Capitalism's foot soldiers
By : Magdalena Wierzchowska
Salespeople in any culture have a dubious reputation. The stereotype is of someone knocking at your door, inviting themselves into your home, and trying to sell you something you don't want or need.
Each day, the Polish Consumer Federation is plagued by calls from disgruntled victims who have been sold substandard knockoffs by visiting salespeople. Longina Lewandowska-Borowka, the federation's press spokeswoman, said people complain that they've been duped by salespeople talking their way into their homes and selling goods that don't work. Such door-to-door tricksters give the entire sales industry a bad name.
And it's an industry that covers a wide area, from retail sales, which is by far the most popular method, to mail order, telemarketing and even e-commerce. But many companies still prefer the traditional direct-sales approach of winning over customers in the comfort of their own home.
"There's a magic to direct sales," said Tomasz Siemienczyk, president of ARS Agencja Rozwoju Sieci, a company that sells humidifiers. It's a magic that's often frowned upon by many Poles and with good reason.
A con man
always rings twice
When Poland opened to the West, many businessmen made a fast buck by playing on people's gullibility. Financial pyramids lured buyers unaware of their nightmarish reputation in other emerging markets with promises of fortunes and left many penniless.
These days, as people wise up to past mistakes, such disastrous financial scandals are more of a rarity. But there are still plenty of small-scale tricksters preying on naive individuals.
On the lowest level, there are the hard-to-trace con men selling household items such as knives that don't cut. Once the deal has been done, the salespeople simply disappear, leaving no trace of themselves or their company.
"Two years ago there was this company that sold second-hand stuff it claimed was brand new," said Miroslaw Lubon, general director of the Direct Selling Association of Poland (PSSB). The association has as its members the major direct-sales companies in Poland all of which, Lubon said, are legal and accountable.
A code of honor
Those member companies include cosmetic producers Amway, Avon and Oriflame; Herbalife, which sells mainly diet food; and kitchenware handlers Tupperware and AMC Alfa Metalcraft Corp. These, together with Zepter, a pot, tableware and cosmetics firm, comprise about 70-80% of the Polish direct-sales market, Lubon said.
What distinguishes the members of the association is that they have an accepted code of conduct, which obliges their direct-sales representatives to introduce themselves and the company before presenting a product. Complying with the code also means that salespeople explain matters such as product price, loan conditions, return policy, and warranty service. In addition, association members offer a seven-day period when a consumer can give the product back with no strings attached, although there may be a return fee. Some companies go further; Herbalife, for example, offers a full refund within 30 days of purchase.
Two types of direct-sale companies exist, Lubon said. One, such as Avon, has its consultants sell only the company's products. The other, such as Amway and Herbalife, also encourage the salesperson to sell the allure of being a company salesperson. So in a twist reminiscent of the hated financial pyramids, recruitment of further agents is often the main objective, creating a kind of pyramid of salespeople. A Herbalife salesperson earns money not only on the retail fee of the products sold, but also receives a bonus from the turnover of the salespeople he or she supervises.
Tomasz Stanislawski, Herbalife's general director, said however that bonuses are directly linked to the volume of sales. "A distributor is not financially rewarded from the sole recruitment of further salespeople," he said, as is the case with the agents of financial pyramids. According to the 450-member Federation of European Direct Selling Associations (FEDSA), "pyramid schemes make nearly all of their profit signing up new recruits."
There are other obvious differences between direct sales and pyramid-style schemes, such as the voluntary nature of direct-sales companies. "One of the things most or all of our companies represent is getting in easy and getting out easy," said AMC President Kurt Bressler. In addition, while in a financial pyramid the initial fees and other financial obligations are high, direct-sales companies usually involve low start-up costs, FEDSA said. Also, direct-sales companies trade goods, while many financial pyramids generate profit by persuading people to pay money for a product of zero value, Lubon said. He gave the example of a company in Krakow, which a few years ago sold what turned out to be sour milk for a substantial amount of money.
Sales magic
How Siemienczyk's magic is exercised varies. "There are a few minutes to make a person trust us," said Anna Hadam, an ARS trainer and saleswoman. "Between a client and us there's a wall." One way of bringing down the wall is through casual conversation about matters close to the other person's heart, said Magdalena Roslaniec, another ARS trainer and saleswoman. Such a conversation has certain rules. A salesperson should always ask yes or no questions, so that the client can't answer with "Well, I don't know." If a salesman wants to enter the potential customer's flat, for example, he should ask a question such as: "Will this dog bite me if I come in?"
Hadam, Roslaniec and Jacek Szymaniak, another ARS trainer and salesperson, all agree that selling is based on appealing to basic and common impulses such as envy, saving, and grasping opportunities. Envy, because a salesperson can say: "Oh, your neighbors have it already." Saving, because the customer is told: "The price in a shop is 100% more." Opportunity, because the offer is described as "One time only." Playing convincingly on those emotions and impulses is important. "If a person doesn't accept us, he won't buy anything," Hadam said, adding that selling a product involves selling yourself.
Peddling Tupperware requires a different approach. Jolanta Siewniak made a sales presentation or, as North Americans would say, hosted a Tupperware party for a group of housewives last month. It's not a party in the traditional sense. "No dancing, no music, no alcohol," Bressler said. Instead, the party is a presentation of Tupperware products in a family atmosphere with a bit of fun and laughter, such as when a lightweight rolling pin is described as one that men call the "come back home safely" device. But, Siewniak said, the name is deceptive, since the pin's empty innards can be filled with water. At the end of the presentation, women received price forms and, hopefully, the party was concluded with sales.
Big in Japan
"In Japan, the main share of turnover of direct sellers is from cars and condoms," Lubon said. Buying a car from a direct seller and thereby decreasing or eliminating the overhead charged by a showroom, substantially cuts the price of the car, while condoms are often sold directly to Japanese women who, for cultural reasons, would never dream of buying them in shops.
In Poland, direct-sale bestsellers tend to be cosmetics and household appliances. All seven major direct-sales companies sell cosmetics or appliances and stress the importance of quality for the consumer. "If you use a product of ours once, you will continue using (and buying) it," said Ewa Strzyzewska, promotion manager at Tupperware.
"Consumer rights are respected by direct-sale companies more than by other companies in the 'regular' trade," said Lubon, adding that stores are not legally required to allow clients to return products if unsatisfied. But when a product is purchased from one of the association's member companies, customers can return it if they wish. Some cosmetics can be returned even if a third has been used, Lubon said. There are, of course, return policies that involve a small fee. "Kowalski, if he wants to withdraw from a deal, has to pay, let's say, 25% (of the product price)," said Miroslawa Pilka, a specialist at the Office for Competition and Consumer Protection (UOKiK).
Problems between consumers and direct-sales companies often arise because many people simply fail to study the small print when buying products. "The majority of Poles sign the contract without reading it," Lewandowska-Borowka said. But some companies misinform customers by withholding information about the product and the terms of payment. There have been three complaints made about a humidifier company in the past two weeks, said Michal Herde, a Polish Consumer Federation representative. Herde said that in one instance, a 90-year-old woman was told to sign in exchange for not being bothered anymore.
So, given the tarnished reputation of door-to-door sales, who are the customers? "Our products are used mainly by women," Strzyzewska said. These women tend to be housewives, whose apartments are used for demonstrations and who are often simply curious about the products on offer. Inviting a salesperson in can also stem from social reasons. "It's not only about money," Strzyzewska said, since sales presentations can be an occasion to meet friends and neighbors. "Let's talk" is Avon's sales motif, and the essence of direct selling. "There's a more significant contact with the client than with the regular retailers," Pluciennik said. The company can adapt and respond faster to consumer needs because it maintains constant contact. "It's a very complicated business as it is based on human relationships," Pluciennik said.
If clients are drawn by the social aspects of direct sales, the salespeople themselves are attracted by the money. At Zepter, 15-20% of the representatives earn zl. 5,000 net a month and half of the company's 13,000 agents earn a minimum of zl. 2,000 net a month, said Zepter representatives. It's a substantial amount, given that the average monthly take-home profit for direct sellers is zl. 600-zl. 700, Lubon said.
The entrepreneurial bug
But it's not only the money that attracts people to work in direct sales. "Direct selling creates jobs for people who don't want to work full time or prefer to work once a week," Lubon said. Some are attracted by the opportunity of being in business with their spouse. Tupperware, for example, encourages families to become involved. While the regular salespeople are mainly women, all 14 wholesale agents and trainers are married couples, Strzyzewska said. The wife is the key seller, while the husband deals with the paperwork. The direct-sale industry can also be a stepping stone to employment independence. Direct-sale representatives can be their own boss and learn how to set up a business. "They (direct sellers) get the entrepreneurial bug," Lubon said.
Ania Olubek, a psychology student and Avon consultant, has a simpler reason for doing door-to-door sales. "It's not a source of big earnings for me," she said. "What I earn, I spend on cosmetics at Avon."
The potential flexibility and perks of being a direct-sales representative have some serious drawbacks. If a worker wants benefits such as social insurance (ZUS), health insurance, or paid holidays, they will have to look for work elsewhere. Selling offers no official benefits. "Ninety percent of salespeople are women," Lubon said, for whom the job is a sideline from their housework or other employment.
