ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, July 24, 1996 TAG: 9607240016
SECTION: BUSINESS PAGE: B8 EDITION: METRO
COLUMN: Marketplace
SOURCE: MEGAN SCHNABEL
DIRECT SELLING IS an attractive second-income source for many people because it's an easy business to get into, industry officials say.
Talex and Sonali Bhaskaran are the kind of people Amway loves to talk about.
The Vinton couple began selling Amway Corp. products part time in 1988, when Talex Bhaskaran was a double-major business and aviation student at Liberty University in Lynchburg.
"I was looking for some career path that would give me time and money," he said.
Seven years later, he and his wife are full-time Amway distributors. The Bhaskarans' "network" - the distributors they've sponsored themselves, plus the people those new distributors have sponsored, and so on - includes 500 to 600 people.
Now the Bhaskarans are in their late 20s, and their income is well into six figures.
"Your goal is to develop leaders who can do what you do so you can work yourself out of a job," Talex Bhaskaran said. The more distributors you sponsor, and the more successful they are, the less sales work you have to do yourself, he said, because the company pays you a commission for helping other distributors start out in the business. The more they sell, the larger your payment.
The Bhaskarans spend 10 to 15 hours a week on Amway business. About half their income comes from commissions, equal to 4 percent of sales by the distributors they recruit. The other half comes from their own sales of Amway-made household and personal care products and other goods and services.
But that doesn't mean that all 7,000 Amway distributors who converged on the Roanoke Civic Center for a Southeast convention a week and a half ago are soon-to-be millionaires. The Vinton couple are exceptional in the direct-sales industry. According to the Direct Selling Association, a Washington, D.C., trade group, almost 90 percent of the people who are distributors for companies such as Amway or Shaklee or Mary Kay cosmetics are part-time salespeople.
Most use their sales income to supplement full-time earnings from other jobs. Only 10 percent of the people involved in direct sales in the United States earn more than $5,000 a year from sales.
"You get out of it what you put into it," said DSA spokeswoman Liz Doherty. "This is not a get-rich-quick scheme."
Because it's an easy business to get into, direct selling is an attractive second-income source for many people, she said. "When the economy isn't doing well - when people are worried about their jobs - our recruiting numbers tend to go up. People tend to turn to direct selling to get them over a rough spot."
As a whole, the direct sales industry reported 1995 sales of $17.94 billion. Personal care and health products - cosmetics, jewelry, vitamins, weight-loss aids - accounted for 48 percent of last year's sales.
Depending on who is supplying the figures, either Ada, Mich.-based Amway Corp. or New York-based Avon Products Inc. is the largest direct selling company in the nation. "Both of them poke holes in the other's numbers," Doherty said. Because both belong to DSA, the trade group declines to side with one or the other.
Amway was founded in 1959 by Jay Van Andel and Richard DeVos, who, with their families, still own and control the private company. The partners started out selling just one product, a multipurpose liquid cleaner.
But the business has grown far beyond a simple cleanser. The company sells more than 7,000 products, including luggage, furniture, hair spray, vacuum cleaners, cosmetics and mouthwash. It has teamed up with companies including MCI Communications, Hyatt hotels and several auto manufacturers to sell discounted telephone service, vacations - even cars.
More than 2 1/2 million distributors sell Amway products worldwide, and sales last year reached $6.3 billion. Amway operates in more than 70 countries and territories, from Argentina to Uruguay.
Distributors are recruited through word of mouth and are sponsored into the business by active Amway salespeople. They pay $125 for a sales kit with product samples, or $49 for just the sales literature. Bhaskaran said he encourages distributors to start out spending five hours a week on Amway business.
Recruiting distributors is becoming easier than it used to be, Bhaskaran said. He estimates there are between 800 and 1,000 Amway distributors in the Roanoke and New River valleys. But he's still on a mission to educate people about his company.
"There's a lot of preconceived ideas out there about what Amway used to be in the past," he said. "People still think it's a door-to-door business, or you're going to be pushy. They think we're going to be selling people things they don't need."
LENGTH: Medium: 91 lines ILLUSTRATION: GRAPHIC: graphs - Direct Selling Fact Sheet, 1995 colorby CNBSTAFF