manufacture a can of coke? Sure, these are large international companies but the same can be said about local businesses as well. My family own and operate a sheep and cattle farm in the south-east part of NSW, Australia. What price do we get for the meat on our sheep and cattle? Anywhere from about 50c to $2.00 per kilogram. What do you pay at the butcher for our meat? Anywhere from $8 per kilogram for mince to $35 per kilogram for scotch fillet steak. It doesnt make sense, the middleman makes all of the profits. Wouldnt it be nice to only be paying $2.00 per kilogram for steak.
In the modern day business world, the middleman makes up a significant proportion of the end cost, so the question you are now starting to ask is: why should the middlemen make all the profits? Smart entrepreneurs are now looking for a better way – direct selling.
With recent advances in technology, mainly communication methods and the internet, manufacturers are now capable of selling straight to the end user. As seen in the diagram below, by-passing the middleman and selling direct to the consumer can save the consumer money. This promotes greater customer loyalty and creates a win-win situation for both the manufacturer and consumer.
The best investment I ever made!
Warren Buffet (Billionaire investor)- In regards to direct selling
There are many large international companies capitalising on the concept of direct selling. A good example, with huge international success is Dell computers. Dell sells their products much cheaper to the consumer by by-passing the middleman, enabling the customer to buy direct from the manufacturer.
Many Fortune Five Hundred companies are also taking advantage of direct selling and relationship marketing. Some companies no longer have a choice in the matter, with purchases of stocks, mortgage loans and other financial services easily made over the internet. Brokerage companies have been forced to give their cliental direct access to these markets, taking direct selling to an extreme where through internet banking you can by-pass human interaction altogether.
Business analysts continually suggest that this is the way of the future, a trend that cannot be stopped. Those who choose to take advantage of it will be rewarded handsomely. So how can the everyday person take advantage of this trend?
Network Marketing. Going direct through referrals is a concept that has been around for years. Now the opportunity for international success through global networks is enormous and immediate. Network marketing is a business model that allows everyday people to take full advantage of going direct. Those who treat network marketing like a serious business venture will find it to be very rewarding.