Party Profits
Home-party sales have moved way beyond Tupperware. And now some big guns want in on this global business
When Kathy Yellets, then a sales executive at Hewlett-Packard, began hawking Pampered Chef kitchen gear using the kind of home parties that made Tupperware and Mary Kay cosmetics famous, her friends were horrified. "They said, `Kathy, you have a master's degree. If you get a license plate that says Pampered Chef, we will disown you,' " recalls Yellets, of Darnestown, Md.
Nine years later and it's Yellets, 51, who is having the last laugh. She doesn't drive a pink Cadillac, but she has long since left her high-pay, high-stress day job and last year pulled down $120,000 as a "kitchen consultant," doing two or three home parties a week and also collecting commissions on the sales of consultants working for her.
Now the rest of the world is catching up to Yellets. Last year, home parties accounted for $8.3 billion in American sales, according to the Direct Selling Association. Marketers have discovered that there's almost nothing you can't sell at a home party, whether it's scented candles, scrapbook supplies, golf clubs, Canadian pharmaceuticals, or battery-powered "marital aids."
And now the big guns are getting in. Established companies that may have scoffed at the lowly home party a decade ago are embracing it. Last fall, billionaire investor Warren Buffett acquired the Pampered Chef for an undisclosed sum, adding the $700 million-plus home-party business to his Berkshire Hathaway group. Time Warner's Southern Living magazine now has a successful home-party affiliate for its new line of furnishings. And companies such as the Body Shop, Binney & Smith (makers of Crayola crayons), and consumer products giant Unilever are also exploring direct sales. "Major companies that were not involved in any sort of direct selling are seeing party plans as a way of lending their name to another venture and bring in more revenues," says Thomas Ingram, professor of marketing at Colorado State University.
Burp. Home-sales parties originated in the 1920s when a primarily male sales force used them to introduce aluminum cookware. In the 1940s and '50s, single mother and saleswoman Brownie Wise took the idea and began a marketing juggernaut from Earl Tupper's line of burping plastic containers, which had been winning design awards but languished on retail shelves.
But in the career-woman climate of the '80s and '90s, "people wrote the party plan off like it was dead," says Neil Offen, president and CEO of the Direct Selling Association. Then came the Internet shopping craze, which seemed to sound the death knell for two-hour parties where single-product lines of often dubious utility are sold at premium prices. Yet home parties are a mainstay of direct sales, an industry that has shown 18 years of consecutive growth.
Industry insiders say, in fact, that in today's high-tech, high-paced life, direct sales in the home are a way to build community and provide social contact. Parties are often organized around an event like a bridal shower, housewarming, or birthday and thus combine socializing with shopping or a hobby, while offering extra income for the sellers.
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