When shoppers are pressed for time, they need help getting their purchases made. The conventional wisdom suggests that they want convenient access, such as online channels that enable them to buy clothing and household décor in a free moment, after they have gotten the children to bed or before they leave for work in the morning. But another sales model takes a different approach. With direct sales, shoppers need to carve out time to visit someone’s home, listen to a pitch, place their orders in person with a sales rep, and then wait weeks for their orders to arrive. This model may seem more inefficient, yet it is growing substantially. The reason may be that it serves a dual purpose.
For modern consumers, with too many demands on their time, the first thing they cut out is frequent socializing. If they need to get laundry done, they don’t meet friends for dinner. With direct sales, consumers can socialize while shopping, killing two birds with one stone and having a great time while doing it.
The CAbi line offers women’s clothing and accessories; various other direct sellers also offer meals, kitchen gadgets, jewelry, candles, makeup, and so forth. The structure of the supply chain is similar, in that the salespeople earn by hosting parties. They take a percentage of the sales made; at CAbi for example, a host earns 33 percent of the total sales made at a party. In addition, top sellers often recruit hosts who work for them, from which they earn an additional, smaller percentage of revenues.
For CAbi, the target market is working women, between 30 and 65 years of age, who are happy to pay a little more for a “girlfriend experience.” The shopping experience is not only social and fun, but it also helps reduce their sense of risk. If a dress just doesn’t look right, the friends at the party are right there to tell her not to buy.
- What is CAbi’s retailing strategy?
- Why is CAbi, and similar retailers, succeeding right now?
- What makes this approach so different from that of other modern retailers selling to the same target market?
Source: Cristina Binkley, The Wall Street Journal, June 4, 2014