At Janine Rodriguez’s office, overtime has been slashed, bonuses have vanished, employees are getting laid off, and she’s getting nervous about her own job. Her solution: Spend two nights a week cooking at the homes of strangers, in front of an audience of the host’s family and friends, pointing out the virtues of cheese graters, garlic presses and other culinary tools. All are made by a company called The Pampered Chef, and she’d be happy to sell them to you.
As the job market continues to deteriorate, more people are choosing the same route as Rodriguez, looking for alternative ways to make a buck.
Laid-off construction workers become handymen for hire. Ex-bankers start doing people’s taxes. College grads join yearlong volunteer programs.
And some, like Rodriguez, try direct sales. Whether it’s selling cosmetics, kitchenware or life insurance, people who may never have considered a career in sales are embracing the occupation to supplement dwindling income or to tide them over until they find a job in their chosen field.
The Direct Selling Association says the number of people involved in that line of work increased by an average of 8.4 percent a year during the last two recessions.
”As the job market contracts, people look for other ways to supplement their income and their family’s income,” said Marla Gottschalk, chief executive of The Pampered Chef, which is owned by investment guru Warren Buffett’s Berkshire Hathaway.
”Anyone can be successful in this business,” Gottschalk said. “You just have to have the desire to do it.”
Bruce Nissen, a labor sociologist at Florida International University, said many people participate in direct sales during a recession only because they can’t find a traditional job.
”In a robust economy with plenty of jobs available, this is a small niche,” Nissen said. “But just now, during the recession, more and more people are becoming desperate.”
Florida’s unemployment rate hit 8.6 percent in January, the highest since 1992.
Lost overtime, which has cost Rodriguez more than $400 a month, has been a motivating factor for her.
RESPONSE TO WORRIES
Although she would like to keep her job of 22 years with a financial-services company, she also wants to make up what she used to earn in overtime and worries about being laid off.
”I’m hoping to hang on till I’m 55, but I’m not sure I can make it,” said Rodriguez, who turns 51 on Monday.
So, in the meantime, she cooks for The Pampered Chef — well, really for herself, since she’s an independent businesswoman rather than a Chef employee.
”I’m doing something I love to do,” said Rodriguez, a single mother from Plantation. “My family will tell you I’m a great cook.”
Incomes from direct sales vary widely, depending on the product, the salesperson’s experience and how much time they spend on their business. The Pampered Chef said a person who makes two presentations a week can expect to earn $750 a month, working about 10 hours a week.
Participants are also rewarded for recruiting other salespeople and typically get a small percentage of the newcomer’s sales.
Kelly Salsamendi, who has been working with The Pampered Chef for 11 years and recruited Rodriguez, said she works about 20 hours a week and makes about $30,000 a year. She is also home-schooling her three children and helping her husband with his pest-control company.
BIG MONEY
Both Avon and The Pampered Chef said their most established, full-time salespeople make six figures, although they acknowledge that it’s rare.
”I love my business,” said Salsamendi, of Fort Lauderdale. “I love the products. People are cutting down on luxury items, and I’m selling something people can buy and justify and feel good about. I’m not seeing that recession in my business. I’m seeing growth.”
While Avon, Pampered Chef and Tupperware are true direct sales, other businesses use variations on the direct-sales model.
Take the website Delivery.com, which allows users to type their address and order food, groceries or other merchandise from participating neighborhood restaurants and shops.
To attract more restaurants and customers, Delivery.com asks users to serve as salespeople. If they sign up a restaurant or store, they get 25 percent of the website’s commission on each order from that business. The commission rate is 5 percent to 7 percent, so the take for a user/salesman would come to about 30 cents for a $20 order.
That could stack up if the restaurant gets a lot of orders through the site.
Signing up consumers to use the site also results in a commission on each order they place.
Then there’s New York Life Insurance Co. Unlike true direct-sales companies, New York Life actually takes on its salespeople as employees — with health insurance and a retirement plan, but no salary.
The company helps newcomers get licensed to sell its products and provides training and office space, but salespeople set their own hours. It’s not for everyone, and turnover is high, but the company always needs people, said David G. Walter, a partner with the firm’s Doral office.
Recruiting is Walter’s job, and he says interest now is high: “A lot of people are out of work. We are constantly interviewing. Last week, I had 13 interviews. Normally I would have like six.”
The direct-sales industry says its model is appealing during a recession, because of these characteristics:
• Easy and inexpensive to start. The Pampered Chef sells a start-up kit with samples, catalogs (in English or Spanish) and other materials for $155. Avon is willing to front merchandise to its representatives, who pay for it when the end-customer pays.
• Budget-friendly products. While not necessarily cheap, the industry’s products may appeal to the budget-minded shopper. For example, people who hesitate to buy a new outfit might buy a new piece of jewelry or lipstick. ”People don’t stop buying during a recession,” said Amy Robinson, president of the Direct Selling Association. “They just buy less or buy different.”
• A sense of control. During a recession, job-seekers may send out dozens or even hundreds of résumés and still not find work, an experience that can make people feel unable to control their own fortunes. But direct-sales companies suggest to people that if they follow the instructions and work hard at it, they’ll make money.
Not everyone is a fan of direct sales, however.
Direct-sales companies generally don’t offer health insurance, although some firms do offer group discounts. And there is no base salary and no paid vacation.
”The only way to make money on a lot of these things is to impose on your friends,” said FIU’s Nissen.
The industry seems to have taken some criticisms to heart. For instance, the Direct Selling Association expects members to follow a long code of ethics.
One of the code’s provisions requires companies to take back inventory that a salesperson can’t sell — a rule intended to prevent firms from sticking participants with unwanted merchandise.
And Salsamendi said she urges new salespeople to quickly move beyond friends and family. ”You can’t build a business and sustain a business on your friends and family,” she said.
Miami Avon representative Sonia Saenz said her friends and acquaintances are glad to buy from her.
”They just buy it from me instead of a store,” Saenz said.
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