Recently I’ve noticed some direct sales companies discounting their start-up fees. A basket/home decor has a $19 start-up, network marketing companies offering free pre-launch promotions, and others with similar dirt-cheap fees to join. At these prices, it makes the skeptics question if you can even consider it a business. Is this good for the direct sales industry? I don’t […]

Recently I’ve noticed some direct sales companies discounting their start-up fees. A basket/home decor has a $19 start-up, network marketing companies offering free pre-launch promotions, and others with similar dirt-cheap fees to join.

At these prices, it makes the skeptics question if you can even consider it a business. Is this good for the direct sales industry?

I don’t know the recruiting stats whether this is good or bad for these companies long-term but I do have my opinion on it .

The problem I have with these free, rock-bottom start-up fees, is that it attracts the throw-away mentality. You know, so what if it doesn’t work out because it didn’t cost anything to sign up with xyz company.

That said, the upside is that if someone loves the products, she/he can use the so-called consultant status to buy products at wholesale prices, which helps the sponsor’s sales.

A few months ago, I took advantage of Beachbody’s free sign-up to get a fitness video to save 25% without pursuing the business. The sale of my purchase certainly helped my friend’s sales volume for that period.

But the biggest concern I have is the saturation in one concentrated area. When your company offers free or sign-up fees for less than the price for lunch, you might get more sign-ups, but it comes at the expense of reducing sales activities from other direct sellers.

It’s a challenge when you have four consultants representing the same company at my daughter’s school.

You might think there’s plenty of business to go around and there is but most people tend to market to their “friends”. In this case, the circle of mommies, becomes quite small. You run the risk of alienating one friend over the other based on whom you buy from.

There’s also the risk of seeing your company’s products on Ebay, Amazon, and other sites when you have people using the wholesale discount and re-selling the products at retail.

To be fair, the number of sign-ups doesn’t mean they’re all active or building the business, far from it. Plenty of people sign up purely for the product discount. And some sign up and do absolutely nothing.

I don’t know about you but I find value in exclusivity. I also value things more if I have to work hard to get it. Whether dishing out a few hundred to start a business or buying a piece of art that’s worth more than $10 bucks, there is value in scarcity.

Would you hold the same value for a business that costs $400, $500 or even a $1000 to start? Or one that you can easily enter for free, $10, $30?

I don’t know if the free or nearly free start-up fees is good or bad for the direct sales industry because there are clearly pros and cons to this. But I’d love to get your take on it.

Your thoughts?