The party plan is a method of marketing products by hosting what is presented as a social event at which products will be offered for sale. It is a form of direct selling. The primary system for generating sales leads for home party plan sales is the home party itself: the salesperson uses the home party business model as a source for future business by asking attendees if they would like to host selling parties, too.
Direct selling through the party plan typically uses multi-level marketing (salesperson is paid for selling and for sales made by people he recruits or sponsors) rather than single-level marketing (salesperson is paid only for the sales he makes himself).
This plan has been used primarily to sell items whose main appeal is to women by women, such as kitchen utensils, home decor items, jewelry, cosmetics, handbags, and similar products. Recent additions to the field include lingerie, wine (e.g., Traveling Vineyard) and sex toys. Sometimes a combination party is held, at which a wide variety of such merchandise is offered for sale.
How it works
In this system, representatives of the sales organization, almost invariably women, approach other women about hosting a social event in their homes during which a product will be demonstrated. In consideration, they will be given hostess gifts and a portion of the proceeds from the amount of goods sold. Frequently all in attendance will be given a token item of nominal value as an incentive to attend.
At the event, the salesperson displays and demonstrates various products. She then takes orders from attendees. The salesperson is almost always paid solely a commission on sales. If the salesperson has recruited other sales people into the organization, then she also receives a commission based on her recruits' sales.
The party plan is criticized for exploiting social conventions in ways that embarrass "guests" into buying things they did not want.
Purse parties that are not done through a dedicated program by the manufacturer differ, however, from these other parties in that the merchandise at these parties consists of counterfeit knock-offs of popular, name-brand purses. Merchandise at American purse parties is usually bought in bulk from smugglers in New York's Chinatown or in Los Angeles' garment district and sold to unsuspecting customers at a significantly higher price, although still lower than the retail price of the legitimate product. These inferior smuggled goods have been linked to organized crime and the funding of terrorism, so purse parties have become of interest to law enforcement. Selling such purses, with an imitation designer label, is a US federal crime called trafficking in counterfeit goods, even if the seller tells the buyer that the purse is a fake.
- Abrams, Rhonda (3 October 2002). "Don't get taken by multi-level marketing". USA Today.
- Martin, Judith (1990). Miss Manners' guide for the turn-of-the-millennium. New York: Simon & Schuster. p. 388. ISBN 0-671-72228-X.
- "The Traveling Vineyard going out of business", The Blog Wine Cellar, May 2, 2010
- Counterfeit Bags May Have Links To Organized Crime, Terrorism Milwaukee News 8 May 2003