Legal Definitions - direct selling

Direct selling describes a business model where products or services are sold directly from the producer or manufacturer to the end consumer, or from the producer/manufacturer to a retailer, without involving traditional intermediaries like wholesalers, distributors, or large retail chains in the primary sales transaction.

Here are some examples to illustrate direct selling:

• Imagine a small, independent bakery that specializes in artisanal sourdough bread. Instead of selling their bread to a large grocery store chain that would then sell it to customers, the bakery sells its loaves directly to customers through its own storefront, an online ordering system for pickup, or at a local farmers' market. This is an example of direct selling because the bakery (the producer) is selling its product straight to the end consumer, bypassing any larger retail intermediaries.

• Consider a startup company that designs and manufactures innovative smart home devices. Rather than distributing their products through major electronics retailers, the company chooses to sell its devices exclusively through its own e-commerce website and a network of independent sales representatives who demonstrate the products in customers' homes or through virtual presentations. This approach exemplifies direct selling because the manufacturer is connecting directly with individual buyers, eliminating traditional retail channels.

• A local craft brewery produces a unique line of specialty beers. Instead of using a large regional distributor to get their products into stores, the brewery establishes direct relationships with several independent restaurants and bars in the area. They deliver their kegs and bottles directly to these establishments, which then sell the beer to their patrons. This scenario demonstrates direct selling because the brewery (producer) is selling directly to the retailers (restaurants/bars) without the involvement of a wholesale distributor.