Pass the Chips and Dip, Y’all. Now Buy Some Southern Living Books.
You may not see any hot-rodding pink Cadillacs when more than 1,000 salespeople descend upon Birmingham this month to attend the first national convention for Southern Living at Home, the newly minted home sales division of the Southern Living publishing group. Those automotive trophies of the Mary Kay cosmetics empire, bestowed upon the firm’s top-selling sales associates and flaunted as emblems of persuasive prowess, are mere baubles to this fiercely partisan crowd. “Strange things happen when you say Southern Living,” explains Dianne Mooney, Southern Living at Home’s VP and Executive Director. “There’s a visceral reaction. This brand is magic. We have instant credibility.” Forget about Cadillacs. We’ve got chocolate-orange cream fingers — straight out of Southern Living Incredible Cookies. You can’t eat pink vinyl for dessert.
The evangelical zeal of this sales force is just one mind-bending aspect of the growing sales channel known as the “home party plan.” Think Tupperware, but think savvier. While the plastics giant synonymous with home party sales floundered in recent years, nimbler companies gamely charged ahead. More than 66,000 “kitchen consultants” from the Pampered Chef logged 1 million home parties last year. The basket-making giant Longaberger is a billion-dollar enterprise (not to mention the subject of a #1 New York Times bestseller of the same name). Even sex-toy parties have bloomed as the latest frisson in living-room demos. “We believe that direct sales is hotter now than it has been for many years,” Mooney says. “But it’s a word-of-mouth business. You don’t hear a lot about it.”
Singing to the Choir
What Southern Living at Home aims to do — and what very few companies have done profitably — is to sell books into the home. Though cookbooks, gardening titles, and decorating primers will account for only about 30% of the company’s home party product line (the remainder being decorative products such as pie plates, carving sets, and tabletop votive cup holders) books remain a core asset for Southern Living at Home. Mooney, who has worked in the direct mail industry for nearly three decades, built her career marketing books from sibling publisher Oxmoor House to Southern Living’s now 2.6 million subscribers, a process company executives describe as “singing to the choir.”
But taking those books into the home via thousands of “independent consultants” is more like sight-reading an aria. “We’ve been marketing books since 1974,” Mooney adds, “and we’ve never done anything as out-of-the-box as this.” Early on in the project, focus groups turned up two relevant facts: many southerners were already involved in other party plan organizations, and the party plan concept did not reflect poorly on the Southern Living brand. Several direct sales staffers were soon brought on board, and the home division opened its doors in January with the hope of attracting 1,000 independent consultants. Already 4,000 people have ponied up the $199 for a starter kit — representing all 50 states — and the response has been so overwhelming that kits for July have sold out. “It’s been an avalanche,” Mooney says. “But we have got to control our growth, because if we let it grow unchecked, the word ‘implode’ has been mentioned.” Consultants make profits on personal sales, plus a royalty on the sales of other consultants they recruit — hence the term “multilevel marketing.” Books sold at home are priced at roughly the suggested retail price.
To some, the response has been no surprise. “If you’re in one of those 17 states that are considered southern, Southern Living is your bible,” says Gary Wright, Director of Special Markets for Southern Progress, the corporate parent of Southern Living, Sunset, and Cooking Light, among other ventures. (Southern Progress is itself a unit of AOL Time Warner.) All of which has been great fodder for Oxmoor House, which publishes around 100 new titles per year, sells into the trade through its Leisure Arts subsidiary (last year book revenues were split about 60/40 between direct mail and retail), and publishes for Martha Stewart Living, Jenny Craig, and others. Among notable triumphs have been the Bubba Gump Shrimp Co. Cookbook, the Forrest Gump tie-in that sold on the order of 700,000 copies, and Southern Living Annual Recipes, with 11 million copies sold by mail and another million at retail.
Learning to Love the 1099
Call it the upside of the downsizing economy. “In the mid 1980s the prognosticators said this was a dead industry,” says Joe Mariano, Executive VP of the Direct Selling Association. “There were supposedly no women home to purchase the products. But instead of a demographic of women selling to women, we ended up with a dynamic of entrepreneurship and opportunity that appealed to people throughout the ’80s and ’90s. We’ve had 12 consecutive years of growth domestically and internationally.” Home parties accounted for at least $4 billion of the total $24.5 billion in direct sales in the US in 1999, according to the most recent data available. And though growth in the US slowed this year, international sales are booming. Direct sales in India are up 40% per year. In the UK, more than 500,000 people are in direct sales. And before a regulatory crackdown a few years ago, there were 500,000 Avon reps in one province in China.
Such freshened-up stats are no consolation to Dorling Kindersley Family Learning, the home sales unit that was axed last summer shortly after Pearson acquired DK and determined that DKFL and its nearly 30,000 independent distributors were gumming up the profit machine. Launched in 1991 and rolled out in the US two years later, Family Learning was built on high hopes. At one point DK planned to roll the program out in one country per year (at the time it was seen as a safety maneuver insulating DK from the savage CD-ROM market) and had established beachheads in Russia, Australia, South Africa, and India. But DKFL reportedly lost as much as $20 million globally in the year before it was shut down. Former DK executive Steve Cohen, now COO at St. Martin’s, points out that the launch of the Family Learning unit came at the expense of sales through mass merchandisers, as the company pulled out of those retailers to ensure that home buyers being pitched books at full price would not have just seen the same titles for 40% off at Costco. “Multilevel marketing requires big margins,” adds former DK President Danny Gurr, noting that the monster mark-ups for mascara are out of the question for the book business. Indeed, when every sales rep who refers a member gets a piece of the pie, margins on books look wafer-thin. “Tupperware can knock off new designs in seconds and for pennies,” Gurr says. “Books are expensive to develop and manufacture.”
The DK closure caused no heartache for Randall White, President of Educational Development Corporation, the exclusive US trade publisher of UK-based Usborne Publishing’s line of educational books. White signed on 1,000 former DK reps, who helped bump net sales for EDC’s home sales division up 15.2% during the last fiscal year, bringing net sales to $17.5 million. Almost 5,000 EDC “independent consultants” in 50 states sell more than 1,000 Usborne titles at home parties. The Tulsa-based company also markets books through trade channels, a strategy that at times irks its consultants. “Most home sales outfits are selling exclusive product,” White explains. “We’re on a tightrope, because we sell in both home and retail.” Sales are currently split about evenly between the two channels, although White says that the home segment is growing “much faster” than retail. “You walk into any major store and obviously there’s nobody demonstrating the books,” he notes. “In a home party you have a captive audience.” EDC’s party sales dipped in the ’90s when a commission structure change prompted a large number of associates to jump ship. According to White, the company is now on the rebound, with party sales up 30% in the first quarter. “Without question the home party is a viable method,” he says.
“You’re able to see how these books can benefit your child,” adds Cathy Adams, VP Marketing for home sales stalwart Discovery Toys. “It takes all the guesswork out of it.” Books account for 25% of the company’s business, with 50 books in the catalog that are mostly targeted for children age 6 and younger. The firm’s 25,000 educational consultants select titles depending on the party theme or age bracket. “Direct sales continue to be a growing opportunity for us,” Adams says. “Our sales are up.” Same goes for Susan Schilling, founder and CEO of home sales firm Books & Beyond. “I think there’s a huge need for families to be serviced with quality books,” says Schilling, who had been a national sales director with DK’s Family Learning unit before founding her company last September. Sales associates are now in 48 states, and new associates can join for $99. Books & Beyond carries titles from a number of publishers, including Barefoot, Kingfisher, and Tyndale House.
Some of these publishers can be circumspect when queried about home party sales. “We’re not ready to talk about that particular kind of distribution,” says a Tyndale House spokesperson. But back at Southern Living, where preparations are in full swing for this month’s power pep rally, there’s no time for circumspection. “We’re reinventing ourselves as we speak,” Mooney says, clearly relishing the thrill. “It’s a wild ride, but I’m enough of a cowgirl to enjoy it.”
