SIC 5963 Direct Selling Establishments

SIC 5963

Retail companies that sell merchandise door-to-door, from trucks and wagons or from other temporary locations, make up the direct selling industry. Included are individuals who sell products by these methods and are not employees of the organizations they represent, as well as establishments that are retail sales offices from which employees operate to sell merchandise by house-to-house canvassing.

NAICS CODE(S)

722330

Mobile Caterers

454390

Other Direct Selling Establishments

Although direct selling has been a staple method of distribution for retailers in the United States since colonial times, the industry has undergone major changes since the 1970s. This industry, which for years included just a few mainstays such as books, household appliances, and cosmetics, now encompasses an enormous variety of products, from household goods to gourmet foods. Entrepreneur reported in 2004 that there were an estimated 13 million independent sales consultants working in the direct selling industry, which generated $28 billion in revenue.

For most of its history, the direct selling industry relied on door-to-door sales. Indeed, many organizations built large retail empires based primarily on home sales methods. Avon Products Inc., Tupperware Corp., and AB Electrolux are a few of the organizations traditionally associated with house-to-house canvassing that generated huge profits during the post-World War II economic boom.

Despite past successes, the effectiveness of some forms of direct selling waned in the 1970s and 1980s as new retail channels emerged. As a greater proportion of women entered the work force, salespeople found it increasingly difficult to find prospects at home during the day. Moreover, because two-income families had less time to shop at stores, they began to purchase more goods through direct mail, catalogs, and the Internet. The increased popularity of consumer goods shows, warehouse stores, television shopping networks, and other selling techniques further reduced direct sales to the remaining one-income families. Finally, increased crime rates caused many potential customers to refuse to allow strangers into the home, and some municipalities banned door-to-door sales altogether.

Responding to this trend, in 1992 both Avon and Tupperware started marketing their products for the first time through mail-order catalogs and direct mail. AB Electrolux also shifted its focus from...