It's
Your Party
Pass
the Chips and Dip, Y'all. Now Buy Some Southern Living
Books.
FROM PUBLISHING
TRENDS (JULY 2001)
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.”
©2001
Publishing Trends
